How to Retire in Singapore: Costs, Visas and More

How to Retire in Singapore: Costs, Visas and More – SmartAsset

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Singapore is a tiny country made up of 64 islands clustered around the end of the Malay Peninsula. Most of its population of nearly 6 million lives in Singapore City. Many locals speak English, and it is home to many human-made wonders, including a massive artificial waterfall, iconic skyscrapers and what is generally regarded as the world’s best international airport. If you are considering the Lion City, as Singapore is sometimes called, as your retirement destination then it is wise to partner with a financial planner to help make your dream of retiring in Singapore a reality.

Cost of Living and Housing in Singapore

Singapore is less expensive than the largest U.S. cities, such as New York, but more expensive than smaller American cities like St. Louis, according to Numbeo, a cost-of-living database. For example, a standard of living in New York that would set you back $ could be roughly matched in Singapore for about $2,000 a month less, according to Numbeo.

On average, rent in the U.S. is 36% lower than in Singapore, but that changes when comparing this southeast Asian nation with the largest U.S. metropolitan areas. For example, you can expect to pay about $3,415 per month in rent for a one-bedroom apartment in central New York City and about $6,610 for a three-bedroom apartment. In central Singapore, you can expect to pay about $2,171 per month for a one-bedroom apartment and about $4,030 for a three-bedroom apartment.

Property costs more in Singapore. Buying a one-bedroom apartment in the center of Singapore will cost about $2,500 per square foot; a comparable residence in New York City will cost about $1,500 per square foot.

Retire in Singapore – Visas

Singapore does not offer a specific retirement visa, but they have several options for retirees to obtain a residence permit.

First, if you worked in Singapore before the age of 50, you might have an option to continue your visa into retirement. If you want to move to Singapore after age 50, you can use Singapore Entrepreneur Pass or the EntrePass, which requires that you start a company with paid-up capital of at least $37,000.

After two years of acquiring the EntrePass and permanent residency, you can apply for citizenship. However, you’ll need to show significant “financial merit” and relation to a Singaporean citizen for government approval.

All other routes to a permanent resident visa in Singapore require being married to a Singaporean citizen, having a work pass or making a major investment in a Singaporean entity.

Retire in Singapore – Healthcare

Singapore has some of the best healthcare in Asia. According to Knoem’s healthcare efficiency index, Singapore’s healthcare system is rated second in the world. This index takes both life expectancy and health expenditure into account. Singapore does not provide free healthcare to expats, so retirees must have private healthcare insurance. Insurance for expats can cost up to $300 per month.

Even with insurance, people may be required to pay for expenses out of pocket, including elective procedures and deductibles. Even without full coverage insurance, a trip to the doctor can cost as little as $25.

The cost of medication in Singapore can vary. Typically, general practitioners and specialists will dispense medications after you’ve seen a doctor. In general, private insurance will cover the cost of medications.

Retire in Singapore – Taxes

All citizens and residents of Singapore who work in the country must pay into the Central Provident Fund. Foreigners who do not work in Singapore do not have to pay into the Central Provident Fund, even if they are residents. There may be a tax on pension income depending on how much you receive.

U.S. Citizens are generally required to file a tax return each year. To avoid paying taxes twice, especially on pension income, it is wise to work with a financial planner and a tax professional that understands the Singapore tax system’s intricacies. Income is taxed at a maximum of 22% in Singapore, so you may want to change your tax status to Singapore if you earn over a certain amount.

Retire in Singapore – Safety

The 2020 Gallup Law and Order Index ranks Singapore as No. 1 in the world for law and order. The index also ranks Singapore as the city where people feel most safe to walk alone.

According to the U.S. Department of State, personal crime in Singapore is very low. The department also notes that Singapore topped the list as the world’s safest city in the categories of personal and infrastructure security, according to the Economist Intelligence Unit 2019 Safe Cities Index.

However, like other major cities, expats need to watch out for pickpocketing, theft of unattended property and purse snatching.

The Takeaway

Singapore is a beautiful country and attracts thousands of expats every year. It is safe for Americans and has similar standards and costs of living. Language won’t be a problem: English is one of four official languages, the others being Mandarin, Malay and Tamil. While it would be difficult for most U.S. citizens to live in Singapore on Social Security retirement benefits alone, someone with a pension or other retirement fund could possibly live comfortably in Singapore in retirement.

Tips on Affording Retirement

  • Consider talking with a financial advisor before moving abroad. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free advisor matching tool can connect you to several financial advisors in your area in just minutes. If you’re ready, get started now.
  • While many Americans would find it difficult to retire to Singapore on their Social Security benefits alone, it may be possible to do that if you also had a pension. Use a Social Security calculator to see what you can expect to receive from Uncle Sam in retirement.

Photo credit: ©iStock.com/southtownboy, ©iStock.com/fotoVoyager, ©iStock.com/mehdi33300

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.

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What Is an Accredited Retirement Plan Consultant (ARPC)?

What Is a Accredited Retirement Plan Consultant (ARPC)? – SmartAsset

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Salespeople and marketers working in the financial services profession, as well as college students, can earn the Accredited Retirement Plan Consultant (ARPC) certificate to show they have proficiency and professionalism sufficient to help employers create effective retirement plans for workers. That includes plan features and designs as well as how to educate, advice and communicate with eligible employees about the plan, not to mention marketing the plans. They can also address required reporting and compliance demands. Meanwhile, a financial advisor can offer individuals, whether they are employees or not, valuable advice on creating, adjusting and monitoring their own personal financial plan.

ARPC Issuing Body

The Society of Professional Asset Managers and Recordkeepers (SPARK) is the sponsor of the ARPC certificate. The nonprofit was formed in 1998 and acts as an advocacy group on federal retirement policy. The membership of SPARK includes many of the financial industry’s top companies, including BlackRock, Fidelity, Charles Schwab and Merrill Lynch. In addition to the APRC certificate program, SPARK provides research, training and other resources on cybersecurity, fraud, compliance and industry best practices.

The ARPC has been offered since 2004. About 150 financial professionals currently hold the certificate. So it’s not an especially common certification.

ARPC Certification Requirements

The ARPC designation is primarily intended for people already working in sales and marketing in the retirement plan field. With the exception of students, applicants must have a year of full-time experience.

SPARK further defines a year of experience as at least 2,000 hours of working in financial services. That has to include at least 400 hours spent selling, marketing or providing services to retirement plans and plan participants.

Applicants must provide a recommendation letter from a current work supervisor. The recommendation letter has to verify the type and amount of the application’s work experience.

Students currently enrolled in a college or university can apply without the required job experience requirement. Instead, they need a recommendation from a faculty member or department head to qualify.

Student applicants won’t receive their ARPC until they complete a year of professional work experience, however. The relevant work experience can include an internship.

The ARPC Exam

ARPC applicants also have to pass a certification exam. This is a 100-question multiple-choice test that must be completed within two hours with a passing score of 73% correct. The exam questions are designed to test the applicant’s knowledge of how to determine an organization’s retirement plan needs, evaluate the effectiveness of organization’s current retirement plan, formulate a suitable retirement plan solution, present it to the employer and assist in implementation and follow-up.

No coursework is required to sit for the exam. However, applicants can take an online ARPC course that presents material based on the exam outline.

Costs to Get an ARPC

ARPC applicants have to pay a $350 application fee and taking the exam costs another $150. The optional self-paced online ARPC training course costs $850. Applicants who pay for the SPARK ARPC course can have the $350 application fee waived.

ARPC certificate holders pay $150 annually to renew the designation. Each year they also have to complete 10 hours of continuing education courses. SPARK offers five-hour continuing education courses that meet the requirements for $150 each.

ARPC Jobs and Privileges

ARPC holders work in marketing and sales in the retirement field. Earning the APRC designation allows the holder of the certificate to use the ARPC certification logo on business cards and stationery. Beyond that, there are not particular powers or privileges associated with holding this designation.

Comparable Certifications

There are several other professional designations that can be earned by financial services workers in the retirement field.

Accredited Retirement Plan Specialist (ARPS) is a SPARK designation for administrative and recordkeeping professionals working in retirement plan operations. Similar to the ARPC certificate, ARPS holders have demonstrated a year of experience and the ability to pass an exam.

Certified Retirement Counselor (CRC) is offered by the International Foundation for Retirement Education. Applicants can earn the certificate by registering and passing a four-hour 200-question exam that costs $520.

Bottom Line

Sales and marketing professionals working in the retirement plan industry can demonstrate their proficiency at designing employer-sponsored retirement plans by earning the ARPC designation. Earning the certificate requires having a year of relevant experience, obtaining a letter of recommendation and passing an exam. The designation, which is not particularly common among financial professionals, can also be earned by college students.

Tips on Retirement

  • Consider working with a financial advisor to develop, implement and fine-tune a personal financial or estate plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors who will help you achieve your financial goals, get started now.
  • Are you saving enough for retirement? SmartAsset’s award-winning retirement calculator can help you determine exactly how much you need to save to retire.

Photo credit: ©iStock.com/South_agency, ©iStock.com/Andrii Dodonov, ©iStock.com/kupicoo

Mark Henricks Mark Henricks has reported on personal finance, investing, retirement, entrepreneurship and other topics for more than 30 years. His freelance byline has appeared on CNBC.com and in The Wall Street Journal, The New York Times, The Washington Post, Kiplinger’s Personal Finance and other leading publications. Mark has written books including, “Not Just A Living: The Complete Guide to Creating a Business That Gives You A Life.” His favorite reporting is the kind that helps ordinary people increase their personal wealth and life satisfaction. A graduate of the University of Texas journalism program, he lives in Austin, Texas. In his spare time he enjoys reading, volunteering, performing in an acoustic music duo, whitewater kayaking, wilderness backpacking and competing in triathlons.
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How to Retire in Austria: Costs, Visas and More

How to Retire in Austria: Costs, Visas and More – SmartAsset

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From Oktoberfest to the Salzburg Summer Festival, Austria seems to have festivities year-round. This German-speaking nation of some 9 million has a rich cultural heritage and can boast of such fabled composers as Wolfgang Amadeus Mozart and Ludwig van Beethoven, among others, as former residents. Citizens and visitors also come to Austria for the Alps, which offer some of the best snow skiing in the world. As you weigh whether to retire in Austria consider working with a financial planner to make sure you can afford it and handle your taxes in the most efficient way possible.

Cost of Living and Housing in Austria

The cost of living and housing in Austria is very similar to the U.S. In general, consumer prices are 6% higher in Austria, according to Numbeo, a cost-of-living database.

However, rent prices in the U.S. are about 44% higher, on average, than in Austria, so your housing costs could be significantly lower if you decide to live in Austria. Compare rental costs in Vienna and New York City: If you choose to rent a one-bedroom apartment in the heart of New York, you will likely pay about $3,415 per month. The same apartment in the heart of Vienna costs about $1,089 per month. A three-bedroom in the heart of New York City costs about $6,610 per month, and the same apartment in Vienna costs about $1,969 per month.

If you choose to purchase an apartment in Vienna, you can expect to pay about $845 per square foot in the city center. The cost outside of the city center is about $504 per square foot.

Retire in Austria – Visas

Austria offers several visas to Americans, but the most popular one for retirees is a settlement permit. To qualify for a settlement permit, a person must prove that he or she has sufficient funds, health insurance and a place to live.

Additionally, Austrian residency requires a language test to prove that you comprehend the German language. The settlement permit is for financially independent individuals who do not intend to work while in Austria. You may apply while in the country on a tourist visa or while still in the U.S. It is best to work with an immigration lawyer as the application process is entirely in German and can take several months.

Retire in Austria – Healthcare

Austria has affordable access to high-quality facilities for most residents, citizens and visitors. According to Knoema, an index that assesses the countries with the best healthcare globally based on life expectancy and health expenditure, Austria ranks 27th. In comparison, the U.S. ranks 49th.

Private health insurance in Austria costs about $240 per month, and a doctor’s visit may cost you up to $70. You must obtain health insurance to get a residence permit or settlement permit, and you can purchase health insurance policies for expats from Austrian or American companies.

Retire in Austria – Taxes

All U.S. citizens are generally required to file a tax return each year regardless of whether they are in the country or not. The foreign earned income exclusion (FEIE) can be applied depending on how much time a person spends outside of the country. For example, on your U.S. expatriate taxes you can exclude up to $105,900 of your 2019 foreign earnings.

If you earn an income while in Austria, that income may be taxed up to 55%. However, your foreign earned income will not be taxed by Austria. Therefore, your tax on your retirement income will be taxed as it would be if you were in the U.S., and any income you earn in Austria will be taxed separately.

Retire in Austria – Safety

The 2020 Gallup Law and Order Index ranks this Central European nation as the sixth safest in the world. According to the U.S. Department of State, Austria has low crime threats and is one of Europe’s lowest-crime countries.

The most common crime experienced by U.S. citizens is purse and wallet snatching, typically in crowded public areas, according to the State Department. Other crimes of opportunity occur in trains, restaurants, shopping areas and crowded tourist areas where criminals distract a victim who usually was not in direct physical control of valuables.

In general, road safety is not a concern. The threat of terrorism, though, is currently listed as Medium when directed to or affecting official U.S. government interests.

The Takeaway 

Austria ranks among the top three most livable countries, according to the Global Peace Index. In fact, a recent study by the Economist Intelligence Unit ranked Vienna as the most livable city on Earth. This city alone offers a seemingly endless array of museums, fine art and world-renowned architecture. The cost of retiring in Austria will be similar to the cost of retiring in the U.S. So whether you choose to waltz through Vienna or ski in Innsbruck, this land-locked country, which shares borders with Italy, Switzerland, Germany and Hungary, has a retirement lifestyle for almost everyone.

Tips on Affording Retirement

  • Consider working with a financial advisor about the cost of retiring abroad. Finding a financial advisor doesn’t have to be hard. The SmartAsset matching tool can connect you to several advisors in your area in just minutes. If you’re ready, get started now.
  • Many American will be able to retire in Austria on a combination of their Social Security benefit and a pension. You can use a free Social Security calculator to see what to expect from Uncle Sam in retirement.

Photo credit: ©iStock.com/benedek, ©iStock.com/Marcin Wiklik, ©iStock.com/CHUNYIP WONG

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
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Compounding Your Savings For Retirement | Discover

With compounding interest, you can build your savings faster—and save even more.

In olden days, people stashed away extra money in their mattresses or cookie jars which is not a good idea if you have a flood or fire or even a lapse in memory. Fortunately, you now have many choices for storing your money—in reliable retirement accounts. These choices not only provide stability and security, but also give the important bonus of earning interest and compounding the value of your money, which means increasing the value of your retirement savings well beyond the amount you have deposited.

How Compound Interest Works

When you have money in an account with compound interest, it allows you to build upon your savings quickly because you earn interest not only on the amount you have contributed, but also on the interest you have earned in prior periods. Within each period you’re earning interest on the total balance in your account, not just on what you have managed to save. With this in mind, saving early is critical to meeting your retirement goals. Saving early can also reduce the need for you to contribute large sums to your savings as you near retirement.

Couple riding bikes along the water

As an example, if you put $1,000 into an account with simple interest of 2.34% Annual Percentage Yield (APY), you will have $1,702 after 30 years. If, however, you have that same $1,000 in an account with compound interest of 2.34% APY, you will have $2,018 after 30 years.

Now let’s talk about how to save for retirement.

Choices For Retirement Accounts

Once you start saving for retirement, you have several choices of retirement accounts: 401(k), Roth IRAs or Traditional IRAs.

  • 401(k). Many companies now offer 401(k) savings opportunities for employees rather than pensions. With a 401(k) you have money withheld from your paycheck for a retirement account managed by the company’s financial partner. Often your contributions are withheld pre-tax, lowering the amount of taxable income in your paycheck and maximizing the amount you contribute to your retirement account. Also, it is common for companies to match a percentage of your total contribution.
  • Roth vs. Traditional IRA. The Traditional IRA is funded with pre-tax funds, meaning that you don’t pay tax on the money that you put into this account now, but you will pay tax on it when you withdraw the funds from your account later on. The Roth IRA is taxed up-front, so you don’t get a tax savings on your deposit now but you won’t pay taxes on qualified distributions in retirement. Check with your financial or tax advisor for help making the best choice for your personal needs.

Whichever path you choose, try to set up regular salary contributions with a fixed amount from every paycheck going into your retirement account. The IRS has a limit on annual contributions based on age and marital status, so check to see what applies to your personal and family situation to avoid overestimating the amount you can contribute.

Couple looking at compounding interest calculations on a mobile phone

IRA Interest Rates/APY

Because retirement accounts are established to meet long-term savings goals, banks and other financial institutions typically consider retirement accounts to be less risky than other consumer deposit account types, such as savings and money market accounts. What that means for you is that banks may offer slightly higher IRA interest rates than regular savings accounts rates. This is another way that retirement accounts make your savings grow faster.

Any financial institution will give you current information on IRA interest rates or APY. They can’t predict the future, but with a fixed-rate IRA CD, you know exactly what interest rate your money will earn over the term you select. Like other consumer savings accounts, IRA deposits are protected by FDIC insurance, to the maximum allowed by law, making them far more secure than the money in your mattress.

The article and information provided herein are for informational purposes only and are not intended as a substitute for professional advice. Please consult your tax advisor with respect to information contained in this article and how it relates to you.

Source: discover.com

How to Retire in Denmark: Costs, Visas and More

How to Retire in Denmark: Costs, Visas and More | SmartAsset.com

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If happiness is contagious, think about retiring in Denmark. Danes are routinely held to be some of the world’s happiest. Indeed two of the top five cities in a global survey of happiest cities are in this tiny Scandinavian nation. Perhaps that’s due to the country’s generous social safety net. Or maybe it’s Danish devotion to outdoor recreation and culture. Children’s book author Hans Christian Andersen, composer Carl Nielsen, tennis star Caroline Wozniacki and some of the world’s most avid sailors all hail from Denmark. Its capital, Copenhagen, is the most bike-friendly city in the world and home to the second-oldest continuously operating amusement park, the 177-year-old Tivoli Gardens. Here’s what you need to know about visas, healthcare and cost of living in this nation of some 6 million, virtually all of whom speak English.

Cost of Living and Housing in Denmark

Like its neighbors, Denmark is generally more expensive than the U.S. Consumer prices are 28% higher in Denmark than in the U.S., according to Numbeo, a cost-of-living data base. However, the cost of renting is lower than in the U.S., but purchasing a home may prove to be more expensive depending on where you choose to live.

You could expect to pay about $3,415 per month to rent a one-bedroom apartment in central New York City and about $2,000 for a one-bedroom outside of Manhattan. In Copenhagen, a one-bedroom apartment costs about $1,671 per month in the city center and about $1,302 outside the center. If you want a bit more space, a three-bedroom apartment in central Copenhagen costs about $2,930 per month and about $2,218 per month outside the city center.

If you want to purchase an apartment in Denmark, the average cost is about $551 per square foot. In central Copenhagen, an apartment costs about $727 per square foot. Outside of the city center, you can expect to pay about $510 per square foot.

Retire in Denmark – Visas and Residence Permit

If you plan to retire in Denmark, you’ll need more than just a tourist visa. If you plan to stay in Denmark for more than three months, you’ll be required to get a long-term visa. Denmark does not offer a retirement visa, so you will have to get a student visa, a worker visa or a Danish citizen’s partner.

The most common option for American retirees is the worker visa or the partner visa. A partner visa is relatively straightforward. If you are married to or in a long-term partnership with a Danish citizen, they can sponsor your visa.

If you want to work in Denmark, you must apply for a residence and work permit in Denmark. You must have a company that is willing to sponsor you and provide information on your work and personal history to be considered for a visa. You can find all the requirements on the New to Denmark website.

Retire in Denmark – Healthcare

The World Health Organization ranks Denmark’s healthcare system as the 34th best in the world (out of a total of 191 countries), which is slightly better than America’s rank of 37. The World Population Review ranks the health of Danes as the 23rd best in the world.

The healthcare system in Denmark is universal and decentralized. The government provides money from tax revenues to all the regions and municipalities to ensure that health services are delivered throughout the country. Therefore, non-taxpayers are not automatically enrolled in the system and must pay with private insurance or out of pocket.

Denmark has a social healthcare scheme called the Danish Health Security Act. It covers foreign nationals who stay in Denmark for over three months, provided they are registered with Citizens’ Services and have a CPR (Det Centrale Personregister) number. If a person is not yet covered or does not have access to a CPR number due to their visa status, the Danish healthcare system will still see them if they have health insurance in their country or can cover their healthcare costs.

Retire in Denmark – Taxes

If you can get a work or spouse visa in Denmark, you will be taxed on your income from Denmark sources. Your tax rate will range from 8% to 56%, depending on your income.

Denmark also has a sales tax on items that can reach 25%. This is known as a value added tax (VAT). Additionally, capital gains taxes on investments in Denmark can be taxed between 27% and 42% of the gains, including bought and sold properties at a higher value. This is higher than most taxes in the U.S.

Additionally, American citizens are required to file expatriate tax returns annually. Your income earned in Denmark may be subject to tax, so be sure to work closely with an accountant or other financial professional to learn about the Foreign Earned Income Exclusion and other potential tax credits.

Retire in Denmark – Safety

In a global analysis of nations in which residents felt safe walking home, Denmark got the fifth highest score. And in the same study’s Law and Order Survey, Denmark got the sixth highest score. According to the U.S. Department of State, Copenhagen is a medium-threat location for crime.

Not only is crime significantly lower than in the U.S., but the superior public healthcare system is also widespread. Therefore, if someone is injured in physical activity or otherwise, excellent healthcare will always be available to citizens and foreign nationals.

The Takeaway

Denmark checks a lot of boxes for outsiders seeking a retirement home. The social safety net is about as strong as exists anywhere. Expats will find the country safe, civilized and full of encouragements to ride a bike, enjoy a beach, hike a centuries-old path through a conifer forest or hunker down on a cold evening to savor hot mulled wine – all with some of the world’s happiest people. (They might even help you pronounce difficult Danish phrases: try saying “red porridge” in their language.). The combined effect of these distinctly Danish pleasures is sometimes called “hygge,” a term that evokes international admiration.

Tips on Affording Retirement

  • Consider talking to a financial advisor about retiring overseas. Finding the right financial advisor who fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors to help you achieve your financial goals, get started now.
  • Retiring in Denmark has many intricacies. In general it’s more expensive than the U.S. But your Social Security and, if you have it, a pension could cover the costs. You can estimate your benefit amount with this Social Security calculator.

Photo credit: ©iStock.com/scanrail, ©iStock.com/pixdeluxe, ©iStock.com/Westersoe

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.

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Budgeting for Better Retirement Planning | Discover

How you’ll live in retirement depends largely on how you budget for it now.

Budgeting is an essential part of preparing for retirement. If you compare budgeting to any sport, you can imagine that without the proper practice and discipline, you may not reach your ultimate goal. The same applies to budgeting – without a clear strategy, good saving habits and a strong commitment to improve, you might never achieve your ideal retirement.

Create a budget

Use a budget to keep track of what you’re spending and saving to make sure your retirement is as comfortable as you envision it to be. The first step when budgeting is to track all your expenses – like utilities, housing, car payments, groceries, healthcare and entertainment – and categorize them on a spreadsheet. Gather your credit card and bank statements and review what you’re currently spending by category to determine your current budget; subtract that from your income to understand how much you can save.

Woman entering her expenses into her budget

Saving for retirement is key, and you may not want to rely solely on extra money you’ve put away at the end of the month. Diversify your savings to maximize your retirement planning opportunities by contributing to an employer-sponsored 401(k) or opening an IRA. Both have greater earning potential in the long run.

Stick to your budget now

A budget isn’t something that you make once and put in a drawer. Keep your budget up-to-date and reassess your spending needs for various stages in life so that when you get to retirement, you’re used to managing money responsibly. By regularly updating your budget, you will be more aware of recurring issues in your spending habits and adjust accordingly.

Review your budget and savings at least annually, possibly at tax time, after year-end holidays or near your birthday. During this annual review, consider what changes have occurred or are anticipated for the future. For example, if you’ve had a raise or paid off debt, try to put a significant amount of the additional income into savings.

Planning your budget for retirement

The quality of your retirement depends upon the financial decisions you make now. Are you budgeting and saving? Are you putting away money in retirement accounts, such as IRAs and 401(k)s? If you open these retirement accounts early and contribute to them frequently, you will accrue more money for retirement on top of the money you saved through regular budgeting. Along the way to retirement, make sure you plan for life changes, as this will determine your spending power and plans for the future.

Grandparents going for a walk with their children and grandchildren

What you want for retirement not only depends on how you save now, but it also depends on your goals. Perhaps you want to retire near your children where the cost of living may be higher or lower than in your current area? Factor into your retirement budget the cost of care for an elderly parent or other dependents, if needed. While the budgeting process starts now, continue to budget into retirement to ensure a secure future for yourself and your loved ones.

Source: discover.com

Retiring: Turn to CDs For Cash Flow

So you’re retiring? Now’s the time to put your CD’s returns to work.

If you are retired and need to fill a gap in your monthly income stream, save for other medium- to long-term goals or supplement your existing investment mix, Certificates of Deposit (CDs)– including Discover’s CDs and tax-advantaged Individual Retirement Account (IRA) CDs — can provide a safe and practical solution.

A simple way to reach your goals.

Watch your savings grow with a CD.

Lock in Your Rate

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  • Supplement cash flow.  CDs can provide a steady source of income that also has the potential for growth. Discover’s CDs, for example, offer guaranteed returns on terms ranging from 3 months to 10 years. The longer the term, the higher the interest rate. And since your rate of return is fixed, you know exactly how much income to expect– and when to expect it (when your CD matures your principal plus interest accrued and not withdrawn is returned to you) –a major plus for retirees looking to close a gap in their cash flow.

One CD strategy for generating cash flow is called a CD ladder. Open a series of CDs that mature at different times. When the first CD matures, harvest the interest income, but reinvest the principal in another CD at the top of your “ladder.” This approach can create a consistent and ongoing income stream to last throughout your retirement years. With Discover CDs, you always have convenient renewal options at maturity, making it easy to put this income-management practice into effect.

Grandparents sharing fresh-picked strawberries with grandson

  • Fund medium- and longer-term goals. Open separate CDs with an eye toward funding different financial goals. Will you need to purchase a new car in the next three years? Are you planning an extended trip abroad to celebrate a special anniversary? Do you hope to help a grandchild with college costs? Time the CD maturity to match your savings goal. Again, Discover offers CDs with maturities as short as three months or as long as 10 years.
  • An alternative to bonds. Investors often choose U.S. Treasury bonds when seeking a safe haven for their investment dollars. Yet CDs should be on your list of worthy alternatives. Both Treasuries and CDs offer safety; however, in some cases, CDs offer more attractive yields.
  • A home for excess IRA/401(k) distributions. Current IRS rules require individuals to begin taking distributions from their retirement accounts when they reach the age of 70½ in order to comply with required minimum distribution rules. To the extent that those distributions are more than you’ll need to spend, which may be the case for those who have delayed taking distributions, consider contributing them to a CD until you need to use the funds.

And remember, the safety of Discover’s CDs and IRA CDs being FDIC insured to the maximum allowed by law can be a big comfort when preserving your assets is more important than ever.

Discover

Regardless of your time horizon, risk tolerance, or savings goal, you can always find the right savings vehicle for your needs at Discover. Discover offers an Online Savings Account to help you with your short-term savings goals, a full range of CDs and IRA CDs with terms from 3 months to 10 years, and Money Market Accounts that have a competitive rate. Open a Discover account online or call our 24-hour U.S-based Customer Service at 1-800-347-7000.

The article and information provided herein are for informational purposes only and are not intended as a substitute for professional advice.

Source: discover.com

Can an Inherited IRA Be Rolled Over?

Can an Inherited IRA Be Rolled Over? – SmartAsset

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If you inherit an individual retirement account (IRA) from a spouse, you can treat it like your own IRA or roll it over into a traditional IRA you already have. If you are the beneficiary of an IRA inherited from someone other than your spouse, the options are different. You can’t roll it over into an existing IRA. However, you can transfer it into a new IRA, if you satisfy certain requirements. In either case, failing to follow the rules can result in the IRA being treated as a taxable distribution. A financial advisor can guide you as you deal with an inherited IRA so that you don’t needlessly incur any tax liabilities.

Inheriting an IRA From a Spouse

The owner of an IRA can designate anyone to be the beneficiary of an IRA or other account after the owner’s death. Often, the beneficiary is the surviving spouse. Then the beneficiary has some choices.

First, the surviving spouse can name himself or herself as the owner of the inherited account. In this event, it will be as if the surviving spouse had always owned the account. The same distribution rules will apply.

Second, the new owner can roll it over into an existing IRA. This can be a traditional IRA or, after conversion, a Roth IRA. Any taxable distributions can be rolled over into another plan, such as a qualified employer retirement plan, a 401(a) or 403(b) annuity plan or a state or local government’s 457(b) deferred compensation plan.

If the rollover route is selected, it can be accomplished by a direct trustee-to-trustee transaction.

Or it can be done by taking the funds from the account as a distribution and then depositing the funds into another IRA within 60 days. Waiting longer than 60 days to re-deposit the funds into an IRA risks having the distribution taxed like income.

The most desirable way is to use the direct trustee-to-trustee transaction. This can be set up in advance if the wishes of the original owner regarding the inheritance are known.

The age of the beneficiary determines how the inherited IRA will be taxed. That means, for instance, any distributions before age 59 ½ will get charged a 10% penalty in addition to being subject income taxes. And starting at age 72, the beneficiary will have to start taking the annual required minimum distributions (RMDs.) If a beneficiary was 70.5 or older on Dec. 31, 2019, he or she has to start taking RMDs immediately.

Inheriting From a Non-Spouse

If you inherit an IRA from someone other than your spouse, you can’t just roll it over. In this case, the usual approach is to open a new IRA called an inherited IRA. This IRA will stay in the name of the deceased person and the person who inherited it will be named as beneficiary. The inheritor can’t make any contributions to the inherited IRA or roll any funds into or out of it.

The funds can’t just stay in the inherited IRA forever, or even until the new beneficiary reaches the age at which they’d have to start being withdrawn. In most cases, all the funds have to be distributed within 10 years of the original owner’s death. If it’s a Roth IRA, all the interest usually has to be distributed within five years of the owner’s death.

Rather than opening an inherited IRA, the person who inherited the IRA can take a lump sump distribution. Even if the person is younger than 59 ½, the distribution won’t be subject to the usual 10% penalty for an early withdrawal. However, the distributed funds will be subject to income taxes.

Bottom Line

Inheriting an IRA from a spouse means the beneficiary can simply name himself or herself as new owner of the account and treat it as if it had been theirs all along. Or the bereaved spouse can roll the funds into a new account. If the inheritor is someone other than a spouse, the usual approach is to set up an inherited IRA, keeping the original owner’s name on the account and naming the inheritor as the beneficiary. But sometimes it makes more sense to disclaim an inherited IRA if, for example, the inherited funds would mean the beneficiary’s estate would be so large it would incur the federal estate tax. In the event an IRA is disclaimed, the funds would go to other beneficiaries named on the account.

Tips for Handling IRAs

  • If you inherit an IRA or expect to – especially if your benefactor is someone other than your spouse – consider discussing the best way to handle it with an experienced financial advisor. Finding one doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors who will help you achieve your financial goals, get started now.
  • One factor in deciding whether to claim and how to claim an inherited IRA is how much you will get from Social Security. That’s where a free, easy-to-use retirement calculator comes in very handy.

Photo credit: ©iStock.com/designer491, ©iStock.com/shapecharge, ©iStock.com/dmbaker

Mark Henricks Mark Henricks has reported on personal finance, investing, retirement, entrepreneurship and other topics for more than 30 years. His freelance byline has appeared on CNBC.com and in The Wall Street Journal, The New York Times, The Washington Post, Kiplinger’s Personal Finance and other leading publications. Mark has written books including, “Not Just A Living: The Complete Guide to Creating a Business That Gives You A Life.” His favorite reporting is the kind that helps ordinary people increase their personal wealth and life satisfaction. A graduate of the University of Texas journalism program, he lives in Austin, Texas. In his spare time he enjoys reading, volunteering, performing in an acoustic music duo, whitewater kayaking, wilderness backpacking and competing in triathlons.
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