When to Take Social Security

"Welcome to NASI’s toolkit on When to Take Social Security: It Pays to Wait! The materials in this toolkit are designed to educate workers approaching retirement about their options for taking Social Security benefits, and about why it can pay to wait.

Social Security benefits can be taken at any time between 62 and 70, but there are sound financial reasons to delay if you can. If you wait, your monthly benefits will be higher for the rest of your life.

• If you need Social Security to make ends meet, take it – you’ve earned it.
• But if you can wait, even a year or two, your monthly benefit will be higher – for the rest of your life.
• If you’re married, you have two lives to plan for. If you are the higher earner, waiting to take Social Security means providing a higher survivor benefit for your spouse if she or he outlives you." http://www.nasi.org/WhenToTakeSocialSecurity

Don't ignore inflation!

How Inflation Affects a Portfolio by: Craig L. Israelsen, April 28, 2014

http://www.financial-planning.com/news/investment_insights/how-does-inflation-affect-a-portfolio-2689015-1.html

“In the years since 1970, the median annual rate of inflation, as measured by the Consumer Price Index, has been 3.37%; the average rate over the past 44 years has been 4.27%.” “The average is higher than the median in this case because of three particular years — 1974, 1979 and 1980 — in which inflation exceeded 12%, skewing the average upward but with virtually no impact on the median.” Read the article for more info and to view the bar graphs.

Podcast: What you need to know about mutual fund fees

"All mutual funds charge fees. The higher the fees you pay while owning a mutual fund, the lower the return you can make from your fund shares. Even a small percentage difference in the fees among funds can add up to a big difference in the dollars you can make. It's important to be aware of all the fees associated with a mutual fund investment." Listen to the 6 minute FINRA podcast  (& check out other podcasts) at: http://www.finra.org/Investors/SmartInvesting/GettingStarted/Podcasts/MutualFundsETFs/P487257?utm_source=MM&utm_medium=email&utm_campaign=Investor_News_042414_FINAL

Facing hard decisions about the high cost of college?

Check out these perspectives from Michelle Singletary (Washington Post $ columnist): The bottom line when picking a university: ‘No debt for our daughter or for us’ by http://www.washingtonpost.com/business/the-bottom-line-when-picking-a-university-no-debt-for-our-daughter-or-for-us/2014/04/17/d3310c5c-c4ac-11e3-bcec-b71ee10e9bc3_story.html and this article by her daughter (now finishing her first year in college): The best education your money can buy. http://www.washingtonpost.com/business/the-best-education-your-money-can-buy/2014/04/18/8665ce38-c580-11e3-bf7a-be01a9b69cf1_story.html

Resetting (overturning) decision to claim early Social Security benefits

About half of SS beneficiaries elect to claim retirement benefits “early” (before their “full” retirement age), thus locking in a lower benefit for the rest of their lives. While some workers make this decision because they absolutely need the income, it can be a big mistake for beneficiaries (and/or their spouses) who live longer than average lifespans. “So what can a retiree do if she later regrets the decision to take early benefits or her circumstances change such that she no longer needs the early income? It turns out there is a way to mitigate this decision after the fact—a ‘reset’ allowed under the Social Security rules.” Joe Alfonso explains, “Social Security allows you, upon reaching full retirement age, to stop receiving benefits until sometime in the future. Under the program rules, delayed benefits after full retirement age are entitled to earn credits of 8% per year up to age 70. Beneficiaries whose full retirement age is 66 and who delay benefits until they reach age 70 can therefore receive delayed credits totaling up to 32%.” Read the details in the Christian Science Monitor: http://www.csmonitor.com/Business/Saving-Money/2014/0419/Deciding-when-to-take-Social-Security-benefits  Don’t forget that the real full retirement age is 70; anyone who claims benefits before that age accepts a lower monthly benefit for life. Read the 10/23/13 blog post for details.

Don't forget taxes in retirement income planning!

Investors looking at a substantial retirement account balance need to remember that they will owe taxes on most of their income in retirement. Funds in employer sponsored plans (401k,403b, 457) and traditional IRAs will be subject to income taxes in retirement, substantially reducing the amount available to spend. "Dan Caplinger, The Motley Fool's director of investment planning, looks more closely at this disaster scenario that results from people overestimating how much in retirement savings they actually have. Dan notes that most people use traditional IRAs and 401(k) accounts to save for retirement, taking advantage of the tax-deferred growth that they offer. But those accounts require you to pay tax on the amounts you withdraw during retirement, and many people fail to take the tax liability into account in evaluating their retirement nest eggs. Dan notes that you can overestimate your actual after-tax retirement savings by anywhere from 10% to 40% or more, depending on how much you pay in taxes." Watch the video at this link: 
http://www.fool.com/retirement/general/2014/04/19/the-nightmare-retirement-scenario-you-must-avoid.aspx

Restaurant selection takes more time than IRA planning

American adults spend more time choosing a restaurant for a special occasion than planning their IRA investments.  Only 15% of the more than 1,000 adults surveyed allotted two or more hours to planning an IRA investment while 25% said they'd spend 2+ hours selecting a restaurant, 21% to buy a flat screen TV, and 16% report buying a tablet took up this time. The survey found a lack of understanding of IRAs is still prevalent. More than 1/3 of respondents do not understand the difference between an IRA and an employer-sponsored plan. For Gen Y, the lack of comprehension reached 45% of the sample, according to TIAA-CREF's survey https://www.tiaa-cref.org/public/about/press/about_us/releases/articles/pressrelease451.html