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Financial News and Information

Can you retire with a million dollars?

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Years ago one million dollars was the dream amount for retirement. The thought of a million dollars brought dreams of wealth and luxury. However, is a million dollars enough to retire in 2011? For many ready-to-retire baby boomers, maybe not.

Obviously, each person will need a different amount of money to secure their retirement years based on several factors.

  • Current debt situation
  • Lifestyle you want to live in retirement
  • Portfolio performance after retirement and Inflation
  • Life expectancy
  • Health Insurance Coverage and your health
  • Our current social security program

Your current debt situation is a major factor in determining a secure retirement. Typically, most Americans’ house payment accounts for 25%-28% of their monthly income. At either percentage it’s a big chunk of the monthly income. If you add auto loans and credit card payments into the mix then obviously you won’t be able to retire with a million dollars without having some type of extra income in retirement. Go into retirement debt free and a million bucks will probably last you through your golden years.

Another major factor in a secure retirement is your lifestyle expectancy. If you plan on spending your golden years on the lake fishing or growing a garden in the back yard you will probably be pretty safe with a million dollars. However, if you want to fulfill your retirement dreams and travel the world, you better get busy saving.

Inflation will play an important part in your nest egg. A vital part of ensuring your retirement savings will last is the ability to create some type of interest on the money you have stored away. Most financial experts will tell you to invest in safe low risk funds after you retire. However, if the inflation rate is more than your interest rate you will essentially be losing money. Be sure to keep a balanced portfolio even after retirement so you can stay ahead of inflation.

How long do you plan on living? Sure we want to live as long as we can and be completely healthy, but longer lives mean we need more money. If you plan your whole retirement savings around living until you are 80 and then live to be 90 you may be in some trouble the last 10 years of your life. Let’s face it, nobody knows how long they will live, but you want to plan for several years over the average life expectancy.

Unfortunately the cost of health care keeps rising and the benefits keep dropping. Health care and health insurance will consume a large portion of your retirement savings. Be sure you plan for these rising costs before you pick your retirement date. A Fidelity Investments report shows that typical out of pocket costs for health care after retirement are over $225,000! Trust me that number will probably not decrease as you get closer to retirement.

Ideally social security will still be around for all of us when we are ready to retire. The maximum benefit from social security is somewhere between $25,000 and $28,000. It doesn’t sound like a lot, but it makes for a great boost in your current retirement plan. Unfortunately, many Americans depend solely on the social security system to fund their retirement and the truth is if current trends continue there won’t be enough money left in the system to secure those funds in the future. Personally, I am not planning on the social security system to fund my retirement.

If you are in doubt about your retirement situation sit down with an honest financial adviser or professional personal finance manager. It may cost a few dollars now to talk to a professional, but the payout will be far greater to secure your retirement.

Streamline FHA refinance

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Do you currently have an FHA home loan? Did you know you could refinance to a lower rate without an appraisal? Streamline refinance mortgages have been permitted by the FHA since the early 1980’s. The term “streamline” does not mean there is no cost involved as some mortgage companies would like for you to think. Streamline only refers to the documentation and underwriting needed by the lender. Streamline FHA refinance loans usually do not even require an appraisal.

There are a few basic requirement for an streamline FHA home loan including the following:

  • The mortgage must already be insured by FHA
  • The mortgage must be current and have no late payments pending
  • The refinance must result in lowering the monthly principal and interest payments of the borrower
  • The borrower can not take out any cash during this refinance

There are also a few pros and cons of a Streamline FHA refinance.

The pros of an FHA streamline refinance are as follows:

  • Lower interest rate in turn means a lower monthly payment for the borrower
  • Very little documentation is needed to close the loan, unlike traditional mortgage refinances
  • Usually, no or very little out of pocket money is involved with the refinance
  • Usually, credit requirements are much more relaxed

The cons of an FHA streamline refinance are as follows:

  • No cash out option is permitted with a streamline refinance mortgage program
  • You can’t refinance a second mortgage loan with this type of loan
  • You will probably start back over with your loan term which will cost you slightly more on interest over the years
  • Fees are often refinanced back into the loan and often disguised as “no cost” refinance loans

If you would like more information about FHA streamline refinance loans please take a look at the HUD Handbook which includes all the laws associated with this type of loan.

Store lists save money

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Want to know a great secret on how to save a little more money at the grocery store? Make a store list, actually take it with you, and stick to it once you are there. A little planning ahead can divert impulse buying and in turn cut the grocery bill.

Start creating your list for the next trip as soon as you get back from the grocery store. If you forgot something the past time it probably wasn’t something mandatory anyway so add it to the new list. As you go through the week keep adding items to your list. Some people keep it on the fridge so it’s in a convenient location. We actually used to have a chalkboard painted on our wall for a grocery list, a to do list and a calendar.

After you’ve made the effort to create your list you have to remember to take it with you. It may be something that’s hard to get used to but it’s an essential part of the process. There are actually some great free applications for smart phones that can help you track lists and more than likely you will have your cell phone with you.

Now that you’ve created your list and remembered to bring it with you, you have to stick to the list at the store. If it’s not on the list don’t buy it. This will help cut out unnecessary expenses and impulse buying. Even if it saves you $5 per week it adds up over time.

If you are a penny pincher then every cent saved counts. Creating a grocery store list is just another simple way to help tighten your budget.

Moving in retirement

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So, you have saved millions and you are almost ready for retirement? You’ve planned for this day for years. You actually one of the small percentage who has saved enough money in your retirement to stop working and do what you’ve dreamed of doing. What exactly is that? Do you want to travel? Do you want to start gardening, fishing or another hobby that allows you to relax? Maybe like several retirees you want to pack up your bags and move somewhere else completely. Several people actually choose to move when they retire, but where would you move to?

There are several articles written on the best places to retire, most of them based on the cost of living. According to cnnmoney.com the best place to retire in 2010 was Durham, NC. Durham, NC is the home of Duke University.With more than 1,500 members, Duke’s 33 year-0ld senior learning program is one of the largest in the country. With over 100 courses offered, it covers many diverse topics.

What else does Durham, NC  sport to the top spot to retire? The cost of living in Durham is also very reasonable.  The median home price is $161,000, well below the $222,600 median home price for the U.S. in 2010. Durham, North Carolina residents also enjoy all the seasons. Spring, Summer, Fall and Winter visit each year and none of the season are extreme. Residents also enjoy plenty of beautiful golf courses, parkland, a renowned university medical center, and a newly built  2,800-seat Durham Performing Arts Center.

Even though many people will agree Durham is a great place to retire, each individual must make their own decision. There are many factors to consider when it comes to moving during retirement. Family, friends, weather, entertainment, and many other personal preferences must be considered. Do some research and even visit several places before you settle into your retirement dream home.

Cons of Filing Bankruptcy

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A guest post from Steven over at PayingPaul.com
The current economic times combined with unmanageable debt loads have resulted in more bankruptcy filings than ever before, but too many consumers make a hasty decision without truly considering the negative effects of such a drastic action. Before making a major mistake, an individual needs to realize that there are several important reasons to avoid filing bankruptcy.

It is difficult enough to remain competitive in today’s job market, but an applicant with a bankruptcy in their past is often seen as fiscally irresponsible and may be passed up for a position. An ever increasing number of employers are pulling credit reports on all of their prospective new hires, so individuals need to be very careful when managing financial situations that could affect their future.

Few consumers realize that they may not even qualify to file bankruptcy due to the outcome of a means test that determines the ability or inability to pay a portion of debts. A payment plan will be required meaning that the debt will still exist, but the irreparable damage will also still exist on the consumer’s credit report. A bankruptcy filing is going to remain in an individual’s credit file for up to ten years, and that is an incredibly long time to suffer from a bad financial rating.

Some individuals try and justify the ten years that a Chapter 7 bankruptcy will be present on their credit report, but it is important to understand that a filing will follow a person for life. Any applications for loans or employment that ask financial questions typically ask if the applicant has ever filed bankruptcy. While it may be tempting to simply state no and assume that the credit report will not prove otherwise, there are certainly ways for employers or lenders to discover the truth. Nobody wants to be charged with fraudulently filling out a legal document or form.

Nobody wants to live paycheck to paycheck and suffer from a huge amount of debt, but the stress and anxiety that can arise during a bankruptcy is often considered to be far tougher to deal with. While it may be true that an individual desperately needs financial assistance, the simple fact of the matter is that there are plenty of bankruptcy alternatives that must be considered first. If consumers really understood the total and lasting impact of bankruptcies, there would certainly be far fewer filings and less individuals that harm their financial future needlessly.