Tag Archives: Planned Retirement

Reasons to Invest in Real Estate After Retirement

optimism, Owning Rental Property,

This post was contributed to Leisure Freak by consultant and blogger Alyssa Foster.

happy elder couple playing console games

Image Source

You decided to boost your income and enjoy your golden years even more. The question is – where to start? If you are out of ideas for a small business, then you might want to give real estate a try.  If you invest in real estate after retirement, your chances of enjoying a more financially stable lifestyle are significantly higher. In addition, you get a completely new retirement mindset you never knew you needed! Having said that, let’s take a look at the benefits of investing in real estate!

Passive income is the most common reason why people invest in real estate after retirement

Not all retirees prefer the same lifestyle. While some enjoy relaxing walks in the afternoon, others still seek to establish another source of income. That’s why real estate purchase is what most retired people opt for. It generates a monthly passive income and tax deduction benefits. If you are a landlord, then all you have to do is calculate the rent that will bring you profit and cover expenses. However, remember that even as a real estate owner, there’s still a required effort on your part.

cute house maquette and a key
You can benefit from being a real estate owner during your retirement.

Image Source

What you should have in mind is that your rental place needs occasional maintenance. Renting is highly competitive these days, which is another reason to give the place you plan to rent your full attention. In order to attract tourists, for instance, you have to make sure everything in the apartment/flat/vacation house works well. Also, there will be a need for repainting, decoration, etc. The money you invest into modifications will return you at a much higher value since the rental place will be sold out even a month in advance. 

Tax deductions

As an owner of real estate, you have the right to multiple tax deductions:

  • Interests – The most popular factor that reduces your taxes.
  • Insurance – A rental insurance policy is another tax write-off.
  • Repairs – All the necessary repairs inside your rental place are also written off from your tax payment. 
  • Professional services – If you decide to rent your rental place to, for example, a lawyer, you get rid of property management fees. 

A vacation home is one of the best real estate investment choice

If you look forward to becoming a landlord, keep in mind that it matters what kind of real estate you will own. A vacation home is arguably the easiest and, at the same time, super profitable real estate investment. However, you must ensure that the location and surroundings add value to your vacation home. This is why it comes in handy to hire a real estate agent and go through the buying process smoothly. A professional and trustworthy realtor is a person that will make sure you get the best deal. 

You can only benefit from entrusting your real estate hunt to a professional realtor:

  • Real estate agents know the housing market well. Hence why hiring one saves you plenty of time. 
  • With the help of a realtor, the market doesn’t seem so confusing and overwhelming anymore. 
  • You learn the pros and even cons of a particular real estate that caught your attention.
  • Once you explain to your chosen realtor what kind of property you want to invest in, they will do their best to get you an excellent deal. 
  • An experienced real estate agent will work in your best interest from start to finish. Even if they advise waiting for a little longer, take their advice.

Hire a professional to help you manage property finances 

If you want to set your retirement plan in motion, consider hiring a financial planner. As a real estate owner, your responsibility is to keep track of your finances and leave nothing to the case. A trusted financial planner can do the work for you and make sure your retirement period remains financially afloat. 

a professional  financial planner calculating the costs
Invest in real estate after retirement and hire a professional financial planner to help you manage finances.

Image Source

Contact a moving company to help you relocate furniture to your newly bought place

Your rental space will be ready once you get it fully equipped. If it’s a vacation home, then keep in mind that you’ll need extra help with furniture and other items. Therefore, put your spare time to good use and look up moving companies that can handle the move. According to seasoned moving specialists, one should rely only on licensed movers with experience. Furthermore, they must have tools and equipment that make moving a smooth process. For instance, if your vacation place is a bit further from the city, movers can simply load the truck and transport professionally packed items. That’s why it’s important to research any particular company before you sign a deal. 

Real estate is a valuable long-term investment

Before you tap into real estate investing waters, remember that patience is your biggest asset. Moreover, real estate is an investment that should pay off in the long run. From the moment you make a concept and start researching the market, it’s necessary to remain strategic. Only sensible decisions will bring you coordinated passive income and a much more relaxing golden years. Furthermore, you will get a completely new outlook when it comes to your retirement period! You will realize it can be joyful and far from dull, especially if you venture into something new (like investing in real estate).

happy older man discussing the reasons to invest in real estate after retirement
The retirement period becomes different when you start reaping the benefits from investing in real estate.

Image Source

Conclusion

At first, it seems complex to invest in real estate after retirement. On the other hand, it’s a fun process through which you learn more than you hoped for. At the same time, you discover how to deduce your taxes and learn how to promote your rental space in the best way possible. For a start, decide whether you opt for commercial or residential renting. Maybe you could join Airbnb and attract more digital nomads or tourists. The options are endless. Furthermore, the more effort you put into your real estate, its value increases. This gives you an advantage in case you decide to sell further your rental space at some point.

 

Thank you Alyssa Foster for sharing your expertise with Leisure freak readers.

Author Bio:
Alyssa Foster is an author who works as a blog writer and consultant for Homegrown Moving Company Colorado. She enjoys long conversations over coffee and outdoor activities when she needs a break from the digital world.  

Is The Market Drop and Inflation Crushing Early Retirement Dreams? It doesn’t have to

Financial Plan, Retire Early, Retirement Doubt,

I am starting to think that the recent investment market drop along with inflation are crushing early retirement dreams. That thinking is based on the questions I get and the change in certain Leisure Freak site page visits. There are certainly valid retirement fear-inducing concerns. I’m reminded of my own crushed early retirement dream in June 2008 when the great recession was doing its damage. Just as I was ready to take the leap, the world decidedly shifted against me. The world today has certainly shifted and any early retirement plan needs to shift too. Here’s what I did back then and what we’re doing today. 

Is The Market Drop and Inflation Crushing Early Retirement Dreams? It doesn’t have to

Image Source

Should The Double Whammy Of A Market Drop and Inflation Be Crushing Early Retirement Dreams? Not Necessarily

For anyone who has been working and saving for their early retirement goals, this new environment has to feel like a kick to the groin. That’s how I felt 14 years ago too. Conditions were different but just as challenging to one’s psyche. 

For those who recently pulled the retirement trigger, sleepless nights and visits to a trusted retirement calculator may become frequent. We’ve all heard the cautions of how detrimental a market correction during the first years of retirement can have on portfolio longevity survival. Inflation just adds to it.

I’m not a financial planner nor pretend to be one. I’m sure my own CFP will have plenty to say in our next meeting based on historical and technical data. What I’m sharing is what worked and works for us in hopes of adding a little calm to an otherwise difficult period in an early retirement dreamer’s timeline.

Pulling The Retirement Trigger When Things Looks Bleak

Just as when I reached my planned early retirement at age 50 in 2008, there was no real indication of a market bottom or economic certainty in sight. Yes, it was crushing early retirement dreams, but not totally. It only changed my plan. 

The new economic conditions were beyond my control. The first step was getting myself over the disappointment and setting my head right. It takes a clear mind to realize and accept that the long-time plan based on before times economics was over. Then setting into action a new plan. 

Count my blessings – 

As today, there was a lot to be economically ticked off about. My portfolio was heavily diminished, my job was a daily soul crushing grind, and I worked hard over many years to ditch the rat race on my terms. The new terms then weren’t great, but I was still very blessed. 

  • A life that prioritizes family.
  • I still had an income source. 
  • Portfolio to replan upon and build on.
  • Zero debt.
  • Known lifestyle budget, roof over my head, and food on the table.
  • Still able to influence my own destiny.
Keep my mouth shut – 

I decided that my best course of action was not to show any of my cards. Keep quiet and leverage income, working conditions, and departure timeline to my advantage. The goal was to retire young for more freedom and purpose on my terms regardless of the economic challenges. I did delay my early retirement by a year and a few months. 

Restructure finances – 

It was obvious that selling beaten down assets to fund retirement in the near term wasn’t going to be smart. Although I still invested in my stock and bond allocation to take advantage of cheap prices, I reduced the percentage and increased cash reserve allocations for short-term retirement funding needs. We also refinanced our modest mortgage to a slightly lower interest rate for the balance owed but re-extended out for 30 years to reduce monthly payment obligations. The thought was we could leverage lower monthly outpay obligations now to assist in increasing cash reserves. Then we would voluntarily increase mortgage payments when economic conditions improved.

Delay retirement, not cancel –

Most importantly to tame my disappointment, I was able to delay and not cancel my early retirement plans. I didn’t know when, but holding my future in my hands allowed me to mentally accept the conditions. As I became more comfortable with my new plan’s progress, I used my growing confidence to leverage concessions and pay increases from my employer during a time when they were used to brutally acting like they held all the cards.

Position For Retirement On A Fixed Income That’s Portfolio Fed

Now that we are again in a new economically challenging environment that appears to also be crushing early retirement dreams for some people, the actions taken when I retired early over a decade ago have smoothed some of the financial pain of today. However, it still needs work to fine-tune.

Get where I need to be – 

We use a portfolio bucket strategy to fund our early retirement. Because the memory of the recession burned deeply in my mind, I’ve always maintained a higher cash and near-cash bucket than most people to fund short-term retirement income needs. However, I did allow myself to reduce it in the past couple of years as we grew older and are closing in on Social Security and Medicare age. At this time we have redirected all dividends and interest to cash instead of a portion being used to reinvest. The goal is to avoid asset depletion until market conditions become more favorable or certain. That and fully bridge the gap to when we start collecting Social Security and when we can ditch my costly health insurance plan for Medicare.

Inflation – 

This has been an interesting mind warp. We were young parents during the go-go inflation of the early 80s. A lot of what we learned trying to save money and survive on a low income frugal budget then has come back easily today. Coupons, sales, discounts, purposeful essential spending, upgrading to a smart thermostat, decreased water heater temp, shorter showers, DIY repairs, frugal cell service, shopping used items at places like Goodwill, driving less-bicycle and walking more, etc. It all adds up and makes a difference. I actually enjoy saving money. 

Sell unneeded stuff –

I always find it amazing that some of what we have and don’t use is needed and valued by someone else. I have been using Craigslist to sell small things and although it isn’t a big cash influx, it does fill a gas tank now and then. 

Increase lifestyle funding – 

Our monthly IRA distributions have followed a modified version of the 4% rule. That rule allows for inflation adjustments, but in this 7% to 8% inflationary environment, does the market diminished portfolio agree? We did slightly bump up distribution amounts but less than the going inflation rate. The difference is made up in spending reductions and emergency fund cash savings when necessary. 

Earn income –

I’ve always believed that retirement is the absence of needing to work, not the absence of working. As of now, there is no job I am interested in learning or doing, unlike there was in my earlier years of retirement. I was a little too successful in working through my bucket list back then. What I do today is keep an open mind and ear. One never knows when a perfect opportunity will present itself. It takes being open to the idea so that I can see it when it comes.  

Realize we’re not alone, pay it forward and offer unwanted things for free – 

Most people are experiencing the pain of inflation and budget strain. In my search for things to sell-off I’ve also found things I just need or want gone and offer it as free. I see it as a trade. If you want or need it, come and get it at no cost. I in turn won’t have to pay for it to be hauled away or dumped. I also price my things to sell at a low cost. I’d rather sell something quickly to someone who can use it than to drag it out over a longer period of time or get into a trolling haggle. Everyone is looking for a deal to get by.  

Figuring our way through these economic headwinds isn’t easy, but nothing worthwhile ever is.

I don’t know when inflation will relax or when the market finds its bottom and stages a reality based comeback. I do know that it will happen at some point. Retirement means being in charge of our own finances and proactively doing what is necessary. 

My task is to stay calm and position myself the best I can to continue funding my early retirement freedom into and beyond our full blown old-fart retirement. This is all just another hiccup in the financial independence journey. The key for us is to maintain a lifestyle that is still enjoyable during this choppy economical episode of time.

Inflation and a dropping investment market is a challenging time. But completely crushing early retirement dreams doesn’t have to be accepted without a fight. We do have to understand our own risk tolerance and make decisions based on what we believe is the right move for us. The last thing someone should do is enter into retirement feeling they may have made a big mistake. 

The goal is to assess the current situation, make necessary adjustments, and move forward confident in our decisions. Then keeping an eye on conditions that necessitate path corrections going forward.

How to Plan For Retirement in a Post-Pandemic Era

Retirement Plan

This article was contributed to Leisure Freak by writer Samantha Higgins.

The COVID-19 pandemic has taught us the importance of properly planning and managing one’s financial records to build a secure future. While health has taken precedence, people are constantly attempting to develop a sound financial plan in case of an emergency. 

Even a poor plan is preferable to no plan. Schedule an appointment with a professional wealth advisor as soon as you begin your first job. They will create an achievable financial plan based on your personal and professional goals. 

Here are some tips for developing a sound financial plan in the post-pandemic period.

How to Plan For Retirement in a Post-Pandemic Era

Image Source

1. Review Your Financial Situation

There are a few factors to consider in this case. Inflation is one issue, as you may notice that certain weekly or monthly expenses are slightly higher than they were previously. It is critical to create a new budget to reflect these changes, whatever your circumstances.

On the other hand, some people may have discovered more spending money after lockdown due to canceled trips or reduced expenses such as dining out, going to the movies, or attending concerts. If this describes your situation, be cautious about spending money simply because you have it. Put it toward savings and future planning – don’t go overboard with your excitement at being permitted to leave the house.

If you own a small business, you should conduct a similar review of your business accounts’ financial management and spending practices.

We cannot discuss financial planning for the pandemic era without discussing insurance. If a global pandemic does not demonstrate the critical nature of health insurance, what will? Another way to protect your family’s financial future is through life insurance, which pays benefits to your beneficiaries in the event of your death.

Establish, and Maintain Financial Objectives. For financial objectives, it is critical to allocate financial resources and expenditures in the most efficient manner possible to meet the deadline.

There are numerous uncertainties surrounding new COVID variants, natural disasters, rising inflation, and health disorders, all of which contrast with many opportunities. 

We must develop a more systematic approach to life planning to prepare for worst-case scenarios, such as a prolonged era of extreme morbidity, to mitigate the impact of COVID.

2. Long-Term Investing

Inflationary pressures have rendered conservative investment themes obsolete. As a result, it is recommended to allocate your hard-earned money strategically into long-term, sustainable investments that generate higher returns to compensate for declining purchasing power.

Unless you live entirely on a paycheck-to-paycheck basis, a retirement plan is essential to your financial management strategy. Your employer may offer retirement plans that allow automatic monthly deductions from your salary. If that is not the type of job you are applying for, there are other ways to get started.

They are necessary if you wish to achieve long-term financial success. Naturally, this is not the case if you are unemployed. In this case, the primary objective should be to preserve any existing savings. This can be accomplished by applying for unemployment benefits and avoiding using retirement funds to cover monthly expenses. You can also sign up to retirement account platforms like Gold IRA and secure a good life in the future with the services.

3. Adopt a More Disciplined Financial Approach 

Current marketing campaigns entice people to increase their spending on unnecessary impulsive purchases. Trapping them in a perpetual cycle of credit card debt. It’s time to break this habit and divide your spending into necessities, needs, and luxury.

The majority of us spend first, then save, and finally invest. Whereas successful and wealthy individuals budget for essentials and significant needs first and then invest the remainder.

Wrapping Up

As the working world adjusts to its new normal post-pandemic, you should adjust your financial strategy accordingly. According to financial experts, reducing debt should always be the first focus. 

Being in debt impairs your capacity to save and damages your credit score, impairing your future ability to get financial products. If you’ve been in debt for more than a year and a half, you simply cannot budget and spend as if you’re not. 

Each month, set aside a certain amount of your salary to repay debts and other commitments. You should prioritize high-interest loans to save money in the long term.

Much thanks to Samantha Higgins for contributing this informative article. This is certainly a time when many will have to navigate retirement in a post-pandemic era and might be questioning their retirement readiness. 

Planning For Retirement in a Post-Pandemic EraAuthor Bio:

Samantha Higgins is a professional writer with a passion for research, observation, and innovation. She is nurturing a growing family of twin boys in Portland, Oregon with her husband. She loves kayaking and reading creative non-fiction.   

How to Plan for Aging Parents

Non-financial Aspects of retirement

This informative article was contributed to Leisure Freak by freelance writer Regina Thomas that details some necessary first steps.

Your parents appeared indestructible to you as a child. You expect them to be present at all times. So it’s acceptable if you are in denial when you notice either or both of your parents are aging and become feeble. Maybe you are unprepared to live without them or are concerned that their health is deteriorating. Alternatively, one parent may have died, leaving the other to deal with loneliness and loss. Alternatively, you may be uncertain if they should continue to live alone and what options are open to them. You might have to accept that your parents aren’t getting any younger. Preparing for the worries that come with aging is in your and their best interests.

The following are some suggestions for preparing for your aging parents’ future and tackling the difficult choices you may face as a family;

How to Plan for Aging Parents

Image Source

1. Have a Family Discussion

Nobody wants to consider what might happen to their aging parent. However, if you truly want to prepare for your aging parent’s future needs, everyone in the family should be on the same page. You are recommended to have a deliberate family chat since this subject can easily be put to the side or neglected altogether. This isn’t a topic to broach during a holiday dinner when everyone is preoccupied. If the entire family cannot attend in person, create an online conference call to ensure that everyone is involved.

This chat aims to discuss your parent’s care needs and wants as they grow older. It doesn’t have to be aggressive; rather, it should be an open conversation with their best interests in mind. Ensure your parents and siblings are ready for this discussion and think about how they feel about it before they come. You should also consider your familial relationships and how they can help or impede this discussion. When feasible, try to avoid any confrontations to keep the conversation constructive and positive.

2.Explore Senior Housing and Aging Care Options

Your parents may appear sprightly and self-sufficient today, but their circumstances may transform. There are several eldercare solutions available to meet your loved one’s needs. If your parent is experiencing health issues and can no longer survive alone but does not require constant healthcare services, supported living is a great choice. Your parents can stay in their apartment, but they will have to share meals and activities with the other residents. Transport, cleaning, laundry, medication administration, and support with activities of daily life (ADLs), such as showering, grooming, and dressing, are all standard services provided by assisted living communities. For instance, The Moments of Lakeville offers high-quality assisted living services and an improved memory care setting for aging parents. A search online can help you find and connect with care facilities and experts in your area. 

3.Financial Planning Needs

Most of us are apprehensive about discussing finances. You will make wise choices if you address these concerns as early as possible when there is no urgency. Examine your parents’ financial situation. Compute their assets, liabilities, Welfare Benefits, pensions, and other sources of income. This could be an excellent time to decide who will have the power of lawyer and financial responsibility for your parents’ accounts. If they cannot manage their money, a power of attorney will allow a trusted individual to do that on their behalf. Your parents can designate how their assets are handled by consulting with an eldercare lawyer. A power of attorney can take control of your parent’s money if they become ill unexpectedly, ensuring that invoices are paid, and medical bills are not missed.

4. Comprehensive Legal and Medical Preparation

Prepare for an emergency ahead of schedule. Make a primary folder with your parents that contains all of your critical documents in one safe location. As you collect documentation, you can check if any papers are missing. Every relevant document should be kept in a safe, locked box or storage unit in this master folder. Make sure your parent share where the items are safely placed so the rest of the family are able to get to them if needed.

A will can be used to avert family feuds by clearly stating their goals. They should consult with a lawyer to discuss their assets and intentions for how their inheritance should be divided. If your parent has particular thoughts about their final farewell, making a plan for sensitive family members to adopt can be helpful. They can even pay for some funeral services in advance. If your parents haven’t already done so, you are recommended to talk to them about making a living will.

Conclusion

This planning will ease a great deal of stress for the family members if you spend the effort to arrange their property and know their preferences for their future. Therefore, this debate is necessary for families, even though it can be difficult and uncomfortable.

 

Much thanks to Regina Thomas for sharing these tips on how to plan for aging parents. Something that many of us may have to face. 

Author Bio:

Plan for Aging ParentsRegina Thomas is a Southern California native who spends her time as a freelance writer and loves cooking at home when she can find the time. Regina loves reading, and hanging with her friends and family, along with her Golden Retriever, Sadie. She loves adventure and living every day to the fullest.

 

How I Overcame Being A Retirement Scaredy Cat

Retirement Doubt, Retirement Plan, Risk Tolerance,

Recession, political jackassery, market insanity, pandemic, inflation, supply chain, extreme weather, war, the list goes on. It seems there’s always an outside crisis beyond our control. Turning even rational and money wise people into a retirement scaredy cat with worries about the negative impacts to retirement success. 

After decades working and performing to earn income, fearful thoughts about retirement are natural. It doesn’t only come into play when making the decision to retire. It can creep in during retirement, causing us to pull back from well planned and wanted retirement experiences. Here’s what calms my inner retirement scaredy cat.

How I Overcame Being A Retirement Scaredy Cat

Image Source 

Shooing Away The Retirement Scaredy Cat  

I was all set for an early retirement at age 50, but then the great recession set in. My numbers were diminished and barely worked out through the retirement calculator, causing hesitation in my pulling the retirement trigger.

It took me another year to finally jump. It was time that I needed to figure things out and find a way to overcome my retirement fears. As the years have passed since my sacred retirement day, I’ve come to rely on what gave me the courage to retire during a recession to shoo away the retirement scaredy cat whenever it sneaks in.

Developing and then believing in my good money habits.

People who are savvy about personal finance have an advantage. Good money habits are actually skills to navigate through volatile financial times. Realizing that I wasn’t just retiring to let life and my finances run on autopilot is one of my biggest fear erasing assets. I’ve already a proven track record of having a solid relationship with money to get to this point of retirement. Something that even when there is chaos beyond my control around me, I could rely on it to guide me successfully through it.  

Understanding what I was retiring to was far better than what I was retiring from.

I didn’t give up something I valued more than my retirement. Knowing that whatever unforeseen risks were involved, it is worth it. Some early retirement scaredy cat thoughts were centered on walking away from a long held career and paychecks that took decades to develop and hard work to achieve. 

I did have to give myself this pep talk many times before ditching the rat race. I found that this mental nag quickly decreased after retiring and actually experiencing how to live without a job title. The knowledge that I value my retirement also aids in my desire to remain retired on my terms and keeps me focused on everything it takes to have a successful retirement.   

Figuring out if things went to hell financially that my scorched earth minimum retirement budget wasn’t all that bad.

Setting and living within a well planned retirement budget includes covering essential costs, but also a lot of what makes retirement the reward we hope it to be. Setting cashflow threshold triggers for budgetary counter measures delivered anti retirement scaredy cat assurance. 

Budgets require monitoring and any hints of cash flow or earnings shortfalls means cutting back BEFORE things become critical. Setting and seeing the minimum survival budget during any serious downturn along with aligning the portfolio to support it can provide fear crushing retirement confidence. I always feel that even my worst day living on a restricted survival budget would be  better than my best day wasting my precious time working in a job I’d rather not be doing.

Realizing that the worst that can happen is unretiring and chasing dollars again with a job.

I had always planned on being open to taking on paid retirement opportunities if they checked off my want to learn and do boxes. So it wasn’t a big stretch to accept that the worst that could happen is my having to temporarily accept working again based on salary. 

What I didn’t know before I retired was that when you are in a retirement mindset, working can be enjoyable. My retirement gigs that focused on interests and passions have shown me that. Even taking on a part-time gig that brings in a small cash flow increase could plug any budget holes to likely solve a crisis caused retirement funding shortfall.

Having a phased financial plan for retirement: All on my own, Medicare, and later Social Security.

I used to write technical requirements as an engineer. It was easier to comprehend and understand when details were displayed in organized chunks. It made sense to do the same with my retirement funding plan. Breaking down the necessary financial requirements for the years being 100% on my own before I could receive my long earned Medicare and Social Security benefits. This chunking helped to easier visualize retirement funding success and tame retirement fears. 

The plan also included all of the likely activities and possible paid opportunities that I would be more likely to have in the earlier years than the later years. It recognizes that aging plays a role in retirement spending and activities of interest. This approach makes it easier to track funding success and make adjustments as time passes in retirement. 

 

There are many ways to calm the inner retirement scaredy cat. The one thing that always enters my mind when it silently creeps in is the reality of time. Spending our valuable time is unavoidable and we are only given so much of it. It’s of unknown quantity other than knowing that it decreases daily. Sometimes that is all we might need to tell the retirement scaredy cat to scat, this isn’t your home.

The Boring Early Retirement Truth: It’s What You Make It

Early Retirement Lifestyle, Non-financial Aspects of retirement,

I’m going to retire early and travel, sleep in, and make my life an endless vacation. I thought it, said it, and have heard it many times from others. Well, maybe it’s true for some. But for me and most people who have or had  this dream, it isn’t our reality. Which sadly can lead to retirement disappointment. As someone who ditched my long career over 12 years ago at the age of 51, here’s the boring early retirement truth: It is all on you to make retirement what you want it to be. 

We have to be prepared and willing to make our retirement the adventure it can be. The euphoria that comes on our first day of retirement fades and drags away any of those freewheeling dreams we might have had. We have to be ready to start a new phase of life. There are a slew of different challenges we must mentally commit to accept and work though.

The Boring Early Retirement Truth: It’s What You Make It

Image Source

The Basic Boring Early Retirement Truth Is We’re On Our Own To Make It Great

There’s nothing earth shattering to be revealed here. The boring early retirement truth is our retirement depends on much more than the portfolio numbers that we need to support it. Our numbers are obtained, invested, allocated, rebalanced, and for the most part do what they are supposed to do based on historical analysis. 

It’s the other stuff that causes retirement grief or success. There’s no nifty non-financial retirement calculator or program to rely on. We are on our own to develop our retirement vision and how to get there. Believe me, it can be a fluid and indirect trip over the years. For as long as we are on this journey, our required effort to adapt never ends. Here are some of my observations collected over my decade-plus of early retirement. 

Big Dreams, Little Sustainable Support For Them

I have to smile when thinking about my preconceived notions of what I was going to enjoy doing in early retirement. Some of it was just dreams. When we are busy working, we can believe that it’s only our lack of free time that is keeping us from doing some things we dream about doing. When I finally had the time, I found out a few things:

  • For some retirement dreams it wasn’t a lack of time that kept me away from them. I just didn’t realistically have the finances to support them. Imagine that. We are always trying to dream big. Sometimes too big.
  • Other retirement dreams I found that I had the finances but would in no way be worth the cost in finances and time for me to do them. 
  • Some retirement dreams I got a taste of and found out it wasn’t my thing. 
  • Then perfection, when it’s right it’s exactly where and what I should be doing. But I had to ditch doubt and notions of previous failures to be willing to make the leap and try it first.
Did any shattered early retirement dreams cause a sense of retirement failure? 

Not hardly. We have to be willing to explore, test, and learn as we go. What looks fun and exciting while reading about other’s adventures or things we thought would make life wonderful may not be for us. I still enjoy reading about and investigating things of my retirement dreams or curiosity because who knows? There’s always an avenue I have no inkling about.

We spent a lifetime doing what others laid out for us or demanded from us and then measured every which-way to Christmas for success or failure. 

Who would have thought that after decades of identifying with our work related title or occupation we could possibly encounter mental turmoil when we decide to give it up. Retirement freedom means it’s on us to test the waters and push ourselves to find out what our thing or sense of purpose really is. If what we are drawn to or dream of stalls or starts out perfect and then fades, just move on. There is no longer the required need to measure up. It isn’t failure, it’s just change.

Being Bored In Retirement

I never thought I would be bored in retirement. Not before or after walking away from the grind. I can’t say I’ve been bored either. Whenever I hear someone say they would be bored in retirement, I agree with them. Yes, you will be bored. Best to stay in the rat race feeding the system. Just as it was designed for. 

If we say we will be bored in retirement we are making a statement of belief. We’re not ready to ask whether we could possibly enjoy being retired or not. Nor willing to accept another’s experience or suggestions. 

Having periods of inactivity, projects, travel, etc. doesn’t have to equate to boredom. We have to get used to learning how to enjoy doing nothing while celebrating the little things in life that the freedom of retirement brings us.

The Mental Bumming Burden Of Financial Volatility

News flash! The portfolio and market numbers go up and down just like before retirement and as it always has through history. We will just care more about it in the early years of retirement since we’re for the most part not adding earned income into it. At least for myself, I skipped away with a less than a fat million dollar portfolio and was alarmed whenever the market took big drops. I now believe a lot of it was more connected to losing my work identity and having to rely on a system I have no control over. 

We do have some control and learning to accept that takes time. I find looking at my financial plan the way I was forced to do for long-term career success worked to ease my mind. Refresh, reevaluate, and rebalance becomes much easier to do and market induced panic no longer lands. From portfolio allocations to spending or budgetary tweaks, it’s all on us to find the right balance for retirement success. 

Accepting A Limiting Definition of Retirement

I don’t get it, and do try to understand it, but why would anyone want to be free from a life of unrewarding work obligation and then throttle yourself with a limiting definition of what retirement is? I’m talking about paid adventures in retirement.

Want to make early retirement easier to accept?  Another boring truth about early retirement, just keep the definition loose: Retirement is the absence of NEEDING to work, not the absence of working. Not that finding fulfilling work in retirement is necessary. It’s just adding the prospect of an open mind of happily riding that horse when the opportunity looks perfect. Get off when it isn’t.

I’ve had some awesome paid retirement adventures and have this same attitude to take with all my retirement endeavors.

Address Social Life Challenges

I found the sting of realizing that my social life was 95% tied to my work. It took time and effort to rebuild a social network within my community where I was going to be living the dream. There’s no magic resource or tool that will tell you that you have this covered.

We leave behind a lot of BS when we retire. But there was also stuff we liked and enjoyed. I found that the people I associated with were only there in my life because we shared the same rat race burdens. It was just like I experienced when changing jobs. Most ex coworker pals drift away. It’s natural and retiring is no different.

I found a new and rewarding community based social life by volunteering to support things important to me, frequenting a local small independent coffee shop where locals can be met, and attending free classes offered at the local library. Then it was accepting the coming social invitations even when it challenged my comfort zone. My social life grew from there. 

You Gotta Make Moves, Nothing Will Likely Just Fall Into Your Lap

When it comes to retirement, we can’t sit back expecting adventure. Another boring truth about early retirement is the old saying, out of sight, out of mind. Get out of your comfort zone and constantly test the waters.

Many times I enjoy being surprised at just how wrong I was about something or some people. It makes taking the effort to find out totally worth it. It is much better than sitting back wondering about something and regretting not being involved or participating in it. Invitations to adventure are rare to those who aren’t seen. By always sitting back, it becomes easy to fall into a boring routine just to avoid stressful risks.

Stay Curious and Open Minded, But Always Question

Sometimes we are drawn to real opportunities for a great retirement adventure. Other times it becomes obvious that we are falling for a hyped-up false version of something or someone. When that happens it’s OK to walk away and don’t look back. 

Live and learn is my basic boring truth about early retirement. There have been a few surprises both good and bad. But without curiosity and an open mind, I wouldn’t have had the great experiences I’ve had over the past 12 years of early retirement. 

4 Retirement Financial “Whats” To Answer Before and During Retirement

Retirement Plan, ,

Now 12 years into my early retirement, I continually learn more about successfully funding and living my desired retirement lifestyle. One of the lessons learned is answering a few retirement financial “whats” questions. There’s a lot of both having trust in established processes and winging it when it comes to retiring. Getting most of it right before retirement is essential. But so is continuing to get it right by reevaluating the plan during retirement. This just happens to be my time of year to do just that. 

4 Retirement Financial “Whats” To Answer Before and During RetirementImage Source

Answering Retirement Financial “Whats” Questions

I have a simple annual evaluation where I divide my plan into 4 retirement financial “whats” questions. This way I can see whether I am good for the coming year and going forward. I take this time to decide whether I can or need to make some tweaks by changing a “what” answer or two for financial and retirement lifestyle success.  

What I Need

I define what I need as the basic minimum required to fund my yearly retirement. This is everything associated with housing, utilities, health, food, taxes, insurance, transportation, and coverage for emergencies. Meeting this basic “what I need” means not having to worry about hardship, and that’s a good thing.

This retirement financial “whats” is a peek into the moment. As we have all recently experienced, the price for things yesterday is not the price today. My answer to this question 12 years ago is vastly different than it is today. When deciding to retire, we have to know our cost of living number and make inflationary estimates. I used the Firecalc retirement calculator and plugged in different spending models to gauge my retirement funding success odds. I still use it in my annual evaluations as numbers constantly change, including my dwindling time left on the planet.    

What I Have

After receiving payments from a portfolio over 12 years and riding the investment markets, what I have has also changed over time. Including a shrinking time frame before receiving my Social Security and going on Medicare. 

Like most people, I focused on hitting “the number” before retiring. This again is nothing but a peek into the moment with some projections. As the future reality is revealed, it requires annual reevaluation. 

What I have has changed much over my years of retirement. The things I look for: 

  • Is it/will it keep up with my other retirement financial “whats”? 
  • Are there risks I need to address? 
  • Is it time to rebalance assets? 
  • Am I taking too much or too little from the portfolio for spending or efficient tax management?
  • Have my other “whats” answers changed over time requiring a change here too?

What I Want

This is the retirement financial “whats” area where I play. It’s the place that makes life an adventure and fun. Much of it has a cost association that needs factored in. I’ve found it has changed drastically over the years of retirement as I’ve changed. My travel, entertainment, hobbies, interests and passions have evolved over time, accomplishments, and my aging. 

When I first retired, I was willing to do anything to ditch the rat race. Although a scorched earth lifestyle wasn’t required, I was up to it. I admit that after years of frugal living to become a good saver to retire early, I was a lousy retirement spender. That is something I’ve had to constantly work on. 

Now 12 years into retirement, I’m starting to feel my aging and mortality. There are some now-or-never “what I want” items entering into my lifestyle. We certainly don’t want to have unnecessary regrets about things done or not done. Going through the retirement financial “whats” exercise lets us know whether we reasonably can or should indulge in any unfulfilled wants before we can’t. 

What I Don’t Know or Won’t Know For A While

Before retiring there are a lot of assumptions to make. From cost of living to what our preferred retirement lifestyle will be. We only have what we know at the time. But there needs to be a little fortune telling added to the plan. 

Financially there has to be a healthy reliance on historical statistics, something a good retirement calculator will provide. But we also need an honest self evaluation of our health and longevity. We can weigh our lifestyle choices,current health, and family longevity history to understand a possible future. 

I admit that my wife and I have experienced some health issues that in no way came into our pre-retirement planning. Now known, it is placed into future planning.  It’s a best guess to how many productive trips around the sun we have left. 

Not only do we need to understand how long we will live to plan for a portfolio that is around as long as we are, but how long we will be able to do the things we want to do. All of which have both financial and lifestyle considerations. 

 

There’s a lot to figure out when deciding it’s time to retire and continue to evaluate throughout the years in retirement.

It goes beyond just the big picture portfolio numbers. There’s how to structure assets for income and investment allocation within our risk tolerance. On top of that there’s the non-financial aspects regarding our preferred retirement lifestyle that will fit within our budget. As time goes on in retirement, we should expect that our desired lifestyle will be challenged and change as we age. Making sure we get our “whats” answers aligned as close as possible ensures a happy and successful retirement. 

How to Conveniently Manage Your Private Investments

Investment Strategy, ,

 

This article was contributed to Leisure Freak by writer Samantha Higgins.

It’s not easy managing your private investments, but it doesn’t have to be a pain. There are many ways you can make the process easier and more convenient for yourself. This article will talk about how you can easily manage your private investments by looking at different tools to manage investments.

How to Conveniently Manage Your Private Investments

Image Source

How To Manage Your Private Investments

One way to manage your private investments is by using software applications. There are many different software applications that you can use to manage your private investments, such as SPV administration services, and each one comes with its own set of features. Some of the most popular software applications include Personal Capital, Quicken, and Mint.com.

Personal Capital

Personal Capital is a software application that you can manage all your private investments from one location. It also comes with features that allow you to see how much money you have spent on things like groceries or clothes. You can quickly and easily check up on your spending habits without having to go through individual bank accounts. It’s easy to sign up for Personal Capital, but you have to link it to your bank accounts. Once all of your accounts are linked, you can see how much money you’ve spent on groceries or clothes just by clicking through different categories.

Another thing that makes Personal Capital an excellent tool for managing your private investments is that it uses technology to help you make better investment decisions. The software application has a built-in financial advisor that will help you make more informed investment choices.

Quicken

Quicken is another popular software application that you can use to manage your private investments. Quicken comes with many of the same features as Personal Capital, but it also offers unique features that make it stand out. One of the best features is the investment alerts. With investment alerts, users can set up notifications for particular investments, so they know when a change has been made. Quicken also offers a built-in retirement planner that will help you create a custom plan to get you on track to reach your retirement goals. The software application also connects directly with over 14,000 banks, so you can easily track your finances.

Mint.com

Mint.com is a software application that you can use to manage all of your financial accounts in one place. Mint.com comes with many different features, but the most popular one is the budgeting feature. With the budgeting feature, users can create a custom budget and track their spending. The software application also comes with a debt reduction feature that will help you pay off your debts faster. Mint.com is free to use, and it connects directly with your bank accounts and credit cards so you can get a complete picture of your finances.

Financial Advisor

Another way to manage your private investments is by using a financial advisor. Financial advisors can help you better manage your private investments by providing investment advice. A financial advisor will work with you to set up a portfolio that is best suited for your current financial situation. You can either go with an in-person financial advisor, or you can choose to work with one online. An online financial advisor can be more convenient because you don’t have to meet in person, and you can usually get started for free.

Brokerage Account

The final way to manage your private investments is by using a brokerage account. A brokerage account is an account that you open with a financial institution that allows you to buy and sell stocks, bonds, and other types of investments. When you open a brokerage account, you can choose to use an online broker, or you can go with a full-service broker.

Full-service brokers are financial experts that will monitor your investments and make changes as necessary, but they generally charge higher fees than online brokers do for the same services. Online brokers offer many of the same features as full-service brokers because they allow you to buy and sell investments online, but they don’t offer as much personalization or hand-holding.

 

No matter how you choose to manage your private investments, it’s important to make sure that you have a plan in place. Having a plan will help you stay organized and make better investment choices. Failing to plan is planning to fail.

Much thanks to Samantha Higgins for contributing this article to Leisure Freak,  sharing convenient ways to manage your private investments. 

SamanthaHiggins How Manage Your Private InvestmentsAuthor Bio: Samantha Higgins is a professional writer with a passion for research, observation, and innovation. She is nurturing a growing family of twin boys in Portland, Oregon with her husband. She loves kayaking and reading creative non-fiction.   

Pandemic, Inflation, Busted Supply Chain, Still A Great Time To Be On FIRE

Retire Early, Retirement Doubt, , ,

It’s no wonder that I run into people delaying their early retirement. But for anyone with personal financial discipline, this is still a great time to be on FIRE and pulling the retirement trigger. There is a lot of gloom and doom to go around. At least that’s what some people focus on and it sure makes for headlines. In these times we certainly have much to be concerned about with a pandemic, rising inflation, and the occasional shortages of things we want or need. There’s a lot that is and can go wrong. But for those striving for financial independence and early retirement who are stuck sitting on the fence because of everything going on, there’s no better place than FIRE to be in or making the moves necessary for being there.

Pandemic, Inflation, Busted Supply Chain, Still A Great Time To Be On FIRE

Image Source

Why This Is A Great Time To Be On FIRE

First off, I do think a lot of things are getting too expensive. However when I look around, for all the boo-hooing about gas prices and the high cost of goods, there has been no shortage of road traffic or store checkout lines. Apparently people are still willing to spend the money. The environment is so unlike the days of the great recession when I retired at the age 51. People then changed their spending and driving behavior. As long as there remains unbridled spending, it looks like things aren’t really as dire as some fear mongers hope to exploit or the fearful to allow to hold them back. Once consumers get to changing behavior, supply issues will change too. Here’s why it’s a great time to be on FIRE while things work out. 

Safety during a time of pandemic

In this strange new world, safety to the loudest among us seems to be defined only by a gaggle or person’s own perception. Whether it’s a workplace manager, co-worker, or some random person who shows up to express and inject themselves into everyone else’s life. 

When it comes to personal safety, people can believe what they want to believe. Smoking or riding a motorcycle without a helmet for instance. I happen to believe based on medical advice and something called scientific evidence that handling rattlesnakes is dangerous. I quietly live my life, keeping it to myself while avoiding contact with rattlesnakes. But in this new world if questioned or cornered and I mention that to a card carrying member of the religious serpent handlers, they just might loudly call me a godless heathen and angrily condemn me as sheep while trying to toss me a snake. 

During this pandemic, aside from those who we commend for choosing to because of their heightened sense of duty, many other folks were and are forced to endure unsafe conditions. Whether of their own desperate financial situation or bullied into it. 

  • Being on FIRE means being able to decide for yourself: When and where we go, what we do, and who we do it with. 
  • Being on FIRE means never having a need to yell and scream about our own safety decisions and viewpoints nor put up with anyone else’s efforts to force us to their “beliefs”. 
  • When on FIRE we’re able to tell someone demanding that we unsafely bend to their beliefs to piss off when necessary. We have the resources to live our lives without crying, pathetic whining, claiming victimhood, or blaming others for the consequences of our own decisions. We have what has been referred to as “F you money” and just don’t have to put up with unsafe conditions or other people’s BS.

Others can go ahead and feel free to handle all the rattlesnakes they desire. I’m on FIRE, so that’s a hard NO for me.

Spending relief in these inflationary times 

All the hand wringing about inflation has been more meh than a problem to our frugal lifestyle early retirement budget. Why? Because we have flexibility and time to manage it. FIRE takes having disciplined spending. It also requires patience and planning. All are great skills to have and use in these inflationary times. Taking the time to search out deals, alternatives, and of course just making due when things are tough to find or are too expensive. In retirement there’s time and usually no need to hurry. 

We refuse to blow money needlessly driving around. 

My wife and I enjoyed plenty of bicycling this summer that benefited both our wallets and health. We limited our driving and although fuel prices bite the big one, we just refused to buy a lot of it.

We set limits to what we are willing to pay for things. 

Nine years ago I paid $2,300 to have the exterior of my 2 story 15XX square foot house painted. When bids to repaint came in at $7,400 and $10,200 this past summer I just asked them to please leave. Their rebuttal, this the pandemic inflationary price reality that it now cost. Well here’s my reality, I’m not paying that. I just started painting it myself and staying the same colors. I painted a few hours a week in the final couple of warm months and will pick it up again in the spring to finish. This way I budget for both the cost of paint and not making it a giant PITA. 

If inflation is keeping anyone on the retirement fence, consider the possibility that these inflated prices are here to stay. 

Even when supply chain relief comes, nobody should assume business will lower prices. People have shown what they are willing to pay and continue to keep buying. When it comes to pricing, capitalism is sticky that way and instead of lowering prices they will likely pocket profits. Fence sitting hoping to wait out inflation means spending far more in time of a finite period called YOUR LIFE. 

There are lots of ways to save money on groceries and other necessities. Cutting the cord and moving to low cost wireless has never been easier and done without sacrifice. You also will have the time to learn and tackle DIY projects. 

FIRE portfolios are fat!

Even my less risk-averse investment portfolio is splitting the skinny jeans it was wearing. Prices are up and so are our long-term investment returns. We all know that a portfolio valuation today isn’t guaranteed to remain that way. That’s always a retiree’s focus when number crunching their long-term lifestyle funding needs. Having a fatter portfolio makes this a great time to be on FIRE because it provides options. 

If today’s economic challenges cause anyone retirement pause, maybe consider rebalancing or restructuring the portfolio. High inflation environments make holding too much cash a money loser as far as purchasing power over time. But cash still has its role. Consider establishing a portfolio bucket strategy to smooth concerns. Although cash earns very little in interest, you are locking into portfolio profits already earned. Look at cash as retirement funding insurance.

Plenty of paid work opportunities for a perfect retirement gig

I know that I am always preaching this, but retirement is the absence of needing to work, not the absence of work. When I ditched my career at the age of 51 in 2009, I fully intended to embrace that definition of retirement. I called it a retire early and often lifestyle. Even during the recession I was able to work in areas of interest and passion. Those retirement gigs were far more rewarding than my long career had ever been. 

There are many opportunities for those of FIRE to entertain and leverage to their advantage with today’s Great Resignation environment and an active Antiwork movement. It’s not just me seeing this. A trend has been seen of people unretiring. The perfect camouflage to cloak your retire early and often intentions while business is eager to hire. 

On the fence about pulling the early retirement trigger?Image Source

There’s always going to be craziness and uncertainty when it comes to early retirement.

What makes this a great time to be on FIRE is that it prepares us to handle it all. Personal finance patience and discipline that are learned on our FIRE journey are the necessary habits and skills to be successful. 

Hopefully I’ve provided some inspiration here for anyone struggling to decide on their next FIRE related steps. I don’t know what will happen in the future and I’m not a financial planner. Just someone who retired young during the great recession and shares my observations and tips based on my 12 years of early retirement experience. I do recommend that before you make any big financial or retirement decision, especially if unsure and still on the fence, check your numbers, and consult with a certified finance professional for advice. 

Retire Abroad US Tax Guide

Relocating in Retirement, Retiring Overseas,

If you are thinking of retiring abroad, you’re not alone. In fact, just over 1 in 10 American workers are thinking of going overseas to retire, according to a 2020 survey by the Aegon Center for Longevity and Retirement. And if you do decide to move overseas, you will be joining over 430,000 retirees who are already enjoying retirement abroad.

But what makes retirement abroad an attractive idea for many? The main driver appears to be simple economics: The cost of living in the United States is rapidly increasing. Prices for housing, food, and gas are rising at the fastest rate in 10 years. For a retiree with limited savings and no fixed income, this could mean a massive lifestyle downgrade as the years go by.

Moving abroad allows people to make the most of their retirement savings by taking advantage of the lower cost of living in many countries. But before you start thinking about sipping cocktails in Mexico or Thailand, you first need to prepare for your tax obligations. American retirees are still required to file a U.S. tax return every year, even if they live abroad. Here’s a quick guide to get you started.

Retire Abroad US Tax GuideImage Source

Do I need to file taxes after retirement?

Just because you have moved to a different country does not mean that you no longer have tax obligations in the United States. The U.S. is one of the few countries to have adopted a citizenship-based tax system. This means that American citizens and permanent residents (also known as Green Card holders) are taxed on their worldwide income, even if they are based abroad. 

The same tax rules apply wherever you live. For tax year 2021, the minimum income threshold is $12,400 for single filers under the age of 65. If you are self-employed, you have to report income over $400.

You may also need to file a state tax return, depending on the tax rules of the state where you last lived. For instance, if you maintain homes or other real properties in the United States, you may still be considered a state tax resident even if you have moved abroad for retirement.

What counts as income

Employment and investments are not the only sources of income you need to report to the IRS. For retirees, income may also include pension distributions, Social Security payments, interest, and dividends.

Foreign asset reporting for expat retirees

You also need to report foreign accounts and assets to the IRS.

For instance, you are probably going to open a foreign bank account if you are planning to retire abroad. Having a foreign bank account will make your life easier, especially if you are planning on living abroad for a long time. If the total value of your foreign financial accounts (e.g. bank accounts, brokerage accounts) exceeds $10,000, you need to file a Report of Foreign Bank and Financial Accounts (FBAR).

If you own foreign financial assets such as houses and rental properties that are collectively worth over $200,000, you also need to declare them using Form 8938, or Statement of Specified Foreign Financial Assets. Your main residence is excluded from this requirement.

How to avoid double taxation?

If you decide to work or open a business abroad, you will need to pay income tax to your new host country. This could lead to a potential for double taxation since the United States taxes its citizens on their worldwide income. Here are a few ways to avoid this.

Foreign Earned Income Exclusion

One of the most popular ways to avoid double taxation is to use the Foreign Earned Income Exclusion (FEIE). The FEIE allows taxpayers to exclude income up to a certain threshold.

For tax year 2021, you can exclude up to $108,700 of earned income. That means income under that threshold is no longer subject to U.S. income tax. However, you still need to file a federal tax return even if your tax liability has been eliminated.

You must meet the physical presence test to claim this tax break. For starters, you need to physically live in a foreign country for at least 330 days in a 365-day period to claim the FEIE.

The FEIE only applies to earned income, or income derived from self-employment or a regular job. You cannot exclude pension income, capital gains, bank interest, annuities, and dividends using the FEIE.

Foreign Tax Credit

Another way to lower your tax liability is to take a foreign tax credit. You can claim an equivalent dollar value of income tax paid to a foreign government.

Income that has already been excluded under the FEIE is not eligible for a foreign tax credit. You can, however, take a tax credit on earned income that exceeds the FEIE threshold.

How to file an expat retiree tax return?

Retirement is meant to be a relaxing chapter of your life, but U.S. tax rules can make your time a lot less fun. You are expected to file a federal tax return every year, and staying on top of ever-changing IRS rules is the last thing you want to do. If you want to make the most of your retirement, your best option is to talk to tax professionals.

TFX has been preparing U.S. tax returns for Americans living abroad for over 25 years. Our team of experts can help you save time and energy and lower your tax liability. Having a tax expert process your return ensures that you have more time for the things that matter.

 

This extremely detailed and informative post comes to Leisure Freak from Veronica Rhodes at TFX.

TFX is a women-owned tax firm that offers all U.S. tax services — for both American citizens and non-citizens with U.S. tax filing requirements. From straightforward expat tax preparation to complex cases involving multiple factors — we’ve handled it all for over 25 years.