GF¢043: [Case Study] Can You Retire Early with Only 1 Million Dollars?

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I want to retire early with 1 million dollars.

That statement has a nice ring to it, huh?

I don’t think I’ve worked with a client yet that didn’t want to retire early, or wouldn’t be ecstatic if they had a $1 million portfolio.

But as most of us already know, $1 million isn’t what it used to be.

IMG - Can You Retire Early with Only 1 Million Dollars

This article from USA Today makes the bold claim that $1 million isn’t enough to retire nowadays.

Look, $1 million is A LOT of money, but to stretch that out for the rest of your retirement is tough. It’s even tougher with lower interest rates.

The article states, “10 to 12 years ago, when people earned a lot more on their investments, $1 million could generate $70,000 to $80,000 a year in retirement income. But with interest rates as low as they are, that’s not really feasible.”

Sure, there are ways to make the most of out your short-term investments, and there are intriguing options like Peer to Peer Lending that can yield decent returns, but they don’t magically guarantee an early retirement.

So the question remains:  Can you really retire early with 1 million dollars?
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Will the Deferred Income Annuity Save Your 401k?

If you have never heard of a deferred income annuity, get ready, because you’ll probably be hearing a lot about them in the near future. And honestly, you should want to!

Deferred income annuities address a major weakness that is a part of current tax-deferred retirement plans, such as 401(k)s: what to do with your retirement plan when you actually retire.

That’s where deferred income annuities come in. They’re a valuable tool you can use that can preserve your investment capital, and make sure that you have a steady income for the rest of your life – no matter how long you live.

They can even turn your defined contribution 401(k) into something resembling the traditional defined benefit plans of yesteryear. That should interest anyone and everyone who is planning for retirement.

IMG - What is a Deferred Income Annuity
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GF¢ 039: Reader Question: What is The Best Thing to Do With an Old 403(b)?

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Well, whether you need PROFESSIONAL professional help is up for debate, but when it comes to your finances, don’t rely on Google.

You need someone who knows what they’re doing.

Confident happy business woman with coworkers in the background

 

Consider this example:

I am 45 years old with 3 young children.   My biggest concern is that in about 10-12 years, they will be going to college.  I have a good job and currently make $75,000 per year.
 

I don’t have college savings plans set up for them at the moment.  I’m considering opening a Roth IRA and maxing it out every year so they use it for college.
 

I also have an old 403b just sitting there doing nothing. I’m maxing out my 401k at my current job, which also offers an 8% match.  Would you please advise what I should do for my children and for my retirement?  Also, do you think I should convert my old 403b into a Roth IRA?

Ah yes.

These are the type of questions that a Certified Financial Planner drools over.
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The Ultimate Roth IRA Conversion Guide – Everything You Need to Know

I love the Roth IRA.  

If I could wrap them up and give them away as birthday gifts, I would probably do it.

Scratch that.  I would definitely do it!

As much as I love the Roth IRAs, you would think that I would be all about converting your traditional IRAs and old 401(k)s to them, right?

Well, kinda.

Unfortunately, doing a Roth IRA conversion is not a total black and white decision.  In fact, there are have been several instances where I suggested that clients don’t do a Roth IRA conversion.

To better understand if a Roth IRA conversion is best for you, we have to understand the rules first.  Here’s a look at at the IRA to Roth IRA conversion tax rules.

IMG - Roth IRA Conversion - The Ultimate Guide
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GF¢ 038: The 17 Worst Excuses For Not Saving For Retirement

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This post is part of the Retiree Next Door Movement, whose mission is to encourage people to stop procrastinating on planning their retirement. The movement is led by MoneyTips.com who are passionate about helping people retire comfortably.  They are so passionate about the topic that they they put together this awesome guide, The Retiree Next Door: Successful Senior’s Surprising Secrets, that you can download for free here (until September 30th). This book highlights 500 successful retirees from all types of backgrounds and demographics, and the strategies that they used to retire successfully. The one thing they all had in common, which is the theme of today’s post, is that they didn’t have an excuse.

 IMG - The 17 Worst Excuses for Not Saving for Retirement

You know what’s sad?

Despite all the talk about retirement planning, and all the information available on the web, millions of people still aren’t saving for retirement.

You know what’s even worse?

Many of them give lousy excuses!  Well, not on my watch.

Today, I call out 17 of the worst excuses for not saving for retirement. Do any of these sound familiar?

If so…you’re busted!  On to the list….
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10 Essential Factors of a Retirement Planning Checklist

If there’s one thing that you don’t want to do twice, that would be retiring.

Imagine having to go back to work after you’ve called it quits. Yuck!!

I’ve heard horror stories of this happening and the most common culprit is lack of planning.

Planning your retirement is something you do not want to take lightly.

Retirement Planning Checklist

If you are approaching retirement, do you know if you are ready?

Do you have the funds saved that you will need?

Do you have all the other details in place and ready to go?

While retirement is an exciting time, it is also a time of big changes in your life.

Not only will you not be going to work every day but you will also have adjustments in your personal life and your finances will also be changing.

To make sure you are prepared for all the changes creating a retirement planning checklist is recommended.

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16 Surefire Ways to Not Outlive Your Money

You’re officially retired. 

You don’t have to wake up to that annoying alarm clock anymore.

The sun is shining, and the only thing you have to worry about is when you get to take your afternoon siesta.

Then it hits you…

Can I really afford this lifestyle?

Did I save enough?

Do I have the right investments?

Ways to Not Outlive Your Money

Your calmness quickly vanishes and is replaced by an overwhelming panic.

You can’t get the sickening thought out of your head — “Am I going to outlive my money?

It’s okay.  Take a DEEP breath and exhale.

Seriously. Do that now.

One of the most common concerns about retirement is the possibility of outliving your money.
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GF¢ 033: 15 Reasons Why You Won’t Be Able to Retire Early

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Who doesn’t want to retire early?

Unfortunately, many people won’t be able to.

Even worse, many people don’t have a clue that they won’t be able to retire early.

Such was the case with this couple in their mid-30’s that planned on retiring in their 50’s even though they only had $17,000 in savings.

Yes, that’s it and the reason I filmed this financial rant video.

I wish I could say that this couple was the exception and many on our pace to retire early, but if I was I Pinocchio then my nose would be grow to be a mile long.

Are you in this camp?  If you’re guilty of the following 15 items then welcome to the retire at 70+ club.

Here are 15 reasons why you won’t be able to retire early.

15 Reasons Why You Won't Be Able to Retire Early

Some of them have to do with how you handle money, but others focus on your mindset, your expectations, or even factors beyond your control.

My hope is that this list will enable you to avoid the traps that prevent people from retiring early.
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The Top 10 Cities That Your Financial Advisor Approves You To Retire In

You’ve probably seen dozens of lists like this, but let’s admit it – most of them center on locations that are already flooded with retirees for all the usual reasons.

On this list, I’m zeroing in on cities that offer tangible financial advantages to retirees. Sure, they’re great places to retire. But each also offers financial or economic benefits beyond simply being where the living is cheap.

And that’s the way it should be – if you’re moving to another city, you’re moving there to retire and create a new life, not to fold up the tent of your life.

top ten cities

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GF¢ 027: 5 Questions to Ask *Before* You Buy an Annuity

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Buying an annuity should not be the worst experience of your life.

Some financial advisors represent them to be the greatest thing since sliced bread.  Other advisors associate annuities with a certain four-letter word.  And no, that word isn’t good.

You might be wondering where I fall in the annuity camp.  Let’s just say that I’m somewhere in the middle.

Annuities, like any other investment, can make perfect sense in the right situation.  In the wrong situation they can be costly and even dangerous.

If you’re in the process of either buying an annuity or being sold an annuity by another advisor that you’re just not quite sure about, use this guide to help you make a better informed decision.  If you want a second opinion, I’m here for that as well.

Here’s what you need to know before you buy an annuity

3Driders
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GF¢ 025: Top 6 Mistakes That Will Screw Up Your Retirement

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No one likes to get screwed.

It’s not a fun feeling and personally it irritates the crap out of me.

But what happens when you screw yourself? That’s definitely not cool!

I’ve been a financial advisor for over 12 years now and I’ve seen plenty of people screw themselves out of a successful retirement.

screw up retirement

The most frustrating aspect on my end is that many of it could have been avoided if the person took a little bit of time to review their situation.

Fact: More people spend time planning their family vacation than they do preparing for retirement.

Don’t be one of these people.

Here are the top 6 mistakes that I’ve seen people do to screw up their retirement.

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401k Contribution Limits for 2014

2013 401k Contribution LimitsThere are reasons for relief in some quarters since the IRS release its official 2012 regulations for 401k, 403b, and other retirement plan contribution limits.

This information is renewed annually based the 2012 cost of living adjustment figures.

The good news is that the cost of living adjustment (COLA) numbers have increased a bit.

This makes an increase after a three year period of relative stability in contribution limits. Back in 2011 there were some fears circulating that the limits were supposed to be lowered.

Those fears never came into fruition as 401k limits remained flat.

Each October the limits are re-calculated using a formula that is based on the inflation rate (which is connected to the COLA figures) in the third quarter versus the previous year’s quarter performance.
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