Retiring With Money

Retirement is the time in life everyone has been waiting for. The time when you can finally kick back and relax, perhaps finally getting that beach home you’ve always dreamed of, and spending your days doing what you love.

But you don’t quite have the funds to do all of that yet, and you’re not sure what you can do. The answer is easy, sell your home.

It’s not uncommon for people that have retired or are about to retire to sell their homes and jump start their retirement funds. In fact, there are some retirement plans that call for selling a home as the primary source of funds in a retirement plan.

Whether you’re hoping to start your retirement or supplement your retirement plan, selling a home can help you do both. But don’t start making plans just yet; there are a few things you need to keep in mind if you plan to sell your home.

Steps to Selling Your Home

The first step to selling your home is to make it look good, no one wants to buy a house that is in bad shape or needs repairs. Adding curb appeal to your house makes it feel like a home, and that’s what can draw in potential buyers, but you also need to de-clutter your home, making it neutral for the next owners to add their own style and personality to it. Cleaning up around your property is also important, and it’s just as important for the neighbors to clean up as well, having neighbors will messy lawns and homes can drive away potential buyers.

Modernization also attracts buyers, the kitchen and the bathrooms are aspects that all potential home-buyers look at, and making those two areas look appealing and new can be the difference between selling your home and being unable to sell it. Repairing your property is also important, and can be leveraged with a small loan if you can’t afford it out of pocket.

Talking to multiple realtors helps you find the best one to sell your home, if you want to use a realtor to sell it, though an advantage is that you won’t have to guess at pricing your home. And finally, making a great impression on the first day of an open house with the smell of fresh baked cookies shows buyers that your property is worth buying.

Selling your home for retirement shouldn’t be a hassle, and following these tips keeps it hassle free and easy.

As baby boomers, we have always gone through life knowing that countless other Americans were sharing experiences very similar to our own. We felt this way when we stepped onto college campuses in the 1970s, when we had children in the 1980s, and when we sent those children away to college in the last decade. Now, boomers have a new shared experience looming on the horizon: retirement.

Most of us have been planning for retirement for years. We have savings accounts, a sense of our post-career plans, and a person with whom we want to spend those twilight years. But even the most well-planned of us are still faced with one key decision, a decision that we hesitate to make: should we retire in our hometowns, where we have lived and worked for years, or should we somewhere distant, warmer, and more senior-friendly?

Destination retirements have been popular for decades, but contrary to common perception, just as many retirees choose to stay in New York and Chicago as those who flock to Palm Springs, San Diego, and Boca Raton. What, then, is the right path for you and your spouse?

If you have been asking yourself this question recently, here are a few considerations you may want to keep in mind:

Affordability

Due to the economic climate and the decline in the stock market, many of us are approaching retirement with less money saved than we had originally planned. Consequently, price and affordability should certainly factor into your decision. But this does not mean that a destination retirement is the more expensive option, especially if you currently live in a major metropolitan area. So before you decide to stay put and seek out title loans in AZ, MD, or NJ, consider this: while a retirement community in California may be more expensive than one in Ohio, there are numerous college towns across the South that offer affordable living, pleasant climates, and excellent access to healthcare and cultural events. If you’re looking to be more frugal in your retirement, leaving the big city and eschewing the popular senior destinations may help you drastically reduce your costs – and can do so while still providing you with a destination retirement.

Family

Beside inertia and financial concerns, family is the element that most often keeps retirees in their hometowns. Even despite today’s highly mobile society, a large percentage of Americans still live in close proximity to family members, whether they be children, cousins, siblings, or elderly parents. If you have a strong family grounding it’s hard to leave all this behind. In light of this, your retirement decision should certainly take family into account. Ask yourself: Do I still have strong familial ties to the place I live? Would I be able to regularly see loved ones, even if I choose a destination retirement? How important is family proximity compared to other factors, such as weather, cultural opportunities, and affordability?

Interests

As we approach retirement, we simultaneously approach the point in our lives where we are no longer defined by our jobs and our careers. Similarly, we will now have time on our hands to pursue other interests – interests that will surely come to define us. The unique interests you hold, personal plans you have, and activities you plan to pursue should fundamentally factor into your retirement decision. If you enjoy big city culture, a retirement community may not be your best bet, even if the climate there is better. If you seek a social scene that is highly senior-friendly in focus and in nature, urban anonymity and small town life are probably options to avoid. And if want to partake in outdoor activities, make sure that you retire somewhere close to nature. Your place of residence is no longer burdened by your career; consequently, it’s time to pursue your interests.

Keep these considerations in mind when you go about making that decision – the decision of where to retire and spend the rest of your life. While every place has its own pros and cons, it’s important to arrive at a decision – and to live somewhere – that will ultimately make you happy.

Many people look forward to their retirement years so they have more time to travel. Working generally limits the amount of vacation time, so it’s natural for people who enjoy traveling to look forward to their golden years, when they’re not limited to two weeks a year for vacationing. Unfortunately, many people reach retirement only to discover they can’t fulfill their travel dreams due to a lack of available money to do so. Here are some tips for traveling in retirement, from budgeting to medical and packing:

Include Budget Airlines in Your Search

The most popular travel search engines for flights will only include the largest airlines. Use travel search engines to compare prices of various flights that include all the budget airlines, as well. You may overpay for flights simply because you didn’t check the budget airlines.

Skip Airfare Completely

Better yet, take your time and travel slowly rather than booking flight after flight. Often, we’re all in a race to get from one place to another and see as much as we can in our limited vacation time. When traveling in retirement, you have the luxury of traveling more slowly. Visit one or two destinations at a time, and take some time to really explore every place you visit. You can get to know the people who live there, you can learn a new language, you can live as a local for a month or more, and avoid paying airfare from one destination to another as often.

If there are domestic destinations you want to explore in your travels, consider buying an RV. Taking your accommodations with you when you travel opens the door to thousands of dollars in savings over hotels.

Consider Your Medical Needs

As people age, there is often an increase in medical needs. If you are traveling, make sure you have enough medication to last your entire trip – and even a few extra doses in case you are delayed in your travels. If possible, research where you can get additional prescriptions while on the road. Keep in mind not all American health insurance will be accepted outside of the US, so if traveling abroad you’ll need to know what is covered and what to do if you become ill or injured outside the country.

Don’t Overpack

You want to figure out the fine line between being prepared and overpacking! You certainly don’t want to be dragging heavy luggage around, only to discover you didn’t wear half of what you brought with you! Research the climate for where you’re going and pack clothes that match the expected temperatures. Bring along one outfit for unseasonably warm or cooler weather than expected, but don’t try to bring your entire wardrobe in an effort to be prepared for anything!

Be on the Look Out for Bargains

If you plan ahead, you can safe money in all aspects of travel from transportation to food to entertainment. If you like to visit local attractions when you’ve arrived to your travel destination, keep in mind that all attractions that allow children will tend to be busier on weekends and school holidays, so you will often get a discount on school days and you’ll avoid the major crowds, too. Always ask for senior discounts – even if they are not advertised, many locations offer discounts or specials for seniors.

photo credit: Michael R. Swigart

Mortgage interest rates continue to hover at all time lows making it a homeowner’s dream to lock in new rates or refinance their mortgages and save thousands of dollars on interest.   According to BankRate.com the current 30 year fixed rate is at 4.84%, down from 5.2% in early April.   It’s crazy to think that it some scenarios that someone who locked in a fixed mortgage 3 months ago could possible refinance and it be totally worth it- even if you have to pay charges to do so.

photo credit: TheTruthAbout…

Whether you’re buying a home or refinancing an existing loan,  a mortgage  interest calculator can help you make the right decision. Determine exactly which deal offers the lowest monthly payments, how much home you can afford, and whether it makes sense to rent or buy. Each of these should prove to be helpful depending your mortgage situation.

Interest.Com Mortgage Calculators

Doing a quick search in Google reveals that Interest.com has a slew of mortgage calculators depending on your situation.   Whether you’re trying to determine “how much house you can afford” or if you should “rent or buy”, they have the mortgage interest calculator for you.

Here’s a few that are most relevant:

• Adjustable Rate Mortgage Calculator
• Required Income Mortgage Calculator
• Points Down or Downpayment

Mortgage Calculator.Org

Mortgage Calculators.Org

The site sounds like a perfect fit, does it not?   Mortage Calculator.org is actually the site that we used constantly when we were trying to figure out what exactly our payment was going to be when we were purchasing our new home.   At the time, interest rates were all over the place; just as they are now.   Their mortgage interest calculator proved to be a valuable resource through the process.

Bank Rate.com

The other great site for mortgage interest calculators (and every other calculator for that matter) is Bank Rate.com.  Bank Rate does a tremendous job of providing practical and very use calculators to help you better asses your situation.  On top of that, they have tremendous amounts of resources to really help you better understand your calculations or what numbers you need to enter to get an accurate calculation.

Here are some of examples of the mortgage calculators they offer:

• Mortgage Payment Calculator
• Amortization Schedule Calculator
• Loan Comparison Calculator

Have you recently had to use a mortgage interest calculator for your housing needs?  If so, which one did you find to be the most helpful?

What happens if the company you worked for goes “belly up’?  Can the company you worked for terminate your plan?  What can a Boomer plan on?

photo credit: patrick h. lauke

Employers can end a pension plan through a process called” Plan Termination”.  There are two ways an employer can terminate a pension plan.  The employer can end the plan in a “standard termination” but only after showing the Pension Benefit Guaranty Corporation (here after referred to as “PBGC “) that the plan has enough money to pay all benefits owed to the participants.  The plan must either purchase an annuity from an insurance company (which will provide you with lifetime benefits when you retire) or if your plan allows, issue a one lump sum payment that covers your entire benefit.

What if the plan is not fully funded?

If the plan is not fully funded, the employer may apply for a distress termination if the employer is in financial distress.  To do so however, the employer must prove to a bankruptcy court or to the PBGC that the employer cannot remain in business unless the plan is terminated.  If the application is granted, the PBGC will take over the plan and pay the plan benefits, up to the legal limits, using plan assets and PBGC guarantee funds.  (Under certain circumstances, the PBGC may take action on its own to end a pension plan without an application if it determines that there is not enough money to pay benefits currently due.)

If a single employer pension plan terminates without enough money to pay all the benefits, the PBGC will take over the plan and pay benefits through its insurance program.  Most participants and beneficiaries receive all of the pension benefits they would have received under the plan, but some people may lose certain benefits that are not guaranteed.   

Guaranty “Limits” of the Pension Benefit Guaranty Corporation

The PBGC pays pension benefits up to certain maximum limits.  The maximum guaranteed benefit is $4,500 per month, or $54,000 per year, payable in the form of straight life annuity, for a 65 year old person in a plan that terminates in 2010.  The maximum benefit may be reduced for an individual who is younger than 65.  The maximum benefit will also be reduced when a benefit is provided to a survivor of a plan participant.

PBGC Maximum Monthly Guarantees (see: PBGC Tables)

What is Guaranteed by the PBGC?

The PBGC does guarantees “basic benefits” earned before a plan is teminated, which includes:

• Pension benefits at normal retirement age
• Most early retirement benefits
• Annuity benefits for survivors of plan participants
• Disability benefits for a disability that occurred before the date the plan terminated

What is not Guaranteed?

The PBGC does not guarantee certain types of benefits.

The PBGC does not guarantee:

• Benefits for for which you do not have a vested right when the plan terminates, usually because you have not worked enough years with the company.
• Benefits for which you have not met all age, service, or other requirements at the time the plan terminates.
• Benefit increases and new benefits that have been in place for less than one year.
• Benefits in place for less than five years are only partly guaranteed.
• Early retirement benefits that are greater than payments at normal retirement age.
• Health and welfare benefits.
• Vacation pay.
• Severance benefits.
• Lump sum death benefits for a death that occurs after the date the plan ends.
• Disability benefits for a disability that occurs after the plan’s termination date.
• Lump sum payments exceeding $5,000 are generally not paid.

Even if certain benefits are not guaranteed, participants and beneficiaries still may receive some of those benefits from the PBGC depending on how much money the terminated plan has and how much the PBGC collects from the employer.

In Summary

In summary, your pension benefits are guaranteed to legal limits by the PBGC, other benefits not considered part of the actual pension plan such as health care insurance, life insurance, vacation benefits, and severance payments are not considered part of a pension plan and may not necessarily be covered.  So, …When they say nothing in life is guaranteed! … They are wrong!  PB.

The reverse mortgage has become one of the more popular retirement planning tools in recent years. Reverse mortgages are sought after because they can provide an income source for retirees who have built up a great deal of equity in their homes. However, before you decide to take the plunge with a reverse mortgage, you should carefully consider your options. Here are 8 things you need to know about reverse mortgages that retirees should consider:

photo credit: Rain Rannu

A reverse mortgage is a loan:

Realize that a reverse mortgage is a loan. It is a loan based on the equity of your home. In order to take advantage of the FHA’s reverse mortgage program, you need to have your home paid off, or be able to pay off the balance at closing with money from the reverse mortgage. Other lenders have different requirements regarding how much you have left on your mortgage. Ultimately, though, you would do well to remember that a reverse mortgage comes with closing costs, interest, origination fees and any other charge found with any home equity loan.

You can take your money any way you like:

You can receive your reverse mortgage payments as a lump sum, as a regular installment, or by using a debit card to access the balance. However, the amount available to you depends on how much equity you have, how old you are, and the interest and fees on the loan. Generally, the older you are, and the higher value your home has, the more you can borrow for your reverse mortgage.

You must be at least 62 to qualify for the FHA reverse mortgage.

There are lenders out there who will qualify you for their own reverse mortgage product if you are at least 60. However, the FHA will not qualify you unless you are 62. It might be a good idea to consider the FHA program, since you know that is reputable.

Income is not a requirement:

Unlike a more traditional home equity loan or a refinance loan, there is no income check on a reverse mortgage. Your approval hinges entirely on your home and age. You do not make payments on the reverse mortgage as long as you are living in the home, so foreclosure is not an issue. You are still responsible for taxes, insurance, utilities and maintenance, however. (Many retirees use money from the reverse mortgage to make these payments.)

Reverse mortgage payments are not taxed:

Since a reverse mortgage is a loan, you do not have to pay income taxes on money you receive from the loan, even if it is for payments.

photo credit: TheTruthAbout…

You cannot owe more than your home is worth with the FHA loan:

One of the reasons it is so important to consider the FHA reverse mortgage is that you cannot owe more than your home is worth at the time you or your heirs sell the home. This means that if your home falls in value, it is the lender that has assumed the risk, and the lender cannot take more than the market value of the home. Be careful, though! Some of the less scrupulous lenders might have different rules. Make sure you go through a lender that is FHA-approved.

You must be living in your home:

In order to qualify for a reverse mortgage, you must be living in the home, using it as a primary residence. If you want to get a reverse mortgage on a home with up to four units, you can, as long as you are living in one of the units. Once you are no longer living in the home as your primary residence (when you move into long-term care, or die), it is time for the loan to enter into repayment.

Your estate repays the loan upon your death:

If you are concerned about leaving your home to your heirs, a reverse mortgage is probably not for you. When you die, the reverse mortgage lender has first claim on your home. Either your heirs have to pay off the lender with other money from your estate, or the home has to be sold in order to pay off the loan. If you move into long-term care, and you or a co-borrower no longer occupy the home, it is time to sell the home, or to begin making payments.

Before you decide on a reverse mortgage, it is a good idea to check information from the FHA, and consult with a knowledgeable financial planner. The FHA has a list of approved lenders and counselors that can help you through the process.

When do you know it’s time to make some major changes in your home? Most likely when you can’t bear to look at your old bathroom fixtures and cracked tiles or the outmoded kitchen cabinets and shabby vinyl floor. Or it could be that you need some additional space to accommodate your growing family. Regardless of your reasons, you’re certainly not alone when it comes to remodeling your home.

Demand Drives New Products and Services

Even when the stock market falters or mortgage rates rise, economists seem to agree that home building will continue to grow because rising home prices permit the homeowner’s equity to be reinvested. As a result, renovations have become more upscale and home remodeling businesses have expanded to meet the demand for more sophisticated projects.

The Open Kitchen

The most popular remodeling job is for the kitchen, which also leads in adding resale value to the home, according to Remodeling Magazine. One of the hottest trends is the “open design” kitchen, which is incorporated into the overall living area of the dining room, den and/or living room. Additionally, kitchens are being rebuilt larger to accommodate more people, food preparation, and storage. Space is being designed more efficiently with rollout shelves, lazy Susans, trash compactors, recessed lighting, and underground cook-top venting. Many designs include dual work areas with separate sinks and cutting areas or large granite “islands” doubling as preparation and dining surfaces. Skylights, dimmable lighting, stainless steel appliances, and wine coolers make the kitchen an attractive setting for entertaining guests while preparing a meal.

Manufacturers have developed many efficient appliances to meet the needs of the time-challenged consumer. For example, there are convection ovens that move heated air directly onto the food instead of into the oven cavity, reducing cooking time up to 25%. And at least one manufacturer offers an oven that uses intense light to reduce cooking time. Meanwhile, the so-called smart appliances on the market can interact with your computer, so you can activate or control the dishwasher, oven, heating/air conditioning, or Jacuzzi over the Internet.

The Lavish Bath

Bathroom improvements are also extremely popular with homeowners, who are eager to sacrifice their small spare bedrooms to make way for huge bathing areas that often include a hot tub, separate shower, dual sinks, heated towel racks, bidets, and lavish marble floors and counter tops. Moreover, ceilings are often being raised to the roof to create an atrium look with skylights and small trees, and it is not uncommon to find dedicated telephones for the toilet and the Jacuzzi.

The New Home Worker’s Office

An office at home is also in demand now, as workers choose to “commute” from home — saving time, dry-cleaning bills, and transportation hassle and expense to become more productive and efficient. Since electronic communication can deliver corporate office and customer site meetings at home, an attractive, workable home office is needed to accommodate this new work culture.

How to Finance Renovations

• Home equity loan: Line of credit, at fixed or adjustable rates. Interest generally tax deductible on principal up to $100,000. Banks, credit unions, other lenders.
• Second mortgage/refinanced mortgage: Based on percentage of home value minus amount owed on first mortgage. Fixed rate. Interest generally tax-deductible on principal up to $100,000. Banks, credit unions, finance companies.
• FHA Title 1 Home Improvement Loan: up to 20 years. Home improvement lenders.
• Cash value life insurance/profit sharing plans: Interest not tax deductible. Insurance companies, employers.

Buyer Beware

While these innovations are impressive, so are the costs. A standard kitchen redesign can run $20,000 to $40,000. Add in granite countertops and special appliances, and the price can climb well over $60,000. Although time-saving and fun, these new appliances can cause sticker shock, so comparison shop.

But before you even think about making a home improvement, you need to find a reputable contractor, and that may not be easy. Even if you know one, a reputable contractor may have a long list of projects. It may take months or even years to start the work, as the boom in home renovation demand often exceeds contractor availability.

And then there are some horror stories to give you pause. For example: A homeowner [in Canada] wanted his fire-damaged house renovated. The contractor asked to be paid in cash to avoid workman’s compensation and taxes. The homeowner agreed, hoping to save a few bucks. Later, he found the work unsatisfactory and, unable to work things out with the contractor, decided to sue. The court did assess damages, but held that because the homeowner had participated in an illegal agreement [to avoid taxes], his right to receive compensation from the contractor was voided.

Other common stories include contractors who never show up; contractors who start the job and then disappear for weeks (leaving portions of the house open and exposed to the elements); and contractors who fail to return at all and never finish the job. Of course, then there’s the contractor who does shabby work that’s not up to code. Since the work can’t pass inspection, sometimes the whole job needs to be redone.

In response to these scenarios, the American Financial Services Association (AFSA) has developed a voluntary standard designed to protect against home improvement scams. Under AFSA guidelines, members who provide financing agree not to make final payment until they receive a certificate signed by the homeowner and contractor acknowledging satisfactory completion of the work.

The best and most obvious way to avoid problems is to get the contract in writing. A worker injured on the job without workman’s compensation insurance could sue you personally. There may also be complications with your homeowner’s insurance if the contractor is not properly licensed. Without a contract, you have no recourse against shoddy work, work not done as specified, cost overruns, and potential legal proceedings.

A written contract will state the proper building materials to be used and that warranties from manufacturers be honored. Additionally, it will specify exactly how “change orders” from the homeowner will be handled by the contractor. If your contractor is interested in cheating or cutting corners, chances are it could happen on your project. Remember, laws are created to protect both you and the workers. Trying to save money illegally could end up costing you more.

Do Your Homework on Your Biggest Investment

This may be a great time for home renovations. Sophisticated new appliances and larger living areas can create beautiful, stress-relieving surroundings while also saving you time and money. Banks are eager to make home equity loans, and loan interest is tax deductible as well. So take the time to find a reputable contractor. Do the research, talk to your friends, check references, get several estimates, and most important, get the contract in writing. These simple steps could keep building your new dream home from becoming a “money pit.”

Here’s our second installment on the the top 6 places to retire by the water.  This time we’re heading up the coast from the first spot.  The second is fairly well known from a Hollywood perspective, often being used for movies hoping to represent The South.  Now I definitely have you curious, don’t I?  Without further ado, the second stop on our list is no other than Beaufort, South Carolina.

Living on the Intra-Coastal Waterway

Beaufort, SC is nestled in the curve of a beautiful bay along the Intra-Coastal Waterway.  It offers a unique Low country living experience in the lasting memories of real southern hospitality.  It is a region steeped in rich history and scenic natural beauty.

Discover the Historic Downtown

Step back in the history of this 300 year old town into the National Landmark District adorned with architectural details preserved with great care and compassion.  This area boasts artifacts representing the Native American, Spanish, and French history.  Along with your cultural exploration, visit the wide variety of shops that line the streets of the district.  Take time to wander off the beaten path to enjoy additional shopping and dining unique to Beaufort.  It features casual eateries, cozy bistros, or world class restaurants, some of which offer waterfront dining with breathtaking views of the Beaufort River and Low country marshlands.

Beaufort has been used as a setting for movies such as Forrest Gump, The Prince of Tides, and The Big Chill . Its historic mansions and moss-covered oaks provide a perfect historic southern setting.  Located on the Intra-Coastal Waterway, it has far more to offer.

Plenty for all to enjoy

Renowned for its charming harbor along the Port Royal Sound and maintaining a historical character, Beaufort attracts tourists and new residents alike.  If you are a boater, you can access the Atlantic Ocean, visit the many islands, or just enjoy the sandbars and beaches along the way.  Beaufort County also offers plenty of of top notch golf courses and resort activities.  The famous Hilton Head is just 40 miles away.

The Plus Sides

Plenty of good golf close by.  Great medical care is available in the area.  Located near Duke University the local hospital is affiliated with Duke.  Well maintained historic charm and southern hospitality.  Temperatures more moderate than Florida. And if you are a huge Bluedevil fan, than that makes it that much more perfect. Personally, I’m not, so that offers no extra incentive for me.

The Down Side

Taxes are higher than some places.  While homes in the area along fairways are in hot demand, the most prized real estate in Beaufort is the well kept historic houses near downtown Beaufort starting at $500,000.  In newer areas just 10 miles away nice homes average closer to $300,000.  Tropical weather is always a concern in coastal areas.  Depending on where the grand-kids live it could be a long way to visit. For Papa Boomer, I like the idea of living close to the water, but just a little too far from my grandson.  Might be a good place to take him to visit when he gets older.

Ready to get away? Find great beach destinations at hotels.com.

Related Articles:

1. Retire by the Water – Sequim, WA.
2. Retire on the Water – St. Joseph, MI.
3. Retire by the Water – Marble Falls, TX.
4. Retire by the Water – Dunedin, FL.