Why You Will Run Out of Money in Retirement

Retirement used to be about enjoying your golden years. For many, it was a time to travel or to relax without the need to earn a paycheck. However, times have changed and today, the very thought of retirement brings dread to those 50 and over.

There is a simple reason for this – most of us don’t have the money we need to enjoy a partial retirement, let allow life without work. Don’t believe me, then look at this article about how many Americans lack any sort of savings for an emergency.

To make matters worse, the Federal Government is now running annual deficits of more than $1 trillion and some observers believe the total combined government debt in the U.S. is reaching $70 trillion – that is roughly three-years’ GDP.

Don’t forget Social Security. In fact, this has become the fallback option for most Americans but the reality is that some forecasts predict the trust fund behind those monthly payments will run out of money in the 2030’s.

Think about it, if you are in your mid-50’s the odds are that there won’t be any money left in Social Security by the time you reach retirement age. At least there are pensions. 



Well, unless you are a government employee, the odds are that your employer long ago switched to a 401k plan. In fact, it’s even worse if you are working as a consultant or a contractor as you are basically on your own.

Ok, enough with the scare tactics. I think you get the point – you will probably run out of money in retirement. That is clear and odds are you already know this. The real reason you are reading this article is to find out what you can do to find some semblance of financial freedom in your golden years.

Step 1: Start Saving Something, Anything

While most financial advisors recommend that you should be saving 15 percent of your monthly income. The reality is that this is often a bridge too far for many Americans. Think about it, times are tough and you are probably just making ends meet. 

To make matters worse, the rear differential on your car is probably starting to give you problems.

As such, the idea of setting a goal of saving 15 percent of your income can be daunting. However, saving 1 percent or 5 percent might be something more realistic. The added plus is that it gets you into the habit of stowing away a little bit of cash each month. 

So, start saving something, anything today and build on that as you go. Not only will you gain some satisfaction from your growing bank balance but once you get enough money – maybe $500 or so, you can start to put that money into an interest-bearing account. In this way, your money can help you make more money.

Step 2: Cut Back on Your Expenses

Take your monthly cable TV bill. Some people are paying more than $200 every month to have 1,000 channels of nothing that they never watch. 

You don’t need to be a rocket scientist to know that this does not compute. Even better, you don’t need to be a techie to figure out ways to watch TV without cable.

Another way to cut back on your expenses is to stop eating out so much. Sure, it is good to support your local businesses but the reality is that eating out generally costs more than cooking at home – a lot more.

Also, don’t fall for those ‘meal box’ subscription services. Yes, some of the recipes are inventive and it saves time when shopping. 

However, you are paying a premium for these services and you can probably get most of the recipes online and the ingredients either through Amazon or at your local supermarket.

An added plus to cutting back on your expenses is that once you get started, you get passionate about finding ways to save money. 

This brings us to an important fact – a penny saved truly is a penny earned. So, if you can find a way to save $200 a month or more that works out roughly $2,400 a year that you have for retirement.

Step 3: Sell Your Home While the Price is High

It used to be that owning your home was a key part of the American Dream. However, if you are over 50, still paying a mortgage, and have no money saved for retirement, then you need to get radical.

One of the best ways to do this is to look at the equity you have in your home – if you are lucky enough to not be underwater on your mortgage. As such, you might want to steal a page from those annoying Millennials at work by rethinking your housing arrangements.

In some cases, this might mean selling your home so that you can cash before the market turns and in other cases, it might mean finding ways to sublet your home as this will turn a massive expense into a revenue-generating operation.

6 Costs You Must Consider Before Becoming Self-Employed

If you have always dreamed of being your own boss, setting your own hours, and doing something you’re passionate about, then becoming self-employed may be the best option for you. 

However, no matter how big your dreams are, you need to fully understand the reality of being self-employed and what it will actually cost you. 

Before you tell your boss to peace out and start pursuing your dreams, here are the six costs you must consider before making your final decision.

1. Lack of a consistent paycheck.

The biggest monetary concern you must face when becoming self-employed is having a lack of a consistent paycheck. Sure, you may think that you’ll reap all the profits of a successful business, but it could take months or years before you make any real profit that comes close to what you were making as a full-time employee. 

Be sure you look into your currently monthly expenses as well as the expected expenses of the business, and then determine what you need to bring in to make ends meet. If you plan on living off of your savings account, you want to know just how long your savings will last before your company needs to start making money. 



If you don’t consider this, you could put yourself into a very bad financial situation too quickly, and it could be detrimental to your personal finances as well as your business.

2. Start-up costs.

In order to start a business, you need to make sure it’s legitimate. This means you need to file your business with your local governments, and this typically requires a small fee. 

In addition, if you need to produce products, build inventory, or purchase equipment to do a specific service, these are all expenses you’ll need to provide upfront to get the business up and running. 

Throw in other necessities, such as a website or other marketing collateral, and you could find yourself with a hefty start-up cost expense list. Be sure to have a full understanding of what these are so you can be financially prepared for what’s to come.

3. Insurance costs.

When you are self-employed, you’ll be responsible for two different types of insurance: insurance for yourself as well as insurance for your business. 

For the business, you’ll need to make sure you’re getting all the coverage you need to keep your company protected from liabilities, workman’s compensation, insurance coverage for employees, and anything else that is necessary for your specific operation. 

As for personal insurance, you’ll no longer have an employer covering all of or a percentage of your medical/dental/vision/life insurance, which means you’ll need to pay for this out of pocket. 

Be sure to shop around for the best deals and do some research by looking at reviews and seeing what other people have to say about the company before making your final decision.

4. Legal fees.

When you’re starting a business, it’s always a good idea to ensure you’re following the laws appropriately, and this means using the assistance of a lawyer. 

However, legal fees can add up, and if you’re not prepared for these, it could damage your business. Be sure to meet with a variety of different lawyers in your area and choose the one that you have a good rapport with as well as one whose fees aren’t astronomical. 

Also, have a clear understanding of how their fees and payment structures work so you’re not blindsided with a giant bill for asking them a question over the phone or having them draw up a contract.

5. Technology costs.

Most entrepreneurs will start their company from their home, and that’s a good way to lower the start-up costs without taking on additional rent or mortgage payments. 

However, while running a business, you may find that the technology you currently have will not suffice. For instance, maybe you need a landline, a fax machine, accounts payable/receivable software, or a higher internet speed to help your business operate. 

Any of this will create a higher technology cost on your end, and you need to be prepared to pay for this.

6. Taxes.

If this is your first time being self-employed, you need to understand that filing your taxes will be different than years past. As a business owner, you’ll need to account for all of your spending, which means you will likely want to itemize expenses. 

In order to do this appropriately, you’ll need to keep records of your expenses, which means keeping receipts, bill statements, check stubs, and anything else that can prove an expense for your business. 

In addition, you want to be aware of any self-employed tax credits you’re eligible for, as those can help reduce the amount of taxes you owe.

Running your own business can be a dream come true, but it’s also a lot of work you need to prepare for, especially when it comes to keeping your finances in order.

A Beginners Guide to Investing

Trading the equity market requires an understanding of why stocks move, and what are the catalyst that drive share prices. Most people view the stock market as a single entity, but indices like the S&P 500 index are made up of individual stocks. 

A share of stock is ownership of the profits or losses that a company produces. To determine how much a share is worth you need to know how much profit or loss a company is generating.

What is a Share?

While many brokers offer CFDs on share prices, the underlying instrument that a CFD targets is the stock price. A stock is the partial ownership of a company and allows you to share in the profit and losses a company produces. 

By owning shares in a company, you are sometime eligible to vote for the company’s board of directors, as well as any special elections. Additionally, you are eligible to receive dividends which are payments from the company back to its shareholders.

When do Companies Report Profits

Most companies report profits or losses to their share holders on a quarterly basis. A quarterly earnings report, provides investors with several pieces of information which include profits, revenues, earnings per share, cash flow, as well as if the company plans on distributing a dividend. 



Most companies also offer forward guidance to their investors. This information includes what the company expects to earn during the next quarter and for the entire year, as well as the revenues they plan to generate during these periods.

What Do Trader’s Pay Attention Too?

Earnings and revenues that are reported for a quarter are pieces of information that have occurred in the past. For this reason, what is important is the numbers relative to expectations. 

Ahead of some earnings releases, analysts that cover a company will update their expectations of a company’s upcoming earnings announcement. If earnings and revenue are better than expected, the stock price might move higher. If the financial results are worse than expected, the news might create a selloff in the share price.

If earnings are lower or higher due to, for example, a one-time tax gain, traders will generally minimize the effect of the one-time gain or loss on the stock price. Investors will also evaluate a company’s forward guidance relative to expectations from the analyst community. 

If guidance is worse than expected, it might generate an adverse move for the stock price. If guidance is better than expected, the stock price might experience a rally.

How Do Analysts Calculate the Target Price?

Equity analysts uses the earnings multiple of a stock to calculate the future target price of a share. The earnings multiple along with expectations of future earnings are both subjective, which makes the process somewhat of an art. 

 The earnings multiple is provided by the market. You can use similar companies to arrive at your multiple. For example, if the earnings multiple of Pepsi is 15, you could assume that Coke has some similar earnings multiple. 

The multiple is then used to calculate the stock price by multiplying the multiple by your estimate of future earnings.

6 Strategies for Diversifying Your Income Streams to Save for Retirement

Are you worried that you have not saved enough money for retirement? You are not alone. Many people aged 50 and older have this concern. Many seek ways to diversify their income sources so they can save or invest more money leading up to retirement.

Strategies to Diversity Income

Diverse income streams offer more security leading up to and during retirement. By combining multiple income sources, you have other options if one stream doesn't prove as lucrative as expected. Here are a few common and uncommon options people over 50 use to diversify or supplement their income.

1. Investments

During retirement, many people live partially off their savings or investments in the form of retirement account payment and pensions. 

If you have money invested in growth stocks, this might be the time to see a financial planner to rebalance some of those assets to dividend earning stocks, bonds and dividend earning REIT investments.

2. Rental Property

If you own a home or real estate, rental income can be an excellent way to diversify your income. Options range from renting your extra house, an apartment within your house, or even a room in your home. 

Many people over 50 enjoy a nice side income with short-term rentals through Airbnb, HomeStay and TurnKey. This may be a perfect option if you are a natural host or hostess. 




Finally, some college and university programs hire local hosts to rent a room to visiting international students and scholars. 

Often this pays a modest stipend, but this can be a fun way to earn extra cash if you are an empty-nester who likes spending time with teens and young adults. Check local colleges and universities for listings.

3. Part-time Job

Many retirees opt to take a casual part-time job to supplement their pension and retirement earnings. But you don't have to wait for retirement. In fact, some mid-career workers take a second job to add to their retirement savings and investments.

Local listings are an option, or you may be able to find convenient work you can do at home. For example many companies like Amazon and American Express hire work-from-home customer service representatives. 

Other options include transcription, virtual assistant work and social media evaluation. You can find options through job sites like FlexJobs and Indeed. 

Be careful of work-from-home scams that con people out of money or sensitive financial information. See whether the company is legitimate by researching the Better Business Bureau or Glassdoor.

4. Embrace the Mainstream Gig Economy

Take a cue from the Millennials and consider joining the gig economy with a side hustle. According to the Pew Research Center, 16 percent of people between 18 and 29 participate in the gig economy compared to 6 percent of people over 50. 

However, people who are 50+ are among the fastest growing segments of gig workers. Options include:

• Driving for rideshare programs like Uber and Lyft
• Running errands through platforms like TaskRabbit or Postmates
• Providing pet care or dog walking services like Wag, DogVacay, or Rover
• Crowdsourcing microtasks like Amazon's MTurk

Teaching conversational English via webcam for programs like VIPKids or Cambly.

5. Start Your Own Business

Most likely, you have extensive experience and expertise to offer.This may be a good time to start your own business even for side income. 

Self-employment is growing at record rates. You may be able to put your expertise to work whether you offer a product or a service like consulting.

6. Flipping Used Items

If you enjoy buying and selling, you may earn money flipping used items. These may include your own unwanted items, rare books, vinyl records, collectibles or clothing. 

Resourceful flippers earn money by combing thrift shops, Craigslist and flea markets for inexpensive local items. Then you may clean or upgrade the item and sell it online for a higher price at places like Amazon or eBay.

Keeping it All Organized

A smartphone with split-screen multi-window ability like the LG V20 can help keep all these revenue streams organized. Most income streams have associated apps, and a good phone with a generous data plan makes it much easier to manage.

If you are not used to self-employment, be aware that the taxes can be a little more complicated. Be sure to visit the IRS page for sharing and gig economy workers.

With a little creativity, you can diversify your income for a more comfortable retirement. You just may be able to have fun and meet new people by monetizing a hobby. 

Who knows? You might find that your side hustle leads to a lucrative business.

Contributor

Dan Cormac knows how to make his money go further. A freelance financial journalist, Dan is passionate about personal finance. Whether you hope to escape the chains of debt, to save for a house, or to retire within a decade, Dan explores the most effective ways you can achieve your financial goals.

How Does an Individual Voluntary Arrangement Work?

For those in the United Kingdom and Wales, an individual voluntary arrangement, or IVA, is a draft worked out between two parties as an alternative to bankruptcy. 

It is an agreement which may be simple or complex, but it works out an arrangement between the debtor and the lender or the debtor and the credit card companies.

What Does an IVA Do?

One way or another, it is intended to work out in a manner which leads to the complete payment of the debt without resorting to bankruptcy filing or court costs. 

Even retrieval costs can be significantly spared in this way. You work with a representative who compiles and represents individual voluntary arrangement agreements.

This is the perfect way to pay of the debts you owe because, as they have accumulated, interest and fees have burdened the situation further. 

With a good consolidator on your side, they will be able to work all of the payments down to the most essential level and pay it all off. Then, you simply get a monthly note to pay for the whole work.

You can get advice on individual voluntary arrangement when you look online and seek professional help. Detail your situation to a representative and get the process started to pay off all of the debts you have accumulated and need to resolve.

How Can Advice on Individual Voluntary Arrangement Help Me?

It is not surprising that a little debt seems to affect your life in only a minimal way. It almost seems as if it has disappeared and you will never owe anything again. 

While you could have gotten away with this about 50 years ago, that surely is not happening in this digital age. Everything is tracked, categorized, assigned, and numbered right to your name.

As such, it is not as if you can run from larger debts. Surely this is motivation enough to pay off bills as you can. However, if you are like countless others, you have gotten in way over your head and now there are bills up to the virtual ceiling. 

What the IVA does to help you is simple. It takes all the debt you have presently and stops it. The fees stop rising up so you can have an easier time paying in installments.

In some cases, you may even be able to pay off the arrangement earlier than expected. When you work with a public worker or solicitor, they can help you reach and exceed your goals and help you get your credit in line much faster.

Conclusion

It is far better to address your debts earlier than it is to do so later. It may take some courage to put it out there. Understand that, the longer you wait, the worse it will become. 

Create an Individual Voluntary Arrangement as soon as possible to keep the late fees low and to avoid collections. In time, all of your accumulated debts will be efficiently paid off.

It's Often Best to Seek Personal Financial Advice Before Making Investments

When you earn your money from work, it never seems like it can go far enough. For the average person, maintaining a livable income is more than just making ends meet. If all the situation is right now is hand to mouth, there is little to no room for gain in the long run. What will it take to make it ahead? One thing is for sure, it is not a matter of more work.

Smarter Work with Money

In our younger years, we are more preoccupied with spending our basic earnings and enjoying ourselves. This is perfectly fine, as there may be no other point in life to do so. As the age sets in and we begin to understand where we fit into the world and how money works, we start to look toward savings and investments with our money so it will last.

Investing is something that always appears as a good idea. In fact, with the proper direction, investments can lead to significant gains. At the same time, we want to be careful what we invest in. Whether you are at the beginning level of investments or experienced and older, it is wise to seek professional advice.





You might think life is all about earning money. Aside from the obvious, it is not. In fact, the old saying to “work smarter not harder” is something we would all do well to follow. There are thousands upon thousands of potentially beneficial investments, but what is right for you right now with the funds you have?

Look to sources such as https://www.hensoncrisp.com/ for additional information regarding how to make your money work smarter for you. Investments are a risk and you can lose, but with the right guidance, you are more likely to succeed and even be among the wealthy. This is especially important when you are using retirement funds for investment in order to create a secure future.

Retirement and Investment

Retirement funds are something you should be building up your entire life. Let us be realistic and understand that economics do not work for present generations the way they did in the past. Most of us looking toward retirement today are actually dealing with debt and dire economic circumstances which we can barely understand.

The retirement funds you have built up so far are going to be the source for investments in years to come. The idea is to invest only what you can afford into the most likely prospects. This is, again, where financial advice comes in handy. In fact, with the proper help, your savings can double or triple in one third of the time or less it took your parents to achieve.

This generation determines the sustainability of the next, much as the one before us did. It is all a matter of making the smartest investments to get ahead in the game. Creating wealth is actually not a game, but if it were, the earnings would be a win and missed advantages would be a loss.