What makes people happy during retirement? Research shows that while financial security isn’t the most important thing, it’s near the top of most retirees’ lists. But it’s also important to think about what your life after full-time work will be like. Do you have social connections with whom you can share good stories and reach out to in times of need? Do you have enough outside interests, from hobbies to volunteering to keep you occupied? Do you have a plan B, such as thinking about part-time jobs that might interest you if you miss working? It’s important to think these things through because research also shows that unhappy retirees often feel that they no longer have a purpose in life or haven’t given enough thought about what they’re retiring into, rather than what they’re retiring from. In terms of financial security, happier retirees know how much they need to save to live relatively comfortably. They’ve paid off their mortgage or are close to doing so. And, they have several sources of income to rely on. A fee-only, fiduciary financial planner can help you figure out the financial aspects of retirement, but you may also want to seek out the services of other professionals who can help you anticipate the emotional aspects of retirement.

For further research: 

• Next Avenue, Who the Happiest Retirees and Most Unhappy Retirees Are 
• Wes Moss, What the Happiest Retirees Know: 10 Habits for a Healthy, Secure, and Joyful Life 
• Tony Hixon, Retirement Stepping Stones: Find Meaning, Live with Purpose, and Leave a Legacy 
• Wessmoss.com: Take the Core Pursuit Finder Quiz to find new activities 

The best time to start thinking about where you may want to live during retirement is long before you retire. While many people spend a lot of time pondering the kind of home they want to live in, they often don’t spend enough time researching the state, town or neighborhood where it may be located. But location may be the most important factor that determines how happy and healthy you’ll be in your new part-time or full-time residence. That’s why you’ll want to thoroughly research any locale you’re considering. How accessible stores and services are. The quality of local hospitals and healthcare professionals. Weather conditions. Whether your potential neighbors are the kinds of people you can make friends with and who can be counted on to help you in an emergency. How easy it is for your children and friends to travel there to visit you. Whether income, sales and estate taxes are lower than where you’re living now. How much of a mortgage you’ll need to take out if you plan to buy a new home. How quickly your home could be sold if and when you pass on or you need to move into an assisted living facility. Once your online research helps you narrow your choices down, plan on taking a trip to visit the top towns or neighborhoods on your wish list. If you find one you really like consider giving it a test drive by renting for a few months to get a real feel of what living there while could be like you’re still able to drive, shop, walk and go out at night. You might need to spend a year or more conducting all of this research, so it’s important to give yourself a head start before you actually plan to make your move.

For further research 

• Next Avenue, Where to Live in the Second Half of Life
• Milken Institute, Best Cities for Successful Aging
• AARP Livability Index: Scores neighborhoods and communities across the U.S.
• Nextdoor.com: A social media platform for connecting with people in neighborhoods you may want to live in.
• Redfin Walk Score: Measures the walkability of any address.
• World Population Review: Ranking of U.S. states with the highest and lowest tax burdens
• Ryan Frederick, Right Place, Right Time: The Ultimate Guide to Choosing a Home for the Second Half of Life

Even though tax-deferred Traditional IRAs have been around since 1974 and tax-free Roth IRAs since 1997, you don’t hear a lot about them these days. Yet, for many people, especially those who are self-employed or don’t have retirement plans at work, IRAs still represent one of the best tax-advantaged ways to save for retirement. As long as you have earned income and your total annual income isn’t too high, you can contribute to an IRA every year. While both IRAs allow for tax-deferred growth, only the Roth IRA allows you to withdraw earnings and contributions totally tax-free at age 59½ or older. However, you make after-tax contributions to a Roth. While contributions to a Traditional IRA can be tax-deductible, you will have to pay taxes when you make qualified withdrawals after age 59½. And with a Traditional IRA, you have to start taking annual required minimum distributions (RMDs) at age 72, whereas you never have to take RMDs from a Roth IRA. But you don’t have to choose one or the other. As long as you have earned income and your Modified Adjusted Gross Income isn’t too high, you can open both a Traditional and Roth IRA. However, you can only make a total combined contribution of $6,000 each year ($7,000 if you’re over 50) to your IRAs. And if you already have a Traditional IRA or a Rollover IRA (funded with pre-tax assets you roll over from one or more company retirement plans) you’re not stuck with it. You can use a Roth conversion to move some or all of your Traditional or Rollover IRA assets into a Roth IRA. However, you will have to pay taxes on the converted amount, so it’s important to make sure the conversion doesn’t push you into a higher tax bracket. If you’re not in a hurry, you might want to wait to do it until the next market correction, when the value of your account will have fallen from its peak. And while there’s lots of talk about how tax proposals in Washington could potentially impact the tax benefits of IRAs, these changes will most likely only the wealthiest Americans. If you’re not sure which kind of IRA to invest in or how to complete a Roth IRA conversion in a tax-efficient manner, consider hiring a qualified fee-only financial planner. The fee you pay them for their guidance may pay for itself in the taxes you’ll save both today and down the road.

For further research: 

• Next Avenue, All About Roth IRAs and How They May Change
• AARP, Traditional IRA deductions limits and Roth MAGI eligibility limits

There’s a common axiom that most financial decisions are based 1% on facts and 99% on emotions. Fear and stress of any kind, whether they’re job-related, pandemic-related, or financial security related, can impact our spending, saving and investment behaviors. Negative emotions lower our confidence, and the less confident we feel, the more likely we are to give into impulses, whether it’s spending more on alcohol, drugs or unhealthy food or panic-selling stocks when the market is falling. If you recognize the detrimental effects of negative emotions, you can begin to make plans to get your financial life in order. The best time to do this is when your life is relatively stable and the market isn’t going through gyrations. This may also be a good time to seek the services of a trustworthy, fee-only financial planner who can give you greater peace of mind by helping you confront the known and often unknown factors that cause fear and stress. They can offer objective, realistic guidance that lets you know where you are financially today and what you can do to improve your chances of achieving your short and long-term financial goals. But before you hire a financial planner, it’s important for you to set expectations for this relationship. What do you need the most help with: Cashflow analysis? Retirement, estate and tax planning? Investment management? Asset protection? The specific issues, stresses and fears you want to address will help you narrow your search to the kind of advisor who has the requisite skills, experience and resources.

 For further research:

• Next Avenue, How Working on Your Mental Health Can Help Fix Your Finances
• Joyce Marter, The Financial Mindset Mix: A Mental Fitness Program for an Abundant Life 

Social isolation, greater use of technology and the flood of stimulus checks and government aid programs during the COVID-19 pandemic have led to a dramatic increase of people victimized by cybercrime and financial fraud. Fraud reports received by the Federal Trade Commission in 2020 increased by 24% over 2019’s figures, from 1.7 million to 2.1 million. More and more Americans many of them elderly, are increasingly falling for online and phone schemes perpetrated by criminals posing as financial institutions, online retailers, government agencies and charities. These scams fool them into providing their Social Security number or other personal information or convince them to click on links that open the door for hackers to take control of their computers and mobile devices. The best way to protect yourself against these scams is to be ever vigilant. No legitimate company or government agency will ever ask you to provide confidential information in an unsolicited phone call, text, or email message. Get in the habit of immediately deleting any suspect messages or hanging up on any suspicious callers. If you’re uncertain whether the request is legitimate, look for the institution’s or agency’s legitimate phone number online and contact them just to be sure. Or seek advice from a friend or family member. And if you become a victim of financial fraud or identity theft, immediately contact your credit card company, bank and other financial institutions to freeze or close your accounts. Even if you avoid being scammed, you can still report these attempts to federal agencies or your local police department to help others from becoming future victims.

For further research:

• Next Avenue, How to Avoid the Scams Popping Up Everywhere.
• IRS: Visit its Identity Theft Central site to find information and resources to protect you against tax-related scams.
• Federal Trade Commission: Visit the FTC’s fraud reporting site to report any kind of scam.
• FBI: Visit their Scams and Safety site to learn how to report crime and fraud activities to the Federal Bureau of Investigations.
• Charitynavigator, Charitywatch and Guidestar.org: Three resources you can use to look up the legitimacy and reputation for any public charity.
• Equifax, Experian, and Transunion: Prevent identity thieves from opening new credit cards under your name by requesting a credit freeze from the three largest credit reporting agencies.

Vanguard Funds’ John Bogle once said, “Investing should be boring.” During sustained market rallies, when the S&P 500 seems to hit new record highs every week, this often seems like good advice: Just set it and forget it. The problem comes when the market suddenly hits a period of turbulence. When this occurs, spooked investors often make bad mistakes—like selling stocks and stock funds at a loss. Anyone who bailed out of the stock market in spring of 2020 when the S&P 500 dropped by 30% only to see it fully recover by mid-summer learned a costly lesson about giving in to irrational impulses. So, how can you keep from making bad decisions? Well, just as the best time to get an umbrella is before it rains, the best time to start thinking about making changes to your investment portfolio is during periods of calm before a potential market storm. One good way to do this is to automatically rebalance your portfolio at least once or twice a year at designated times. For example, if the targeted asset allocation in your IRA or 401(k) account is 60% stocks and 40% bonds and rising stock prices have increased the stock allocation to 70%, consider selling 10% of your stocks or stock funds whose price you believe have peaked and use the profits to buy more bonds to restore that 60/40 mix. Or, if you’re close to retiring and realize you will need to withdraw more money from your retirement accounts each year than you originally expected, consider reducing your allocation to stocks when the market is still calm and move the proceeds into cash or money market funds. That way, if an extended bear market happens later on you won’t have to sell as much stock at a loss to generate the cash you need to live on. To make these decisions effectively you need to understand the connection between your investment strategy and your financial goals and have the self-discipline to make these adjustments even during volatile markets. If you don’t feel qualified to do this yourself, consider working with a fee-only fiduciary financial advisor. Entrusting them to keep your investment plan on track through all kinds of market conditions will give you greater peace of mind in knowing that your financial future is in good hands.

For further research:

• Next Avenue, Mind Over Money: How to Do It Right
• Terrysavage.com, Starting Over This Fall 

According to Michael Clinton’s new book, Roar: into the second half of your life (Before it's too late), those who are approaching retirement should focus less on the idea of leaving the full-time workforce and more on what they can do to find the most fulfillment during this time. Whether it’s working part-time, starting a new business, taking up a new hobby, traveling, volunteering for causes your care about or mentoring young people, these various “layers” can shift your mindset from “retiring” to “rewiring.” And while you don’t need to be wealthy to enjoy a fulfilling life during retirement, meeting with a qualified financial planner can help you paint a realistic picture of what your finances will be like during your second half and which items on your “roar-wish- list” are truly attainable.

For further research:

• Next Avenue, How You Can Roar Into the Second Half of Life
• Michael Clinton, Roar: into the second half of your life (Before it's too late)

Medical care is becoming a for-profit business even among nonprofit providers. Despite huge advances in technology, care is increasing impersonal, primary care physicians are getting harder to find, and patients are constantly being hit by “surprise charges” from medical procedures that are financially devastating. Many of these charges are unexplained up front and may be incurred by physicians, residents and fellows who are not part of your network. In this environment, it’s up to you to be your medical advocate, or ask someone you trust to serve in the role of healthcare proxy to come with you to appointments to ask key questions you may be too overwhelmed to ask yourself. When evaluating primary physicians or specialists, ask questions such as “Is your practice independent, or owned by a larger conglomerate?” “Does you or your practice receive compensation or special benefits from pharmaceutical companies?” “Are there ways for me to reduce costs, such as paying one co-pay that covers multiple visits?” “Can we meet virtually, and can I contact you via text or email?” Before you agree to any kind of potentially costly procedure, ask both your physician and your healthcare provider questions such as “How much will this procedure cost me out of pocket?” “Will all the physicians involved be in my network?” “Are there less expensive alternatives to an operation, such as physical therapy or prescriptions drugs?” And if it’s a major operation, you’ll want to be assured that the surgeon you’re consulting with will perform it, rather than a resident. If you or your healthcare proxy doesn’t feel they have the knowledge to sort through these issues, consider hiring an independent professional patient advocate or billing specialist.

For further research: 

• Next Avenue, How the Culture of Medicine Kills Doctors and Patients 
• Robert Pearl, MD, Uncaring: How the Culture of Medicine Kills Doctors and Patients
• Rally and Healthcare Bluebook: These sites provide comparison pricing information for healthcare providers and medical procedures in your area
• GoodRx.com: Find the lowest local prices for prescription drugs

Some people describe the current economy by paraphrasing Dickens: It is the best of times, and it is the worst of times. On the plus side, the economy seems to be steaming forward, with robust job growth, increased consumer spending and a stock market that seems to set new records every week. Yet, in some regions and industry sectors, millions of Americans are still out of work and are facing foreclosures, eviction and the end of unemployment benefits. While inflation has picked up this year, it may either be temporary or long-lasting. While COVID-19 immunizations have allowed life to return to nearly normal in many areas, rising infection rates among the unvaccinated in many states are raising the specter of a return to lockdowns and business restrictions. While new infrastructure spending will help improve America’s crumbling roads, bridges and water supplies, the trillion-dollar cost will greatly increase the national debt to near record levels and may result in increased gas taxes and rises in capital gains taxes and taxes on the wealthy. Given these dichotomies, it’s hard to predict where the economy is headed, making it difficult for people to figure out what they should do financially to prepare for what may or may not happen. The best answer may be to simply take a good look at your personal finances and investments right now and see if there are minor adjustments you can make that will better prepare you for any outcome. For example, if you’re worried about inflation eroding the value of your nest egg, you might want to increase your exposure to stocks. If your stock portfolio is concentrated in larger companies, it might be time to sell some of the stocks (or funds that invest in them) and use the proceeds to gain greater exposure to midcap, smallcap and international stocks, real estate and even gold. If you’re worried about losing your job, start building up an emergency fund to pay for everyday expenses for at least six months or more, but don’t lock up that money in a CD where you’re barely able to earn any interest. If you’re paying down a mortgage, consider refinancing at today’s lower interest rates, before the Federal Reserve starts raising interest rates. If you’re unsure how to do this on your own, consider working with a qualified fee-only financial planner who can help you prepare for both the best and worst of times to come.

For further research:

• Next Avenue, Money Tips for an Uncertain Economy
• Terrysavage.com, A Tale of Two Countries

It’s a common belief that owning a home is an investment, but the reality is otherwise. While the national year-over-year appreciation rate of 14.5% (as of April 2021) may seem high, this figure includes both areas where housing prices are skyrocketing as well as regions where appreciation is relatively low. Once you add the costs of owning a home—mortgages, taxes and home repairs—into the equation, the actual appreciation rate of the average home barely matches the inflation rate. So, for many people, their home not only isn’t an investment, but, depending on the never-sending cycle of home maintenance costs, it may end up being a money-losing proposition. That’s why you should think of your home solely as a place to live in, and one for which you need to set aside money each year for both ongoing maintenance as well as costly “surprises.” Making a list of when you last fixed your roof, had the exterior painted, installed a new furnace or central air conditioning system or bought a water heater, dishwasher or washer/dryer and estimating when they may need fixing or replacing can help you estimate how much you should put aside each year-- 1% of your home's market value may be a good place to start--and financially prepare you when these “surprises” occur. Having this rainy-day fund is important, especially during retirement, because the last thing you want to do is to tap into your retirement nest egg to pay for emergency expenses, especially if making a non-required withdrawal from your IRA or 401(k) plan assists could raise your taxes.

For further research: 

• Next Avenue, Lessons Learned from a Wet Laptop

Investment clubs are a great way for people to sound out investment ideas, ask questions, and increase their knowledge of the stock market with the help of friends and family members. The popularity of investment clubs, which started in the 1950s, has waxed and waned over the decades, but during the pandemic there has been a resurgence of interest. Social media and virtual collaboration tools make it easier for people to organize and participate in clubs. A new generation of no-fee trading apps enables people to buy fractional shares of expensive stocks with no account minimums. There are even dedicated sites that can help people form their own clubs or join other existing clubs. Some sites can even help clubs calculate investment results, maintain accurate accounting records and generate required tax forms.  While participating in an investment club is fun and can help you become a more confident and knowledgeable investor, you should consider the money you invest to be “fun money” that you can afford to lose. The bulk of your investment assets should be invested in a diversified long-term portfolio that’s designed to align with your financial goals, rather than make quick profits.

For further research:

• Next Avenue, Why You May Want to Start, or Join, an Investment Club 
• CLIMB Investment Clubs: Provides real-time educational experiences to help people learn the basics of investing and building wealth.  
• The National Association of Investors: A national 501(c)(3) nonprofit organization that provides unbiased investment education and online stock analysis tools. 
• ICLUBcentral: Provides software and online tools to aid in investment club accounting, idea-sharing, stock research, trading, portfolio management and tax form preparation.  
• Voleo: A mobile and web app that helps people create, fund, and manage investment clubs. 
• Stockpile: A no-fee trading app that lets investors buy fractional shares of stocks.