Guidelines In Investing Your Retirement Money

Retirement (Photo credit: Tax Credits)

Enjoyment in life does not have to end when one retires from his job and leaves work. In fact, it should be the time when one should sit back, relax, and reap or enjoy the fruits of his labor, so to speak.

But even during retirement, you should manage your finances and watch your expenses. Remember, you are no longer at work and you have no other means of earning an income. So unless you take care of your hard-earned retirement money, you may lose it through unnecessary spending and you may find yourself penniless one day.

When preparing for retirement, the first thing you should do is set aside money for your needs as well as for emergency purposes. Living expenses for food, clothing and shelter must not be disregarded. Similarly, an emergency fund that you can use in the event of illness, natural disaster and other unforeseen events must likewise be taken care of.

When all of these have been placed into your financial budget, it is time to explore your investment opportunities. As this is your retirement money, you need to be careful about the businesses that you want to put your money into. Many people have made the mistake of putting their retirement money into wrong investment ventures and end up losing much of their hard-earned money.

To avoid this, you need to avoid putting your money into high-risk investments to ensure that you have a secure financial base in the future and thus avoid bankruptcy. Although you may balance high-risk investment with low-risk financial opportunities, it is not a good decision to make.

Here are sound investments where you can invest your retirement money:

• Treasury bonds – As many financial experts would say, treasury bonds are one of the safer options for investment. Unlike stocks, they have a fixed rate of interest, which means you know the constant growth rate of the bond.
• Certificates of deposits – These are like money in time deposit term but in this type you will be penalized if you withdraw your money earlier as scheduled. However, if you have an individual retirement account (IRA), you can save and withdraw without penalty once you reach age 59.
• Annuity – This is another option that financial advisors recommend. You can invest your money into an annuity where you can save or deposit money in a lump sum or in small amounts over time before you retire and receive back regular payments like a salary when you retire. You can choose from different kinds of annuities such as fixed annuities which has a set rate of interest, indexed annuities with a fluctuating interest based on a particular index, and variable annuities where you can choose how your money will be invested and whose rate of return will depend on the performance of your investments.

This guest post was provided by DebtSuccess.com, the debt management experts specializing in debt consolidation, debt relief, credit repair, tax debt, debt settlement and more.

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Get Help to Get out of Debt

Debt Mummy Art (Photo credit: Brad_Chaffee)

Being in debt can be really bad for your mental health. The stress and pressure that it adds to your life can affect your relationship, your sleep and your general well-being. 

Too often, people who are in debt don’t seek out help soon enough, instead they bury their heads in the sand and hope that the problem will somehow go away. Of course, it doesn’t. The problem with debt is that if you do nothing about it, the amount you owe just grows as each missed payment will mean that more interest is added onto the amount that you already need to pay back.

If you are ready to admit that you need help with debts, then there are some different ways to go about finding that help.

First, be honest with your partner. As the old adage goes, a problem shared is a problem halved, and while this might not actually do anything to change the amount of debt you have, it will ease some of the guilt and pressure if you have been trying to hide the debt from your partner. They may also be better at managing the income that you have and help you begin to pay the debt back through careful budgeting.

If this isn’t the case, you can always talk to a friend or relative who is ‘good with money’. They can help you go through the list of your expenses and debts owing, and look at your income and then see the best way to start reducing your living costs and clearing the debt.

Your debt levels may be so significant that self-help is not enough. In this case you can contact one of the many debt management companies that are now in operation. They will help you devise a debt management plan or if necessary, organise a debt consolidation loan – where you borrow a lump sum in order to pay off all the individual creditors who you owe money. This means you will still be in debt, but only to the debt management company and you’ll only need to find one monthly payment. Although this may cost you more overall than paying off the individual debts separately, it will take a lot of the stress and pressure out of the situation as you won’t have different creditors chasing you.

Whatever step you take to start clearing your debts, it’s positive that you are taking the decision to tackle the problem and move forward, and that in itself is very motivational.

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How to Deal With Debt When Retired

Retirement (Photo credit: 401(K) 2012)

It is ideal to pay off all debts before retiring. But at times, it is inevitable. You may have entered your retirement age but you still keep several outstanding debts that you have to deal with after you retired from employment. Getting retired does not mean you are spared from debt problems. You still have to deal with those.

Some experts advise individuals nearing retirements to postpone their retirements until they pay off all their debts. This is to make sure they will still have regular income and a source for paying dues. If postponing retirement is not an option, a retiree can still earn income by taking a part-time job, which may not be directly related to his former job.

Plan your retirement well. Aside from bolstering your retirement savings, try to eliminate all your debts. If you can’t help it, here are some logical strategies to deal with debts after retirement.

Use debt consolidation.

Debts should be paid even after you get into your retirement years. You may have stopped working and generating regular income but you are expected to continue paying your financial obligations. Retirement will not be a passport to neglect and not seriously take your debt problems.

If you still have debts to pay during or after getting retired, try debt consolidation. There are debt consolidation loans with better terms and lower interest rates. Secured loans will give you better rates and terms. As an alternative, you may use low-interest or 0% interest incentives of your credit cards’ balance transfer features. Again, after using the service, try to repay the amount as quickly as you can. Some balance transfer offers only apply lower rates or 0% rates within a limited or specified period so be aware.

Pay debts with higher interest rates first.

You may opt to pay off balances or pay slightly above minimum required payments on some of your debts for the meantime. Try to pay off debts with higher interest rates first. That is because you can save more money by doing so. The high interest rate payment can be added to the payment you make to get rid of other debts.

Keep on paying diligently. Make it a goal to lower your total debt as quickly as you can. Paying little interest will help you save on costs. As you go on to repay your obligations, you may also try to tighten your financial belt by living practically and frugally. You may expect to emerge out from the debt problem in a few years.

Once you get rid of all those debts, take a breather. Try to resist the urge to obtain loans and other forms of debts again. Live within your means so as not to make your coffers run empty. Your retirement years can be enjoyed more if you will not think more about those financial obligations you owe to anyone. During retirement, it is better not to live a stressful life anymore. Enjoy your years and get past debt problems.

Andrew enjoys blogging about personal finance and especially topics such as debt consolidation and management. Over the last 4 years, Andrew has written numerous articles and has been an active contributor in personal finance forums.

5 Things You Need to know When Dealing With Debt Settlement Companies

We have had our experiences with debt collectors. The calls all day long and on weekends also. Starting in the morning, sometimes starting at 9:00 A.M. Sunday morning. We have learned to screen our calls but it's still annoying.

Two of our children have had some credit card debts go into default. The debt collectors started to call. There are probably 5 different debt collectors that still call on a regular basis. I talk to them to explain that my kids don't live here anymore and that they are wasting their time. It usually goes well, the caller is business like and we're done but I had one bad call with a nasty debt collector who was insulting. I can see how the tactic works. They make you feel so upset that you give them the rent money to make them quit calling.

With the constant daily calls you become desperate to in trying to pay your debts. That's when you think of trying that debt settlement company. Most debt settlement companies don't succeed in cleaning up your debt. The fees are enormous and the process is long and stressful. Sure there are some that succeed but the success level is low. When dealing with these companies you have to very careful. I have listed a few tips to help you navigate them.

1. Most debt settlement companies charge regardless of whether they ever settle your debts. They usually collect most or all the fee from you long before they have helped to eliminate your debts. You pay the fee whether your debts are settled or not.

2. Debt settlement services don’t provide instant relief. Most debt settlement services require you to deposit a specific amount of money in a bank account each month until you have enough to make a reasonable settlement offer. While you are trying to save, the debt settlement company’s fees are being deducted from your bank account. Saving enough for a settlement can take a year or more. If you have multiple debts, you will save for them one-at-a-time, so the whole process could take several years.

3. Debt settlement services can be very expensive. The charge is often based on a percentage of the total amount of debt that you want help with when you sign up for the service. A typical fee of 15 percent (some are even higher) on four credit card accounts totaling $20,000 would be $3,000. You would pay that amount regardless of how many of the accounts, if any, are actually settled.

4. Claims for success rates can be very misleading. Debt settlement companies advertise big savings but those claims often don’t take into consideration the number of accounts that are never settled or the fees that customers pay. Industry figures show that the majority of debt settlement customers drop out of the programs within the first six months, after they have paid a large portion of the fees but before their debts are settled.

5. Debt settlement programs don’t stop debt collection. Banks and debt collectors don’t have to cooperate with debt settlement companies and they can keep trying to collect the money you owe. While you are saving for a settlement, your debt may increase because of interest and penalties, you may be hounded by collection agents, and you can be sued for the debt.

Debt Settlement companies are everywhere they want your business and may make promises they can't keep. At first, they may stay on top of your program but as time passes either you or the companies lose interest and your case just becomes another account in their computer. There are better ways to settle your accounts which I will cover in another post.


Here are some additional posts about debt:

The Early Warning Signs of Debt

Debt Collectors Are Calling me Everyday - What are my Rights?

Readers Question: A Debt Collector Is Threating me if I Don't Pay | What Should I Do?

Debt Snowball. What is it?

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Debt Snowball. What is it?

Image via Wikipedia

Image via Wikipedia

This term "Debt Snowball" what does it mean, does it refer to when Frosty the Snowman went over his credit limit? I don't think so. Its a term made famous by financial guru Dave Ramsey. The way it works is first be current in all your debts. List all your debts from smallest to largest ignoring interest rate. Pay the minimums on all your debts except the smallest one. The smallest one pay the minimum and as much other money you can scrape up to pay it off as fast as possible. After the first debt is paid off take that amount and add it to the second debts minimum. Hence increasing the payment on the second debt. When that one is paid off, take all that money add it to the the third minimum debt payment. Keep doing this till you go thru all your debts. This plan allows you to focus an ever increasing amount of money on your smallest debt. Every time the debts are paid off the snowball payment keeps getting bigger ultimately getting you out of debt sooner.

The key to this plan is the focusing on the smallest debt for an emotional win. Even though other debts may be a higher interest rate. You may be thinking paying off the highest interest debt first would be mathematically correct. The emotional win is more valuable to the individual. To have a couple of wins under your belt is a ego boosting feeling. This gives you the encouragement to keep going. In my personal experience it the only thing that kept me going and still does. The tedium of going thru this process is exasperating. It takes a long time and is a lot of work. You could lose patience and chuck it all if you didn't have some early wins. It like when you go on a diet and exercise. If you don't see results you most likely give up.

The argument of paying higher interest debt first is mathematically correct. It seems the right way to go. But responsibility with money is more psychological than math related. If you did the math on using credit, you wouldn't us it. It goes along with impulsed purchasing. Did you ever want to purchase an item. Maybe something you were exposed to when you were walking down the isle of a store. You just grabbed an item and put it in your shopping cart. Your whole thought process consisted of: See item, like item, I have credit card, Buy it. Totally a Pavlov's dog reaction. Not more than 2 second thought process and programed response. Now if you had left that credit card at home and only had cash the entire event would of happened differently. Thought process would go something like this. See item, like item, I only have cash, Do I want to use my little bit of cash on this piece of junk. Answer, "No". Its not automatic, it actually takes longer to decide to purchase because using cash actually hurts. Using credit is fun and painless and can be rationalized easily. You actually buy more stuff when you use credit. 

Here is an example of the debt snowball in action:

My Debts listed smallest to largest:

1. Home Depot - Balance 1214.00 - minimum 22.00 - Interest 15%
2. Chase 1 - Balance 2858.00 - minimum 36.00 - Interest 2.9%
3. Chase 2 - Balance 7076.00 - minimum 170.00 - Interest 16%

Here is the plan for paying off $11,148.00 of debt in 19 months. Its the plan I am going to follow. Of course if  I have any other extra money I will add it to the snowball. Again it will take discipline and focus to complete this. You must establish goals and make a written plan on how to complete them . The Debt Snowball is the best plan for getting out of debt. Some people have gone the way of "Debt Consolidation". Thats when you refinance all your bills into one amount and have one small affordable payment. This is not a plan for success. Its a lazy way of just moving your debt around and believing your actually doing something. Its a false economy to think that. Another way people pay back debt incorrectly is go to a credit consolidation company that takes charge of all your debt and renegotiates your balances and interest rates down. You end up paying them a large fee and wrecking your credit. Take charge of your debt, do this your self.

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