Most of us check our bank accounts regularly, are diligent in the daily management of our checking accounts to make sure that no money is missing and that we can pay our bills each month. It would be unusual for someone to forget that they had a checking account out there that hadn’t already been rolled into their new checking account; however, sadly, it is all too common for people to lose track of an old retirement account.  

It is estimated that today’s millennials are job-hopping every 3 years on average. With so many moving parts that come into play when jumping from job to job, it can be surprisingly easy to forget to rollover a 401(k) or other retirement savings plan. Millennials aren’t the only ones who lose track of their retirement savings. More and more soon-to-be retirees also can’t recall where they stashed their money years ago. This presents a serious problem, as forgotten retirement savings can be subject to high fees or inflation or even become seized by the state if they are abandoned for too long.

What Happens When Your Plan is Forgotten?

Terry Dunne, of Millennium Trust Co., which handles 401(k)-to-IRA rollovers, estimates that more than 900,000 workers lose track of 401(k)-style, defined-contribution plans each year, illustrating that this is a far too common occurrence.

When the companies that administer your retirement plan can’t find you and are not successful in getting in touch with you, all of your invested money gets put into cash, which can then get eroded by fees and inflation. Worse, this causes investors to lose out on the opportunity for possible long-term gains in the market while the investor doesn’t even realize they have lost money out there to be invested.

Do Employers Really Want to Find You?

There is virtually no incentive for financial companies holding 401(k) accounts or pensions to find you. While your money is sitting there, they can collect fees. If they alert you to the issue, you may move your money elsewhere.

Tom Reeder of the U.S. Pension Benefit Guaranty Corp. (PBGC) said employers often just “go through the motions” of finding beneficiaries. When so-called missing accounts are transferred to the PBGC, the agency can often find those participants immediately with modern search tools.

“All employers are not as eager to find these people as they should be,” he said.

The U.S. Department of Labor seems to agree. In January it said it was expanding an investigation of large pension plans failing to locate participants.

What Can You Do to Locate an Old Plan?

While it is essential to be diligent in managing and moving money into current plans, these things happen. And when they do, here’s what you can do about it:

Unfortunately, there is no central, comprehensive repository where you can locate lost 401(k)s or pensions, but there are a few places where you can start:

• Contact Former Employers: The best place to start locating an old retirement plan is to contact your old employers and see if you ever participated in a 401(k) plan and, if so, how you can gain access to it.
• Contact the Plan Administrator: Sometimes former employers cannot be found, whether due to a business closure, merger or relocation. If this is the case, and you still have an old 401(k) plan statement, see if you can locate the contact information for the firm that administered your plan. If you don’t have an old statement lying around, try to locate the Form 5500 – which most plans require participants to complete — on www.freeERISA.com. This form will reveal the contact information of your plan administrator as well.  
• Search Online: Congress may be in the works to create a “retirement seek-and-find”, a complete searchable database of abandoned retirement accounts. In the meantime, the U.S. Department of Labor offers an Abandoned Plan Database, which shows if your plan is in the process of being terminated, as well as the name of the Qualified Terminator, who you can contact about your account. There is also a National Registry where some employers list missing participants as well.
• Visit a Pension Counseling Center: More than 30 states offer free counseling resources that help individuals reclaim retirement benefits they have earned.  To find a free counseling resource near you, visit www.pensionrights.org/find-help.

Roll Old Plans into Current Ones

One of the easiest ways to avoid losing track of your retirements accounts is to simply roll them into the plan with your new employer. It may also be beneficial to open a traditional IRA and transfer your 401(k) money there to keep track of it in one place, which also opens up the amount of investment options you will have. Before taking either step you should evaluate the fees and investment options of each.

If you’re dealing with a pension, make sure you keep a record of how to claim that pension when you leave the company and store in a safe place for future reference. This will increase the odds of not forgetting about a pension that you have and also cut down on delays in receiving your first pension payment.

Keeping track of your retirement plans isn’t hard and should be done with as much diligence as your checking accounts. Don’t become one of the 900,000 people who don’t know they have money sitting out there somewhere waiting for them to claim.

This year’s presidential race will surely be one for the record books. Already, the media coverage, the drama and the voter turnout during the primaries are all breaking records. One connection that investors are trying to make is how this election will affect their money. Many people are trying to predict what will happen to their investments depending on which candidate wins. But is this a senseless process, or is there real truth in worrying about who will win the election and what it will do to your investments?

Here are a few points that might help you determine just how much of an impact the outcome of this Presidential election might affect your portfolio, as well as what you can do about it.

Predictions Can Fail

No one can really predict just how one event, such as a Presidential election, will impact another event, like the financial markets. There are numerous factors that come into play that can affect the outcome of something as influential as the state of the economy or its impact on your financial portfolio. Even if there is a Nostradamus among us, it is difficult to know just who to believe with so many experts weighing in with their own opinions.

One major point to consider is that many predictions made by financial advisors and other market experts end up being wrong. Just look at the recent Brexit drama, where many of the world’s leading financial market experts agreed that there would be major stock market crashes around the world for months. While it’s fair to say they were right for about three days, the reality is that almost all of the global markets have recovered since then and some have even recorded new highs, like the markets in the U.S.

Go back even further in time to the Y2K scare. Many leading experts were on edge thinking that markets would fail to open, businesses would be shuttered and the world would descend back to the dark ages because of a simple computer software glitch. Of course, nothing happened that time either.

The point is that expert predictions are often wrong, then everyone forgets about it until the same experts move on to another topic of interest or their next prediction. If the experts can’t get it right, then why should you try to make a prediction about what will happen either?

Instead, Come Up with a Strategy for Good Times or Bad

Instead of trying to gamble with your money, regularly review your long-term plan and consider how you will adapt your portfolio to different outcomes in the market. Why not come up with a general strategy for minimizing short-term market performance? By mapping out your goals, risk tolerance, and time frame you have a plan to protect yourself in any type of market. This way you don’t have to worry about getting predictions right, just follow your plan.
Investing is not about emotion, it’s about following a long-term, strategic plan and reviewing its progress. Most predictions tug at our emotions and can cause us to make poor investment decisions. Isn’t it a better idea to just plan ahead so you know your portfolio can weather any storm? Don’t let the hype of this Presidential election steer you in the wrong direction or diverge from a well-constructed, long-term financial plan.

Experts all over the world predicted that the remain vote would win the day on June 23, 2016 when Brits all across the UK took to the polls to vote on whether they would remain in the EU or leave it. In fact, the same experts warned the British people of the impending doom that would follow if they, in fact, decided to not play along and voted to leave. While doomsday predictions did seem imminent for the first few days after the surprise vote to leave won the day, the global markets have since been quiet. Some experts believe, however, that the long-term effects of the Brexit have not totally been felt in the financial markets yet. If this prediction is true, how will the long-term aftermath of Brexit impact your personal portfolio, and what can you do to protect it?

According to Janet Yellen, Chair of the U.S. Federal Reserve, Britain’s exit from the EU could keep government bond yields down both in the U.S. and around the world. These low yields, in turn, may also deteriorate future returns from investment grade corporate bonds as well, she said.

However, much like the vote itself, no one can accurately predict the effects. As always, diversification is the key to a sound financial portfolio if, in fact, another storm is on the horizon. Events like these highlight the importance of diversifying to protect yourself against future losses.

In volatile times, it is important to reassess your risk-reward outlook and ensure your portfolio reflects your true risk tolerance. Based on your risk tolerance, if your portfolio is heavily weighted in any particular area, it might be time to reallocate your portfolio with the help of your financial advisor.

No one is certain how the Brexit vote will play out. The new Prime Minister, Theresa May, just announced that she plans to execute the break on or before the first part of 2017. Some experts predict that gives you until April to prepare. Whatever the outcome, it will be crucial to increase your diversification to weather any storm that might result from the UK’s actual break from the EU early next year.

Philanthropy has always been a major component of financial planning for many wealthy families. In the past, it was common to set up a trust or a foundation to conduct such philanthropic activities in a tax-exempt manner. These entities, however, are susceptible to increased scrutiny from other governmental agencies. For this reason, a new breed of billionaires has started to emerge with a new way of thinking about how to involve themselves in philanthropic causes with less headache.

The Emergence of Charitable LLCs

One such endeavor by Facebook founder Mark Zuckerberg and his wife Dr. Priscilla Chan made headlines when the two structured their philanthropic organization, the Chan-Zuckerberg Initiative, as a privately held limited liability company (LLC).  They weren’t the first billionaires to set up their charitable organizations in this way. Chan and Zuckerberg’s initiative follows the footsteps of such charitable entities as the Emerson Collective, founded by Steve Jobs’ widow, and the Omidyar Network, founded by eBay founder, Pierre Omidyar and his wife, which are both set up as charitable LLCs instead of nonprofits.

A charitable LLC is legally no different from a for-profit LLC, which means it is governed only by applicable corporate law. A nonprofit foundation or trust, on the other hand, would be subject to further state nonprofit statutes and additional oversight by attorneys general and the IRS. With an LLC, although the entity is subject to federal and state taxes, there are no restrictions on donations, investments or income. There are also lighter restrictions on political activities than governing charities, allowing for more flexibility within the organization. In fact, the owner of the charitable LLC has almost complete flexibility to change the LLC’s mission or projects at any time. The LLC also provides a veil so that it is more difficult to see how much money was donated or utilized in a given year.

Millennials Embrace New Philosophies of Giving

Not only are the new ways of structuring philanthropic causes changing, but the number of new donors among the Millennial generation is also changing. According to CAF America, as the philanthropic landscape undergoes a transition, the profile of donors is also shifting as more and more Millennials are making significant donations and funding various charitable projects.

The way Millennials give is also a departure from Baby Boomers’ style of giving. While Baby Boomers have traditionally zeroed in on organizations or philanthropic causes that hit close to home, Millennials are more broad in their charitable approach. Many Millennials, including Facebook co-founder Dustin Moskovitz and his wife, embrace a charitable philosophy known as “effective altruism”, which is the belief that donors should give to causes where the greatest positive impact can be achieved through one’s donation.

Few Millennials Consult Financial Advisors Before Giving

While it is encouraging to foretell the generosity of the next generation, one point of concern, however, is that only 47% of multimillionaires aged 18 to 34 consult a financial advisor before making philanthropic decisions, according to a report by U.S. Trust. Even of those who do use a financial advisor, only a small percentage reported discussing philanthropic activities with them.

This is concerning because there are various ways to structure entities or donate funds to charitable causes that can have a tremendous effect on your tax burden for the year. By failing to limit your tax liability, even someone with the best intentions may have less to give to the causes they believe in each year. One simple example is offsetting charitable contributions against other capital gains to reduce future tax burdens. If you don’t consult a wealth advisor on issues like these, they won’t be able to help you implement this strategy to save money on your taxes, allowing you to give more to the causes you care about most. An open line of communication with your financial advisor is crucial, particularly when it comes to donating your wealth to causes that are close to your heart, so you can maximize your charitable impact.

Will Social Security Cease to Exist?

The future of Social Security is frequently discussed and debated among Americans young and old. Perceptions about the future of Social Security are heavily aligned with how far you are from retirement. Older Americans tend to believe that there will be Social Security available for them when they retire, while millennials are generally pessimistic about its existence when they retire. According to a recent Pew Research Center survey, 51% of millennials believe Social Security will be entirely extinct by the time they retire and only 6% of millennials expect current benefits to be there for them at age 67.

Many people are scared that Social Security benefits will no longer be available to them by the time they retire. While this outcome is certainly possible, the reality is that Social Security will not likely be left to vanish completely without any government interference. It is more likely that benefits will be paid in a lesser amount or that a new government-sponsored retirement plan will fill in the gap.

In a recent annual trustee report released by the Social Security Administration, Treasury Secretary Jacob Lew, predicted that the Social Security trust fund will no longer be able to pay full benefits in 2034. Instead, recipients will only be able to receive three-quarters of the promised benefits from that point forward. That sum would be funded by payroll taxes from future generations.

Changes to How You Will Receive Benefits

Social security, at least not in our lifetime, will not likely cease to exist altogether. There will likely be some form of benefits well into the future, albeit perhaps a smaller amount or distributed under different circumstances and according to different rules. The great unknown, however, is in just what changes are in store for Social Security in the future.

There have been many recent changes around Social Security, such as shifts in the age when you can start receiving benefits and changes in the length of time you can defer payments. Additionally, there is no telling what additional changes are in store for Social Security in the road ahead, making accurate predictions about Social Security difficult.

Recent changes in Social Security have caused some confusion or misconceptions among those entering retirement already, so it is important to keep your thumb on the pulse of Social Security changes to maximize your benefits now or in the future.
Change is certain, and when it comes to Social Security, something will definitely have to change. With these inevitable changes ahead, it is important to check in with your financial advisor about your Social Security strategy, stay informed about the latest updates to Social Security policy, and update your retirement plan accordingly. With a strategic Social Security plan in place, you can rest assured that you are well-prepared for a happy, comfortable retirement, regardless of any turning tides that may lie ahead.  

What do fine wines and financial portfolios have in common? Like a fine wine, quality portfolios take work. The best wines in the world are not made by accident. It takes time, planning, adaptation and perseverance to produce a top-quality bottle of wine. Likewise, there are a number of carefully calculated factors that come into play when it comes to creating a high-quality, perfectly balanced financial portfolio.

Here are just a few ingredients you need to make your investment portfolio a successful one:

Calculated Planning

Making a great wine starts with planning. The same is true when it comes to investing. With a vineyard, the process includes looking into the placement of the actual vineyard with respect to the sunlight, monitoring the soil quality, selecting high quality grapes, and implementing a good irrigation system. If something is not planned well in this stage, it can negatively affect the entire batch of grapes. When something goes wrong in this stage, it will most likely affect the entire harvest and not be something that can be fixed. Once, the quality of the grapes is damaged, the quality of the wine will surely suffer too.  

Investment portfolios are no different. A lack of planning at the start can cause the output of your portfolio to suffer. Just like you wouldn’t plant a vineyard with no plan, it would be unwise to just invest in anything without knowing what the outcome will be. Planning investment portfolios requires knowing what your primary financial objectives are, which assets you want to invest in, what your required return is, the amount of time you need and what you have to start with. If you take the time to plan your “vineyard”, you’ll be well on your way to reaping the rewards of your well-thought-out plan.  

Managing with Care

Even with the best roadmap, events that are out of our control are bound to happen. In farming, weather can be the biggest unknown. Going through a period of drought can drastically alter your crop, even after all the planning in the world. Other sudden events like fires, tornados, hailstorms or insect infestations can also have lasting and damaging effects on the fruits of your labor.

Investments, like vineyards, should be monitored and cared for all the way until the harvest, as investments too can be affected by external events. Some examples include the imposition of capital controls, changes in regulations, a severe financial crisis, or a major geopolitical event. As in the case of a vineyard, our portfolios can take a sudden and scary hit or go through a long drought that can impact our growing season. While we can’t control these external factors, we can deal with them as they come to make sure we don’t lose the entire crop.

Reaping the Fruits of Your Labor

The harvest and ensuing winemaking may be the best part of the winemaking process. The grapes are finally hand-picked, processed and fermented into wine. This is especially rewarding because you get to see and finally experience the fruits of your labor. After careful planning and management, the time that you’ve waited for has finally arrived. It’s time to sit back and enjoy the fine wine you’ve worked so hard to make.

Similarly, reaping what you sow in your investment portfolio is equally as rewarding. The time and effort you spent in planning and careful execution will eventually pay off, and you can enjoy the reward – whether it be retirement, sending a child off to college, or buying your first home. Investments, like winemaking, take discipline, care, and attention to detail. In the end, after all the planning and trials that you’ve been through, it will all be worth the effort.

One week ago on Friday, the unexpected happened: Britain voted to leave the European Union. The “Brexit”, as it was called, was a global market shock. Most experts thought the United Kingdom would vote to remain. The following morning major markets and currencies plummeted. Some markets had their worst one or two day drop ever. With fear running rampant, what are investors to do with their investments? Here are four time-tested tips to weather this storm.

Don’t Panic

During market downturns, people tend to panic and often make irrational, short-sighted decisions as a result. This may be because fear is a strong emotion that causes us to act quickly without using much rational thought. The problem is that when a lot of investors panic at the same time, markets drop fast and create more intense panic. Often this fear is not grounded in rational thought and investors lose out on long-term gains out of short-term fear. This scenario has played out many times before and it won’t be the last time we see a massive one-day market drop. Indices tend to eventually recover and resume their uptrend over time, so it is important not to panic and stay the course with your long-term investments.

Don’t Day Trade

Day trading may become more appealing to some investors because there can be a lot of money made quickly from the dramatic price swings. When investors let greed get the best of them, however, they might be unpleasantly surprised by the result. For the typical, long-term investor, day trading is both unwise and dangerous. It’s very difficult to correctly guess the direction that any one stock or market index will go, and if you’re not careful, you can lose a lifetime’s worth of savings in a short span of time, leaving you left scratching your head wondering what happened.

Diversify

If there’s one thing a global situation like this emphasizes, it’s the need to have a diversified portfolio. Investors should already have their money in many different types of investments. This includes investing in companies that operate in different industries but also different countries and regions. Diversification helps soften the impact of these types of market moves. The larger losses were realized in Asia and Europe, so having some other investments outside of those markets would have helped investors reduce their risk and their losses.

Keep a Long Term Mindset

Over the long term, markets tend to find support and resume their uptrend. The world has weathered many storms including world wars, the Y2K scare, the collapse of Lehman Brothers and other similar events throughout history. Each time there was a temporary crash that eventually subsided and markets gradually resumed their predictable upward trend. This time should be no different. The world will not end and the UK and EU will eventually work out trade agreements that benefit both parties. Likewise, Britain will not sink into a black hole. They will eventually stabilize their economy, profit again from trade and grow their businesses just like they always have over the course of hundreds of years.

While the Brexit was unexpected and scared plenty of investors worldwide, it isn’t a unique event that has never happened before. Although we may be in for a rocky road and a lot of volatility over the course of the next few months or even years, this market action will eventually subside and begin to march forward once again. The best thing you can do is to remain calm and remind yourself that you are in it for the long haul.

Every once in awhile, a major figure in the public eye passes away without a living trust or will. Recently, this was the case with the world famous pop singer, Prince. Although this case made front page news because of his fame, this occurs more often than you would think to ordinary people every day.

Not only is it important for everyone to have an estate plan, but it’s equally important to keep that plan up-to-date with the latest estate tax laws in mind. You may also want to revisit your estate plan after key life events, such as a marriage, divorce, death of a spouse, birth of a child, move to a different state, or a change in your guardian, executor or trustee’s ability to carry out your living trust or will. Keeping your will updated to reflect changes within your family dynamics, tax codes, and state and federal laws is crucial to ensuring your intended wishes are carried out.

Here are a few reasons why having a comprehensive estate plan is so important:

First and foremost, a will makes sure that your final requests are granted when you no longer have a say. This is important because without a thoroughly documented estate plan, the state courts get to determine the value of your estate and decide on where your assets go. Depending on the judge assigned to the case and the local political climate, the courts can get quite creative in protecting their – the state’s – best interest, which is to squeeze the greatest amount of taxes out of your estate by valuing it at its maximum dollar amount.

In the case of Prince’s estate, this is exactly what is happening now. As Michael Kosnitzky, head of the tax practice at Boies, Schiller & Flexner states, “… his estate will owe taxes on whatever the IRS and the administrators agree on as its value. Various estimates place that figure around $300 million, not including the unpublished music. And with a federal estate tax rate of 40 percent and a Minnesota tax rate of 16 percent, roughly half the estate could go to the government.”

A well-documented estate plan should include safeguards that shield against this enormous tax liability. There are a number of options available, including establishing private trusts, gifting assets, and making charitable contributions that ensure your assets are distributed as you wish.  Speak with your financial advisor, estate attorney, and tax professional to see what options make the most sense for you.   

Second, without a living trust or will, heirs have to deal with the burden of fighting the government to value the deceased’s estate. This can be a long, arduous and stressful process for those involved.

“[Prince’s] situation is just going to be a hot mess of litigation and legal fees,” says Richard Behrendt, director of estate planning at Annex Wealth Management and a former estate tax attorney with the IRS, saying the litigation could drag on for years.

Finally, without a clearly documented plan, people other than your intended beneficiaries may come out of the woodwork to stake a claim on your estate. This also leaves your heirs with the additional hassle and stress of dealing with these claims to parse out the true from the false.

Unfortunate cases like Prince’s provide us some insight into why it is extremely important to plan your estate. Tragedies occur every day, and lives can be swept away unexpectedly. Sadly, without a living trust will, you have no control over what happens to your hard-earned assets after your death, leaving your loved ones to pick up the pieces and deal with the enormous burden of fighting for your estate.

A beloved family member’s passing is heartbreaking enough without also having to watch half of their estate get taken away in taxes or deal with family members squabbling over your intentions. Don’t put yourself – or your loved ones – in that position. If you don’t have an estate plan or haven’t revisited yours in a while, contact your estate attorney and financial advisor to see what options are available to you.

When it comes to death and taxes, people often avoid taking the time to plan ahead. Unfortunately, estate planning involves both of these unpopular events rolled into one. In the United States, most citizens will not be required to pay an estate tax because of an IRS tax credit known as a lifetime exemption, which makes the first $5.45 million (or $10.9 million for a married couple) of one’s estate tax-free. However, no matter which side of the line you are on, planning is crucial and there are a number of factors to consider when drafting your estate plan to ensure the longevity and protection of your assets for many generations.

Here are just a few important considerations when drafting your estate plan:

Family Dynamics

As uncomfortable as it may be to admit, some family members may be more reckless or wasteful in their inheritance than others. If you have heirs who you fear may be spendthrifts, addicts, or have broken the law repeatedly, it would not be wise to make them the executor of your estate. While we all want our children to be cared for after we are gone, it is crucial to take an honest look at your beneficiaries and decide if they are responsible enough to inherit the money or if additional protections are needed in your estate plan. In the long run, these added protections should enable your children to actually preserve their inheritance, not waste it away.

Taxation of Assets Upon Death

Current U.S. tax policy allows for an asset’s tax cost basis to be adjusted, or “step up”, after an individual’s death with no capital gains or personal federal income taxes due on the sale. This could lead to significant tax savings on an appreciated stock that otherwise would have been taxed heavily during one’s lifetime. For example, if an individual leaves 5,000 shares of a stock that cost him $10 per share, and the stock’s value is $60 per share at the time of his death, the difference between his cost basis and the value of the stock at the time of death is not taxed. If the individual had sold his assets during his lifetime, however, he would have been taxed handily for capital gains. Therefore, the average American today with an estate of less than $5.45 million is better off deferring the transfer of significant assets until death instead of distributing them to heirs during one’s lifetime.

Gift Tax Exemption

For those with estates worth more than $5.45 million, there are ways to reduce or eliminate estate tax liability altogether through the gift tax exclusion. The gift tax exclusion allows you to gift $14,000 each year per person during your lifetime tax free. These gifted sums do not count toward your lifetime exemption, allowing you to reduce the value of your estate and avoid paying high estate taxes upon your death.

Charitable Contributions

Almost everyone has a cause that’s important to them. Factoring charitable contributions into your estate plan can reward you in more ways than one. Not only will you be doing good and getting a sense of personal satisfaction, but can also help you save money in estate taxes. By leaving money to a charitable organization, the full amount of your gift may be deducted from your estate tax-free. There are several options to leave a charitable gift including an outright bequest of cash to the charity, establishing a charitable trust, creating a charitable remainder trust that provides you and your spouse with a life-time income based on the value of your donation, or making a charity the beneficiary of your IRA or retirement plan. In addition, foundations and scholarship funds can also be set up that will live on and continue to help others even after your lifetime.

Failure to plan is a recipe for disaster. Unfortunately, many individuals fail in planning their estates, leaving their heirs to deal with the repercussions of a poorly planned estate. While none of us can predict when we will die, we can be comforted in knowing that our loved ones will be taken care of by planning ahead.

Estate Planning is a very important part of overall Wealth Management and our process as well.  It is important to stay up-to-date on the latest federal and state estate tax policies and limits to ensure that your estate plan is safe and sound.  We do our best to make sure our clients are protecting their wealth and are keeping their estate plans up to date by reviewing those plans as part of each annual review.  If you have any questions or concerns about your estate plan, reach out to your financial advisor for guidance.  

Many people who imagine their lives in retirement envision themselves on white sandy beaches, traveling the world, or enjoying myriad other fun or leisurely activities and hobbies. Although retirement is often depicted or imagined in this way, the reality is that most people do not factor these expenses and luxuries into their retirement plans, making this prized retirement lifestyle few and far between.

Retirement plans are generally based on a simple income statement analysis – a calculation of income in retirement minus estimated expenses. Often, these calculations are based on a monthly budget, plus an emergency fund for unexpected expenses like medical bills. Most people, however, miss a major component of retirement planning: factoring in fun.

Recent Study Reveals Retirees’ Visions of Retirement

In a recent study conducted by Merrill Lynch and Age Wave, nearly all retirees surveyed agreed that retirement presents them with both greater freedom and opportunities. They also told researchers that retirement is the time of their lives when they have the most fun, reporting peaks between the ages 65 and 74. The retirees surveyed were also 10 times more likely to say retirement is more fun, enjoyable and pleasurable than when they were working.

Despite these optimistic claims and visions about life in retirement, the same survey found that of current retirees, most do not factor in funds for these leisure activities. The survey found that of current retirees, 58% say they do not know how much money they will need to fund leisure activities and 66% have not discussed and agreed with their spouse or partner on how much money to spend on leisure in retirement.

While many leisure activities are certainly low cost, others need to be planned for, such as travel or funding a new hobby in retirement. If you envision travel or picking up a specific activity during retirement, it is essential to plan for these extra funds and discuss how much money should be set aside for fun activities in retirement.

Start Making Your Fun Plan

To start factoring in fun into your retirement plan, the first thing you can do now is to sit down with your spouse and agree on some of the fun things you would like to do in retirement. Many of these things will be low cost or free, such as volunteer work or spending time with family locally, while others activities will need to be budgeted for. These types of activities include learning new hobbies, traveling or taking continuing educational classes. Once you determine which activities you’d like to participate in, you can readjust your income statement analysis with fun factored in, giving you a complete retirement package that will allow you to live out your dream retirement.  

Retirement should be fun. It’s a time that allows for more freedom, time, and perhaps opportunities to pursue lifelong passions, but without the right plan in place, you could be missing out on your dream retirement. It’s never too early or too late to start planning for your life in retirement to ensure you aren’t missing out on your golden years!