As you retire, there are variables you can’t control; investment performance and fate are certainly toward the top of the list. Your approach to withdrawing and preserving your retirement savings, however, may give you more control over your financial life.
Drawing retirement income without draining your savings is a challenge, and the response to it varies per individual. Today’s retirees will likely need to be more flexible and look at different withdrawal methods and tax and lifestyle factors.
Should you go by the 4% rule? For decades, retirees were cautioned to withdraw no more than 4% of their retirement balances annually (adjusted north for inflation as the years went by). This “rule” still has merit (although sometimes the percentage must be increased out of necessity). T. Rowe Price has estimated that someone retiring with a typical 60 percent/40 percent stock/bond ratio in their portfolio has just a 13 percent chance of depleting retirement assets across 30 years if he or she abides by the 4 percent rule. A 7 percent initial withdrawal rate invites an 81 percent chance of outliving your retirement assets in 30 years (individual.troweprice.com/staticFiles/Retail/Shared/PDFs/retPlanGuide.pdf).
That sounds like a pretty good argument for the 4 percent rule in itself. However, while the 4 percent rule regulates your withdrawals, it doesn’t regulate portfolio performance. If the markets don’t do well, your portfolio may earn less than 4 percent, and if your investments repeatedly can’t make back the equivalent of what you withdraw, you will risk depleting your nest egg over time.
Or perhaps the portfolio percentage method? Some retirees elect to withdraw X percent of their portfolio in a year, adjusting the percentage based on how well or poorly their investments perform. As this can produce greatly varying annual income even with responsive adjustments, some retirees take a second step and set upper and lower limits on the dollar amount they withdraw annually. This approach is more flexible than the 4 percent rule, and in theory you will never outlive your money.
Or maybe the spending floor approach? That’s another approach that has its fans. You estimate the amount of money you will need to spend in a year and then arrange your portfolio to generate it. This implies a laddered income strategy, with the portfolio heavily weighted towards bonds and away from stocks. This is a more conservative approach than the two methods above: with a low equity allocation in your portfolio, only a minority of those assets are exposed to stock market volatility, and yet they can still capture some upside with a foot in the market.
Attention has to be paid to tax efficiency. Many people have amassed sizable retirement savings, yet give little thought as to the order of their withdrawals. Generally speaking, there is wisdom in taking money out of taxable accounts first, then tax-deferred accounts and lastly tax-exempt accounts. This withdrawal order gives the assets in the tax-deferred and tax-exempt accounts some additional time to grow. A smartly conceived withdrawal sequence may help your retirement savings to last several years longer than they would in its absence(online.wsj.com, March 7, 2011).
Keeping healthy might help you save more in two ways. Increasingly, people want to work until age 70, or longer. Many assume they can, but their assumption may be flawed. The 2012 Retirement Confidence Survey from the Employee Benefit Research Institute found that 50 percent of current retirees had left the workforce earlier than they planned, with personal or spousal health concerns a major factor (www.dailyfinance.com, Sept. 3, 2012).
When you eat right, exercise consistently and see a doctor regularly, you may be bolstering your earning potential as well as your constitution. Health problems can hurt your income stream and reduce your chances to get a job, and medical treatments can eat up time that you could use in other ways. Good health can mean fewer ER visits, fewer treatments and fewer hospital stays, all saving you money that might otherwise come out of your retirement fund.
Fidelity figures that a couple retiring now at age 65 will spend $240,000 (in 2012 dollars) on retirement health expenses across their remaining years. That $240,000 doesn’t even include dental, over-the-counter drug and long term care costs (and as a reminder, many eye, ear and dental care costs are not even covered under Medicare or by Medigap policies). Every year you work may mean another year of health insurance coverage as well as income (www.marketwatch.com, Dec. 6, 2012).
Last Updated on Thursday, 27 March 2014 13:15
Q: This question came from Dave in Bozeman:
My 72-year-old mother was almost a victim to a foreign inheritance scam. She could hardly believe her luck when an attorney in London emailed her, claiming to be relieved to have finally located her, because he was administering the will of someone who was distantly related to her and very wealthy. He said the deceased had left her a vast amount of money. After exchanging a few emails, he eventually called her at 4 in the morning asking her if she was “ready to receive the money?” He instructed her to go to Western Union and wire him $350 for the transfer fee. Fortunately she balked because she just didn’t have the money. When she told me about the incident, I had to convince her that this was a scam and she was lucky she didn’t lose any money. After she finally believed me, she was ashamed of herself. How can people protect themselves these days from unscrupulous scam artists?
A: Your mother shouldn’t be ashamed, because she is hardly alone. An estimated 10 to 15 percent of the U.S. population falls for one kind of scam or another each year, according to FTC research. Studies show that the average fraud victim is between 55 and 65 years old.
The U.S. Federal Trade Commission estimates that foreign-based inheritance and lottery fraud alone bilks Americans out of literally billions of dollars a year. Moreover, the FTC estimates that more than 90 percent of lottery scams go unreported because the victims are too ashamed to file a complaint.
Elderly people are often the target of scams because they tend to be more vulnerable. Con artists know that they are generally on fixed incomes and the offer of money makes for pretty good “bait” to lure them into a scam.
To spot and avoid scams of all types, including fraudulent lotteries, “business opportunities” and Ponzi schemes, here are 10 tips from Doug Shadel, a leading expert and author on fraudulent schemes and Senior State Director of AARP Washington:
1. If anybody ever asks you to pay a fee to collect a “prize” you have won, they are trying to scam you.
2. If anybody ever invites you to play a foreign-based lottery – or tells you that you have won such a lottery – they are trying to scam you. How do we know this? Because foreign lotteries are illegal in the U.S.
3. Fraudsters will try to get you whipped into an emotional state of excitement. It doesn’t matter if the emotion is thrill, grief, guilt or anger – getting you into the emotional state is the goal. When you are in that state, you literally cannot access the rational part of your brain.
4. Do not engage in personal conversation with people attempting to sell you an investment opportunity or “process your winnings.” They will collect personal details they can use to push you into the emotional state they need you in.
5. With investment opportunities, make sure the person trying to sell you the investment product is properly licensed and registered. In the State of Montana, you can call the Commissioner of Insurance and Securities at 1-800-332-6148 to make sure the agent is properly licensed and the product is properly registered. Also, the Financial Industry Regulatory Authority (FINRA) offers a Broker Check Database at BrokerCheck.FINRA.org.
Finally, beware of investments sold by friends or members of an affinity group to which you belong.
6. Before investing, investigate and fully understand what the company does to earn the return it is promising. If you don’t know how the company makes its money, it may be a Ponzi scheme.
7. All that glitters is not gold. Never buy coins (or other investment opportunities) from a telemarketer, and never put an excessive amount of your investments in one type of vehicle – like gold.
8. Even if you meet these salespeople in person and find yourself impressed with their offices and marketing materials, it could still be a scam. If you’re bilking people out of millions of dollars, you can afford to put a pretty glossy façade on it all.
9. Learn more about how scam artists work their black magic. Read “Outsmarting the Scam Artists: How to Protect Yourself from the Most Clever Cons,” a book by AARP’s Washington State director, Doug Shadel.
10. Log onto the AARP Consumer Protection Resource Center for the latest scams and schemes at http://www.aarp.org/money/scams-fraud/
The old adage still applies today: If it sounds too good to be true, it probably is.
Last Updated on Thursday, 27 March 2014 13:13
(StatePoint) Do your relatives know the facts about your personal medical history? What about your family history and their risk for disease?
A recent survey found that 96 percent of Americans believe it’s important to know their family medical history, yet only a third actually gather specifics, according to the U.S. Department of Health and Human Services.
This has public health officials concerned, as a number of diseases, such as diabetes, cancer and depression, have been known to run in families.
Family medical histories can be collected at family reunions and holidays. Explain that you’re creating a record the whole family can use to receive better health care. Remember to speak less and listen more.
â€¢ Provide multiple choices. Some people may be more willing to share health information in face-to-face conversations, others by phone or e-mail. Let them choose.
â€¢ Speak less, listen more. Keep your questions short and neutral. Medical diseases are not moral failings, but feeling judged is likely to get your relatives to clam up. So listen without comment.
â€¢ Respect privacy. Just because this information is to be shared, thereâ€™s no need to make Uncle Jimâ€™s prostate problems the focus of discussion at the next family barbeque.
You can keep your family medical history current by using free Web services such as the governmentâ€™s Family Health Portrait Tool, available at http://familyhistory.hhs.gov. After information is collected about grandparents, parents, siblings, children, aunts, uncles and cousins, it organizes it into a diagram for health care professionals to better individualize diagnosis, treatment and prevention plans.
To find out more about how your family history can affect your risk for diseases such as prostate cancer, visit www.pcf.org.
Then take the opportunity to collect a family history the next time your family is together. It might just save a life.
Last Updated on Thursday, 27 March 2014 13:11
Rimrock Promotions will hold the 31st anniversary Spring Home Improvement Show this weekend at the Expo Center and Montana Pavilion at MetraPark.
The show is free to the public and will open Friday, March 7, at noon and run through Sunday, March 9, at 5 p.m.
More than 650 exhibits were exposed to more than 30,000 people who attended the 2013 Show, making it the largest attended home show in a five-state area.
More than $30,000 has been allocated in advertising and promoting the show, along with innovative grand prizes.
When the show first started 30 years ago in the corridors of Rimrock Mall, it was typical for exhibitors to come only hours before the show to set up their displays. As the show has grown over the years and the complexity of the displays has increased, some exhibits start setting up as early as 10 days prior to the event.
The show was located at Rimrock Mall for its first two years and consisted of 92 exhibits. In the third year, the show moved to the Holiday Inn Trade Center. The Trade center was a brand new building and gave the show the ability to grow to 175 exhibits.
After five years the show expanded to two buildings – The Trade Center and the Ramada Inn Convention Center, allowing for 250 exhibits. After seven more years at these two buildings, the Expo Center at MetraPark was built. The show moved over to the newly built Expo Center which gave the show the opportunity to expand to 450 exhibits.
Over the past four years the Spring Home Improvement Show has expanded to encompass both the Expo Center and Montana Pavilion at MetraPark and is bursting at the seams with over 650 exhibit spaces.
The Spring Home Improvement Show is considered the largest trade show of any kind in a five-state area and the fall show is the largest fall trade show in the state.
In an era of national economic recovery, the major expansion of the show, and the large waiting list of businesses trying to get in the show, truly indicates the economy in and around Billings is thriving.
Rimrock Promotions has been a family owned and operated business since its inception 30 years ago and continues to be today, three generations later. The show is currently developed and managed by Mark Hedin, Rhonda Hedin, Beau Hedin and Devon Hedin.
Last Updated on Thursday, 06 March 2014 11:48
(StatePoint) What’s growing on your windows? If you have wood windows, or even dirty window sills, the answer could be mold.
“When materials in the home, such as wood window frames or wood window sills, come in contact with moisture for an extended period of time, mold can grow,” says John Stark, marketing manager for Simonton Windows. “The key is the presence of an organic food source.”
And mold growth can be hazardous to your health, causing respiratory problems and allergic reactions. So how do you reduce your home’s risk for mold?
• You may see your windows “sweat” during the winter or summer months because of varying humidity levels inside the home. Without proper ventilation, moisture can accumulate on windows and walls from daily household activities such as hot showers, boiling water and opening dishwashers after a cleaning cycle. Use ventilation fans and dehumidifiers to minimize condensation and help reduce humidity in the home.
• If your windows have major air leaks, don’t close properly or are failing to act as a solid barrier to the environment, then it’s time to replace them. Opt for vinyl window frames, such as those from Simonton Windows, which won’t provide an organic food source for mold. More information can be found at www.Simonton.com.
• Keep window frame surfaces clean. Even if tiny particles of organic debris are found on or around the surfaces of a vinyl window in a moisture-rich area, you could potentially find mold growth. What makes up this debris? It can be anything from fragments of pollen to animal dander to insect pieces to normal household dust.
• Reduce the chance of condensation in your home. Use ceiling fans, particularly in the kitchen and bathroom to increase ventilation. Leave interior room and closet doors open. Consider reducing the number of house plants.
• If your blinds or window coverings are closed all the time, condensation can get “trapped” in between the window treatments and the windows, creating a damp environment that may encourage mold growth. Routinely open window coverings to increase ventilation near windows. Additionally, ensure air vent deflectors are placed on floor vents to reroute air into the room rather than straight up against a window.
While installing vinyl windows in the home is a smart start, homeowners also have to do their part – keep the home well ventilated and clean during all seasons to reduce mold.
Last Updated on Thursday, 06 March 2014 11:46
(StatePoint) Your backyard is a space where you enjoy quality time with your family all year long. But accidents can happen anywhere - even in the oasis of your backyard. For parents, taking extra safety precautions out back should be just as important as childproofing done indoors.
To prep and maintain your yard for outdoor safe play and relaxation, here are several important steps:
• Lawn: Remove tree stumps and level concrete footings to avoid tripping. Lawn debris such as rocks could become projectiles when cutting the grass. So be sure to clear the yard. Additionally, children should never be nearby while you’re using motorized equipment. Store potentially dangerous tools, equipment and chemicals completely out of the reach of children, such as in a locked shed or garage.
• Fencing: A yard without a fence is like a house without walls. Fences help protect children from danger, keeping toddlers out of swimming pools, hot tubs, ponds, or away from traffic or strangers. Fences can also improve pet safety, keeping your pets in your yard and other animals out, and can reduce your liability by preventing injuries to uninvited guests on your property.
With that in mind, be sure your fences and gates are functional and free of rust that can render them useless or dangerous.
“Rusty metal gate hardware that no longer functions properly or becomes a threat to children is a top homeowner concern, according to our research,” says Jim Paterson, senior vice president of D&D Technologies, which manufactures gate latches and hinges made of ultra-strong engineering polymers.
Eliminate this worry by installing high-quality fencing impervious to seasonal weather, ground settling and other factors that can cause gates to become misaligned over time. Opt for gate hardware that can be easily adjusted to function properly over the long-term. For example, some models of TruClose self-closing tension adjustable hinges are vertically and horizontally adjustable.
Additionally, be sure to install pool barrier access gates with adjustable self-closing hinges like TruClose and self-latching gates where the latches are out of the reach of children, such as the Magnalatch Safety Gate Latch. Both products carry lifetime warranties and are adjustable both vertically and horizontally for easy adjustments.
Homeowners can peruse a bevy of rust-free gate hardware and child safety latches online at www.ddtechglobal.com or in person under the Stanley Hardware brand available through most Lowe’s stores.
• Sun Protection: When the sun is bearing down, skin can be susceptible to burns and permanent damage year-round. And children’s skin can be even more sensitive to harmful UV rays. Your yard should have plenty of shady areas to seek respite. Plant trees and watch them grow. Install a canopy. Adorn patio furniture with an umbrella.
Your backyard can be one of the most exciting places for your children to play through the entire year. A little prevention along the way will keep it safe and fun.
Last Updated on Thursday, 06 March 2014 11:45
(StatePoint) After a busy work week, it can be hard to get motivated to complete chores and tasks around the house. And knowing what tasks to do and when to do them may not come intuitively for everyone. But neglecting home maintenance is a mistake, say experts.
“Regular home maintenance can benefit your family’s health, safety and pocketbook,” says Elizabeth Dodson, Co-Founder of HomeZada, a digital hub to store pertinent information about your home. “Consider creating a home maintenance schedule to stay organized and motivated.”
With this in mind, here are several examples of how to maintain your home and why it’s important:
• Mineral deposit build-up in your refrigerator’s ice maker can eventually cause a leak that could damage the refrigerator and its contents. Annually clean water lines to prevent the need for a major appliance replacement.
• Lubricate your garage door for smooth operation and to delay the need for parts replacement.
• Lint build-up in dryer ducts is flammable and a common cause of house fires. An annual cleaning eliminates this dangerous situation. You should also regularly clean your dryer’s lint filter after every couple of loads. Likewise, you can prevent fires with checks on electrical and gas equipment and fireplaces.
• Maintain the air quality of your home by replacing or cleaning the filters on your home’s heating system quarterly, or as needed.
• A regular schedule of battery replacement in your home’s smoke and carbon monoxide detectors could be life-saving.
Reducing utility bills
• Periodically ensuring that your home is properly sealed and insulated can lower utility bills. Use weatherstripping to close gaps around windows and doors.
• On an annual basis, inspect heating and cooling equipment to ensure it’s running optimally.
• Ensure your fireplace damper closes and opens properly. When your fireplace is not in use, keep the damper closed to maximize your climate controlled environment.
A house in worn condition can lose 10 percent of its previous appraised value, whereas proactive maintenance can increase the appraised value each year by 1 percent, according to the National Association of Realtors.
And you don’t have to invest a ton to improve your home’s value. Plenty of projects offer great returns on investment. This becomes especially important if your home is on the market. From replacing elements of your home’s exterior to updating your kitchen, your realtor can offer suggestions for updates that can help you sell.
Consider new tools to help you track home improvement projects in one place. For example, by signing up for HomeZada, you will automatically receive comprehensive home maintenance checklists, as well as automated alerts and reminders when it’s time to complete a task, so you never miss anything important.
Additionally, the site provides how-to videos and other free resources for do-it-yourselfers. For more information, visit www.HomeZada.com.
Don’t let key maintenance tasks fall by the wayside. Let new tools help you keep your home safe and up-to-date.
Last Updated on Thursday, 06 March 2014 11:44
(StatePoint) One of the simplest ways to make a big impact on your home’s exterior is with your front door. But if you are tired of the old standards colors, you’re not alone – experts predict bolder trends this year.
“Exuberant hues will be popular this year as a way for homeowners to show the world their energy,” says Kate Smith, a color trend forecaster and president of Sensational Color. “For those going for a classic feel, colors that are vibrant, yet at the same time, offer comfort, warmth and reliability will reign.”
For homeowners looking to express their “colorful selves,” consider selecting a paintable fiberglass door with a smooth finish. For example, those from Therma-Tru Classic-Craft Canvas Collection and Pulse, feature clean lines, crisp angles and attractive glass configuration options, and are ideal for adding personal expression to a home.
According to Smith, the top five door colors for the “exuberant homeowner” in 2014 include:
• Capri: A tropical blue that wakes up natural woods and neutral surroundings, this hue adds a splash of energy.
• Raucous Orange: This color demands attention with its energetic tone and makes the perfect punctuation point for homes with a modern look.
• Dynamo: This flirty violet hue instantly updates traditional color schemes for a trendier home front.
• Relic Bronze: A deep, almost brown mustard color, “Relic Bronze” reflects aged beauty.
• Quixotic Plum: This sophisticated deep purple is where trendy meets timeless.
The top five door colors for those following the more classic trend of comfort, as identified by Smith include:
• Georgian Bay: Brighter than dark navy, this step-above reserved blue is a trusted color when it comes to the welcoming message it sends to family and friends.
• Show Stopper: Like classic red at dusk, “Show Stopper” adds a touch of mystery to this bright hue. A slight spin on traditional red, this color warmly welcomes people to a home.
• Polished Mahogany: The deep, rich shade of brown has a staying power that traverses trends and captures a solid feeling for homeowners.
• Classic French Grey: Stepping out of the shadows to stand on its own, this cool, neutral grey will continue to rule the palette in 2014.
• Gulfstream: This bright, modern blue has an of-the-moment appeal. At the same time, it still feels rooted in something familiar and nostalgic for homeowners.
Whether you follow new trends or stick to tradition, don’t forget to take your entire home’s exterior into consideration. From roof to door, a “top down” approach can help you pick color combinations that are eye-pleasing and flow naturally to create curb appeal.
Last Updated on Thursday, 06 March 2014 11:43
BOZEMAN – Are you a Montanan who is 62 or older as of Dec. 31? If so, then check to see whether you qualify for Montana’s elderly homeowner/renter tax credit for 2013.
If you can answer yes to all of the following questions, then you may be eligible for the credit:
• Were you 62 or older as of Dec. 31, 2013?
• Did you occupy a Montana residence(s) as an owner or renter for 6 months or more during 2013?
• Did you reside in Montana for nine months or more during 2013?
• Was your total gross household income less than $45,000 in 2013? Form 2EC contains instructions for determining total gross household income.
To determine eligibility, complete “Form 2EC,” which can be found at your local office of the Montana Department of Revenue, library or post office.
Last Updated on Thursday, 06 March 2014 11:42
(StatePoint) Warmer weather is just around the corner, which means higher temperatures. But does it have to mean higher energy bills too? The answer is no. There are numerous ways to keep your home cool and bills low this summer.
After a few months off, it is vital to check that your air conditioning system is still working in an efficient and optimal manner. If you have a central air conditioning system, for peace of mind, you might want to have your system checked by an HVACR professional. In order to save, be sure to shop around for special deals, which are not difficult to find for seasonal preventive maintenance. Understand however, that the proficiency of HVACR technicians differs greatly.
When searching for the right HVACR technicians for your home, one way to make certain that the job will be done properly and effectively is by hiring a professional certified by North American Technician Excellence (NATE), the nation’s largest independent, non-profit certification body for HVACR technicians. NATE-certified technicians are qualified to properly install and service equipment, which means maximum home comfort and energy savings.
Once a NATE certified HVACR technician has inspected your system for efficiency, there are a number of things you can do to keep energy bills low:
• Clean your air filters. Check them every couple of weeks and change them at least twice in the season, or as directed by the manufacturer.
• Don’t obstruct airflow around air conditioner units – keep them clear of plants and debris.
• Raise the thermostat about five degrees, because each degree you raise the thermostat will save you a percentage off your cooling energy bill.
• Compare energy bills from last year. If your costs have significantly increased, simply contact a qualified HVACR technician - they can help determine the source of the problem.
Remember, just because you have an energy-approved, eco-friendly, high-efficiency product, it does not mean automatic money and energy savings. For substantive results, proper installation, service and maintenance are important too. So do yourself a favor - request the service of a NATE-certified technician. In order to locate a contractor that employs certified technicians, look for the NATE logo or go to www.HVACRAdvice.com.
By taking preventive measures, you can rest assured that this season you will be cool while saving money and energy.
Last Updated on Thursday, 06 March 2014 11:39