Plan Ahead To Enjoy Your Retirement

Many of us hope to enjoy our retirement years sleeping in as late as we’d like or filling our days with the passions and hobbies that were put to the side during our working days. Traveling, visiting grandchildren, and taking up new interests are all beckoning as retirement draws nearer. 

However, without some careful planning, living on a fixed income and a new form of healthcare insurance can pose a struggle that will dampen those dreams of retirement. Unfortunately, the majority of us are somewhat behind in our retirement planning and haven’t made a plan to help us transition successfully to retirement. Wherever you are on the path to retirement, the time to make a plan is now. 

Plan Each Step Before You Take It

Simple advice, right? Just as in a chess game, each move you make in preparing for retirement will have an effect on the next move. You will want to consider factors such as when to retire, the quality of life you hope to enjoy, the dreams you want to live out, and the situations that you need to prepare for. Each of these decisions will be easier to make when you have time to study the consequences and contributing factors.

1- When is the right time to retire? Your retirement age will be influenced by the legal age of retirement in order to receive Social Security and Medicare. It may also be affected by the number of years you have put into your current job or the level of tenure which you have attained. Retirement budgets are usually calculated based on your age, the amount of savings and other financial resources you’ve set aside, and the retirement income you have earned from your qualifying jobs. Utilize an online retirement calculator or consult with a professional retirement planner so that you can retire at the most beneficial age.

2- Work out a retirement budget. List any of the debts that you currently have, your costs of living, and any other necessary and desired expenses. Use this information to create a budget. Keep in mind any new hobbies or activities that you are hoping to engage in. If you are hoping to begin traveling, then you will need to calculate those costs ahead of time if you hope to be able to afford any trips.

3- Plan ways to reduce unnecessary costs. While most of us hope to enjoy the same manner of living that we had while working, this is far from guaranteed. Planning ahead is the first step in protecting your income. Learning how to reduce living expenses is the second step. When you reduce your costs now and set aside the extra money, you will be better prepared to handle the emergencies and other unexpected expenses that will invariably occur.

4- Learn to spend wisely. Before retirement, many of us simply live from paycheck to paycheck and spend only what is left after paying bills. Living on a retirement income may present a new problem, especially if a substantial part of your income will come from savings that you can access readily. You may wish to re-take financial classes that you once took as a new homeowner or when you first began investing. You should probably consider enrolling in a course that is specifically taught to educate men and women approaching retirement. With this information, you will be better prepared to make the decisions that affect you personally.

5- During retirement, it will be more important than ever to know how to save your money. Don’t spend as if you don’t have another twenty years ahead of you. People are living longer than ever before and you may need to plan for several decades of retirement. You may feel tempted to spend money up front thinking that your expenses will remain stable. However, many aging adults find that the costs of living for seniors rise suddenly due to increased medical bills and other expenses related to getting older. 

A Successful Retirement Plan

After working for most of your life, you hope to enjoy a stable and peaceful retirement. If you want to avoid depending on your children or making other sacrifices of independence, then plan ahead and carefully consider each step before you take it. With a well-thought out budget and the determination to stick to it, you will have the monthly resources to meet your bills and financial obligations. By developing habits of frugal spending and generous saving, you can feel more comfortable pondering the future years approaching.

BIO:

Lauren Hill is a freelance writer, wife and mother of 2 really awesome kids. She enjoys writing on topics affecting our everyday lives. When she finds free time, you can find her in the garden, driving her kids to activities or blogging at www.laurenqhill.com

A Guide to Pension Sharing Orders

Like many people, you may be wondering ‘What is a Pension Sharing Order?’ A pension sharing order is made through the courts after a divorce or separation. Essentially, it is the process by which part or all of a pension is allocated to the pension holder’s former partner, who will then hold these benefits in their own right. 

A pension can be one of your most important assets, which is why it’s so important that a pension sharing order is implemented correctly. 

Implementing a Pension Sharing Scheme

To obtain a pension sharing order you will need to employ the services of an expert financial advisor, who will be qualified to advise you on the most suitable plan for dividing and re-investing pension benefits. All pension orders must go through the courts, who will determine exactly what proportion of a person’s pension must be allocated to their former partner.

A pension sharing order must be implemented within four months of the date when the pension scheme receives all of the pertinent paperwork. Each part of the scheme will have different requirements as to what documentation is needed so all paperwork must be delivered and processed on time to prevent delays in the pension sharing order.

The implementation of a pension sharing order is also dependent upon whether an internal or external transfer method is used by your pension scheme, which you should check before negotiations begin. 

Enforcing a Pension Sharing Order

To ensure that a pension sharing order is successfully enforced, it’s important that all parties go into the courts having asked a few important questions:
Whether or not the non-member can remain in the scheme.
Whether the pension sharing order recipient will need to wait until their normal retirement date, if the pension scheme in question allows for early retirement.
What charges will be levied by trustees, and if these need to be paid up front.
Whether or not your pension sharing order will accrue interest, either directly or through a qualifying agreement.
If internal documents need to be signed before a pension sharing order can be implemented, and the best way to go about gaining the signatures of both parties. 

The Advantages of a Pension Sharing Order

One of the reasons that so many people choose a pension sharing order is that it allows for both parties to make a ‘clean break’. Pension assets are split according to a percentage decided on by the courts, and a pension sharing order is managed from start to finish by court officials and an official pension sharing order advisor. 

Alternatives to Pension Sharing

There are several alternatives to a pension sharing order which may be used to divide pension assets in the event of a divorce or separation. Offsetting and earmarking are two of the other ways in which separating couples may decide to divide pension assets, however both are dependent upon certain other factors, such as the amount of available assets and the amicability of the separation.

Are You Paying Too Much Tax? – How to Claim Tax Back if You Are

Taxes (Photo credit: Tax Credits)

If you think you’ve been paying too much tax, then how do you claim tax back? Here’s the low down on how to get your money back and what to do if you think you’ve overpaid. Overpayment can appear in many guises, either through income tax, PAYE, self assessment, pension, savings or national insurance, so let’s take a look at each one in turn. 

Income Tax 

Tax on your income is taken from the amount that you earn each year and is broken down as follows. 

• Anyone under 65 can earn up to and including £8165 before they’re taxed 
• Anyone between the ages of 65 -74 can earn up to and including £10,500 
• Anyone 75 and over can earn up to and including £10,660 

This system works well for a person with one full time job with a rate of pay that’s fixed. However it mightn’t be as straight forward for someone who doesn’t fit into this criteria. If you feel that you have been overpaying tax, then contact the HMRC, or use the free HMRC income tax checker. 

PAYE 

The majority of the UK workforce pay tax through the Pay As You Earn (PAYE) system which is deducted automatically from your salary. PAYE uses a tax code to determine how much tax you should be paying, but if your pay fluctuates or you’re not employed for the full year, then again, you could be paying too much tax. If you believe this to be the case, then you should contact HMRC and ask for a tax assessment. Claims can be backdated for as much as four years. 

Self Assessment 

If you are self employed and feel that you have been paying too much tax, then similarly to PAYE you need to get in touch with HMRC. You have four years to claim backdated overpayments. Alternatively if you need to make a claim, or to correct a mistake on your last tax form, then you can do so by completing an amendment form. This is again available from the HMRC. 

Pension 

Tax can be paid either on personal, company or indeed state pensions and there may be a chance that you are paying over the top. This can be for a number of reasons. It could be that: 

• You've been allocated an incorrect tax code 
• Your entitlements have changed 
• Your circumstances have changed (ie age) 

Again contact the HMRC explaining the situation, but you’ll need evidence such as your P60, P45, and any other information relating to your pensions and benefits.

 

Savings 

The majority of savings accounts automatically deduct tax from the interest on your savings before it hits the bank. If you are excluded tax (ie filled in an R85 form) or your savings are in an ISA, then you shouldn’t have to pay standard savings tax. If you are, then ask for and fill in an R40 form and contact your local tax office. 

National Insurance 

If you’ve had a succession of jobs in one year then chances are could be paying too much national insurance. Visit the DirectGov website to check out if you are indeed paying too much and which form you have to fill in. 

In essence, if you are paying too much tax, then don’t worry unnecessarily. As long as you know who to contact and what forms to fill in, you should be able to claim tax back easily. Claim Tax Back at www.taxrebateservices.co.uk.

 

Reliable Sources of Income after Retirement

Retirement (Photo credit: Tax Credits)

Time flies and before you know it you have reached middle age and soon after – retirement. This is inevitable and therefore being prepared for it is a must. An important consideration after retirement is to have reliable sources of income to sustain whatever state of health you are in and lifestyle you intend to maintain. The following are some options:

• Savings should be highly prioritized during your working years. Treat your savings funds like money already spent so you won’t get tempted in using it for unnecessary spending. This is the most reliable source of retirement income as you can invest it in a high yield money placement where you draw only the interest earned and keep the principal to generate more income from interests gained. Of course you need to be extra careful in choosing the bank or financial institution where you keep your most valued and hard earned savings. 
• Social Security to date is the major source of income for a greater number of retirees. Relying on this mainly may not provide you a very substantial amount to finance your daily subsistence but it is reliable and steady. Augmenting it with other sources is highly recommended. 
• Pension Annuities are precise instruments that help you transform value of pension into periodic source of income. It is essential to be careful in purchasing a pension annuity as it is a long term contract and can be your reliable source of income after retirement. Choose a reputable and stable financial institution that offers this instrument. You have options to obtain it monthly, quarterly, semi annually or annually. You can also choose to obtain income which remains the same without any fluctuation or one which increases every year through set percentage or inflation. 

Ways to Augment Retirement Income

• Personal pension schemes matched by employers like IRAs and 401k in America can help when you are a disciplined spender but unfortunately for most retirees they tend to overdraw from these sources of retirement income - that they readily deplete it in a short period of time. When real need is there, chances are the money is all gone and they go broke. It is suggested that you treat this source as a monthly paycheck just like when you were working. Draw a monthly amount that will make your reliable source of income last as long as you live along with your partner in life. 
• Rental income from real estate investments can also become your reliable source of retirement income. As long as your property is leased, you have a regular income. It is therefore important to have savings and investments while you are working as this can help sustain you throughout your retirement years. 
• Royalties can also give you some retirement income. This is from patents, books and record you have registered in your name during your working years. 
• Investing in stocks while you are working can also provide you a reliable source of income when you retire. This entails savings during your productive years and wise spending as well. Majority of senior investors though are not so happy with the yield they derive from this nowadays but still it can augment your spending fund when you retire. Get advises from reputable consultants on this field and always be updated on how your stocks are currently doing. 

Circumstantial Retirement Income

• Inheritance for some lucky persons with parents or relatives who are quite well off can help fund their retirement. Of course this should not be relied on 100% as depending on circumstances, you can be written off their will or probably they can outlive you. Think of this only as a surprise if and when it happens. 
• Home equity for some is an inevitable source to fund their retirement. To most, their home is their biggest asset though depending on your needs, it will make you not leave anything to your children as inheritance. 
• Part time work for some is an option especially if they are not careful with their finances. At the time when you are supposed to take it easy in life, you will have to take on part time jobs to finance your retirement. On a positive note, this will make you more active and feel useful that is a motivation to do well in whatever responsibilities you take on for this purpose. 

Being financially ready for retirement can make you live longer. You save yourself from unnecessary stress and make you grow old gracefully. As we all probably know that stress is the number one cause of dreaded diseases - so it is strongly encouraged to save up during your productive years for a stress-free retirement years.

About the Author:

Mackenzie Salis is a freelance writer, a professional blogger and an enthusiast advocating finance awareness via online exposures for 3 years. She is the author of the site: Credit Counseling that can provide all valuable information about loans and warn you against fraud online.

Cities Using Special Tax Accessments To Cover Budget Shortfalls

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More and more cities are having trouble meeting revenue requirements for the city employees pension plan. City and state employees along with firefighters and police have yearly pension obligations. They are usually funded by property tax or income tax revenues. What happens when these pension plans are not funded because of a revenue shortfall?

Pension plans are usually created by the employee unions and the city leaders. These plans have to be funded or the unions become very angry. This leaves cities no other choice but to go to where the money is: the residents of the city.

In one of our neighboring cities this problems is happening. In Lake Worth, city commissioners are working toward making a plan to levy a per-building assessment on homes and commercial buildings to cover a shortfall in firefighters pensions. Commissioners voted to take the first step in levying a fire assessment for the budget year that begins Oct. 1. The city's annual fire assessment would be $60 per residential unit, 13 cents per square foot for commercial buildings, 2 cents per square foot for industrial or warehouse buildings and 9 cents per square foot for institutional buildings.

Notices showing the amount owed will be mailed to each affected property owner on Sept. 1. A public hearing on the assessment is scheduled for 6 p.m. Sept. 22 at city hall. The commission is expected to vote on the fire assessment following the public hearing.

When the assessment is O.K.'d as proposed, the city will use most of the $1.4 million to cover part of the cost of firefighter pensions, which cost the city $1.8 million this year.

The Lake Worth city commissioners have come up with a clever plan to cover the shortfall. The only problem is the publics reaction to it is not good. Many people have voiced concerns that raising taxes in this financial environment is counter productive. Other concerns are that fulfilling the never ending pension needs of the fire fighters is representative of the Social Security shortfalls we currently experiencing in Washington. Many believe that all city and state employees should fund their own pensions with their own money. 

The current pension system is broken. The unions should see this and ween the firefighters off the taxpayers to a self supporting system. We are seeing more pension and budget shortfalls every day. Don't bleed the tax payers anymore and don't let the employees of the city and state goverment trust in a pension system that will eventually collapse under it's own weight.