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Educational

Your Complete Guide to Retiring Alone

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Saving for retirement involves lots of planning and calculations for every adult; however, if you are not married and don’t have children, you’ll need special strategies for retirement saving and planning.

If you are anticipating a single retirement, you are not alone. According to the U.S. Census, approximately half of all American adults are married. In addition, close to one-third of baby boomers don’t have children. Others may age alone due to the death of a spouse, a divorce or estranged or unavailable children.

Here’s what you need to know about retiring alone:

Create your own support system

One of the greatest challenges of retiring alone is not having a built-in support system through a spouse and children. Isolation and feelings of loneliness can be one of the strongest factors in early aging and general unwellness, so it’s a good idea to build your own support system if you’re planning on retiring single. This can take the form of a close group of friends who live near your home and are happy to join you for fun outings or occasional errands. If you don’t have this group of friends, make new ones by attending local social events through Meetup.com, befriending your neighbors in your community, or spending time at a senior center for active adults.

Identity your most trusted friend

It’s a good idea to choose one friend to serve as your emergency contact and to make decisions on your behalf in case you become incapacitated for any reason. Failure to appoint this person can mean decisions about your health and welfare can be relegated to your closest living relative, which may be someone with whom you have no relationship at all.

Choose your trusted contact and draw up a medical power of attorney so they can make decisions for you if the need arises. Save this person’s contact info in your phone, titled “In Case of Emergency,” or “ICE”, so someone can easily find this number in your contacts should the need arise.

Get creative about your housing options

When looking for a place to retire alone, there are loads of options to consider:

Move abroad to a country with a low cost of living where you can check out the sights, get to know the culture, and experiment with the cuisine.

Team up with a friend or two for built-in companionship and shared living expenses.

Choose a retirement community with senior-friendly amenities and walkable conveniences.

Consider long-term care insurance

Did you know that most adults turning age 65 will need long-term care at some point in their lives?

Long-term care can be expensive. As a single retiree, you’ll likely feel more secure knowing you have coverage for a long-term care facility or at-home care should the need arise. A long-term care policy may not be cheap, but may be worth the security it brings you.

Know your Social Security claiming options

If you have never been married, or have never had a marriage that lasted 10 years or more, your Social Security claiming options are simple. You are likely best waiting until age 70 to claim, unless you believe your life expectancy will be shorter than average. If you do claim your benefits before reaching full retirement age, and you continue working, make sure your income does not exceed the Social Security earnings limit at the time, or you may end up owing money.

If you have a previous marriage that lasted 10 years or longer, you may be able to claim a spousal benefit based on your ex’s earnings record and switch over to your own benefit amount when you reach full retirement age. If your spouse is deceased, you may be eligible for a widow/widower benefit based on your late partner’s earnings record.

Be sure to review your options carefully before making your choice.

A single retirement may look a bit different than a retirement shared with a life partner, but by planning ahead and following the tips outlined above, these can be the best years of your life.

Just for Fun

5 Discounts for Older Adults You May Not Know About

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One of the many perks of advancing in years is scoring great deals on all kinds of purchases and expenses. Here are five places you may not already know about where older adults can save big money:

1. Amazon Prime

Older adults who have valid EBT cards, or are on Medicaid, are eligible for Amazon Prime at just $5.99 a month. Compared to the $12.99 regular cost, that saves you more than half at just $84 annually.

2. Auto insurance

Many auto insurance providers reward years of safe driving with discounts for policyholders who are age 55-plus. Be sure to shop around for the best deal or to ask your current provider if you qualify for a discount.

3. Dining out 

Dozens of national restaurant chains offer discounts, or even freebies, for older adults. Why pay full price when dining out (or ordering takeout, in the era of COVID) when you don’t have to?

Here are just a few chains that offer discounts:

  • Applebee’s: 15% off with Golden Apple Card (60-plus)
  • Arby’s: 10% off (55-plus)
  • Burger King: 10% off (60-plus)
  • Chili’s: 10% off (55-plus)
  • Dunkin’ Donuts: 10% off or free donut with coffee purchase (55-plus)
  • IHOP: 10% off (55-plus)
  • KFC: Free small drink with any meal (55-plus)
  • Krispy Kreme: 10% off (50-plus)
  • McDonald’s: Varies by location; most provide discounted beverages (55-plus)
  • Subway: 10% off (60-plus)
  • Taco Bell: 5% off; free beverages (65-plus)
  • Village Inn: 10% off (55-plus)
  • Waffle House: 10% off every Monday (60-plus)
  • Wendy’s: 10% off (55-plus)
  • White Castle: 10% off (62-plus)

4. Cellphone plans

From basic phones to the latest in smartphone technology, if you’ve lived through bell-bottoms and Beatlemania, you can get your cell phone plan for less!

5. Discounts at apparel stores

Whether you’re spending the afternoon at the mall or browsing the new season’s selections from the comfort of your couch, don’t forget the discount!

  • Banana Republic Discounts: 10% off (50-plus)
  • Bealls Outlet: 15% off on Mondays (50-plus)
  • Belk: 20% off most purchases on Tuesdays, or 15% on home and shoes (55-plus)
  • Burkes Outlet: 15% off on Mondays and Fridays (50-plus)
  • Dressbarn: 10% off Tues. and/or Wed. (varies by location – 55-plus)
  • Kohl’s: 15% off on Wednesdays (60-plus)

Reaching the other side of 50 can come with fringe benefits like grandchildren, a relaxed pace of life, and of course, lots of great discounts. Don’t forget to cash in on your special savings the next time you shop.

Educational

How Do I Choose the Right Investments for Me?

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Q: I’m ready to invest in my future, but I need some help getting started. How do I choose the investments that are right for me?

A: Investing your funds is a great way to grow your money and secure your financial future; however, choosing a first investment can be tricky.

Here’s all you need to know about the most common beginner investments and how to choose the path that best suits your needs:

Retirement plans

If you are employed, you likely already have a retirement plan through your workplace. There are many ways to maximize this account, or even open additional retirement options. Here are some of the most common retirement plans:

A. 401(k) is an employee-sponsored retirement plan. It allows eligible employees to save and invest for their own retirement on a tax-deferred basis. Employees can decide how much money they want deducted from their paycheck and regularly deposited into their 401(k), as long as contributions fall within IRS limits. Sometimes, an employer will offer to match all contributions, which is essentially free money with a guaranteed return.

Goal: Save for retirement.

Pros: Contributions are tax-free and there is generally no minimum for contributions.

Cons: Fewer investment options than other retirement accounts, may have high account fees and early withdrawal penalties.

Best choice for: All employees with a W-2, especially employees who have an employer offering to match contributions.

Best age to invest: As soon as you start working at your first job.

B. Traditional IRAs are retirement accounts that offer most individuals an upfront tax break.

Goal: Save for retirement.

Pros: Contributions and investment earnings aren’t taxed. Contributions may be tax-deductible and significantly lower your taxable income. There are no income limits for contributors.

Cons: Withdrawals during retirement are taxed at your tax rate during that time. At age 70½, you are no longer allowed to make contributions. Also at age 70½, you must begin taking distributions even if you are still employed (and therefore, possibly in a high tax bracket).

Best choice for: Individuals who are currently in a higher tax bracket than what they anticipate being in during retirement and employees who don’t have access to a workplace-sponsored retirement plan.

Best age to invest: Age 18, or the minimum age allowed in your state.

C. Roth IRAs are retirement plans that do not allow for tax-deductible contributions, but feature tax-free withdrawals during retirement.

Goal: Save for retirement.

Pros: Withdrawals are tax-free. There is no age limit for making contributions.

Cons: Contributions and growth are both taxed and are not tax-deductible. There are

also income limits for eligible contributors.

Best choice for: Individuals who anticipate being in a higher tax bracket during retirement and individuals who may need to access some of their savings before they retire.

Best age to invest: Age 18, or the minimum age allowed in your state.

529 plans

A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs.

The SECURE Act,  passed in 2019, expanded tax-free 529 withdrawals to include registered apprenticeship program expenses and up to $10,000 in student loan debt repayment for account beneficiaries and their siblings.

There are two primary types of 529 plans:

529 savings plans offer a place for tuition savings to grow, tax-deferred. The money in the account is usually invested in a mutual fund.

Goal: Save up for tuition costs and related expenses, like room and board.

Pros: Contributions and growth are tax-free. Withdrawals are also tax-free, as long as  they’re used for qualified education expenses. Can be used for K-12.

Cons: May have high fees and can impact the beneficiary’s eligibility to receive financial aid for college.

Best choice for: Parents looking for a safe investment for their child’s college tuition.

529 prepaid tuition plans allow the account holder to save for future tuition payments.

Goal: Prepay tuition costs at designated universities and colleges.

Pros: Lock in lower tuition rates. Make high tuition payments more manageable by spreading them over a number of years.

Cons: May have high fees and can impact the beneficiary’s eligibility to receive financial aid for college.  Tuition payments are only accepted by a limited number of states and specific higher education institutions. Can only be used for tuition expenses.

Best choice for: Parents of students who know which college they will be attending and  want to lock in lower tuition rates.

Best age to invest: It’s best to open any kind of 529 as soon as the child is born.

Annuities

An annuity is a contract between a contract holder, or annuitant and an insurance company. The contract stipulates that the insurer promises to pay the annuitant a predetermined amount of money on a periodic basis for a specified period, in exchange for regular contributions.

Many people purchase annuities to serve as retirement-income insurance, which guarantees them a regular income stream even after they’ve left the workforce, often for the rest of their life.

There are two primary categories of annuities:

Immediate annuities require the annuitant to give the insurance company a lump sum immediately and then begin receiving payments right away. The payment amount may be fixed or variable.

Deferred annuities allow the annuitant to make contributions throughout their working life which can be converted into an income stream when the annuitant reaches retirement. They can also be purchased with a lump sum.

Within these broad categories, there are several types of annuities from which to choose:

  • A fixed annuity provides a specific amount of money every month for the rest of the annuitant’s life, or for the period of time chosen, regardless of how the annuity performs.
  • Indexed annuities blend the features of fixed annuities with the potential for additional growth, depending on how the markets perform. The annuitant is guaranteed a minimum return along with a return that is directly linked to any rise in the relevant market index.
  • Variable annuities provide a return based on the performance of a portfolio of mutual funds that the annuitant has selected. The insurance company may also guarantee a minimum income stream if stipulated in the contract.

While each specific annuity will have its own pros and cons, all annuities share commonalities:

Goal: To guarantee a regular income stream even after retirement.

Pros: Generally, during the accumulation phase of an annuity contract, earnings grow tax-deferred. Withdrawals are taxed at the same tax rate as the annuitant’s income. Contributions to annuities funded through an IRA may be tax-deductible.

Cons: May have high fees. There is generally a minimum age for allowable withdrawals without penalty.

Best choice for: Immediate annuities can be a good choice for individuals who have had a one-time windfall, or who are close to retirement and have significant retirement savings they’d like to invest. All annuities can be a beneficial addition to a retirement plan, especially if the annuitant is afraid they will outlive their retirement savings.

Best age to invest: In general, the best age range for purchasing annuities is between 40-70.

Life insurance

Life insurance is an agreement between a policy holder and an insurance provider that the insurer will pay a sum of money to a designated beneficiary when the insured passes on, in exchange for monthly premiums.

Goal: Ensure that one’s family will be provided for after their passing. The payout can also be used to cover funeral expenses and related costs, and to pay off any outstanding debts the policyholder may have had.

Best choice for: Anyone looking to secure the financial future of their children, spouse and family members.

Best age to invest: Individuals in their 20s and 30s will likely get the best rates on a life insurance policy.

There are two primary kinds of life insurance:

Term life insurance only covers the insured for a set term, generally between 10 and 30 years.  The benefit is paid out only if the insured passes away during the term.

Pros: Cheaper premiums and more flexibility.

Cons: No cash value; may not serve its purpose if the policy holder outlives the term.

Permanent life insurance covers the insured for life as long as the premiums are paid. Some permanent life insurance policies also allow the policyholder to accumulate a cash value.

Pros: Tax-deferred growth, lifetime coverage and cash value for loans.

Cons: Costly premiums and less flexibility.

Your Turn: Do you have another beginner investment to add to our list? Share it with us in the comments.

Are you looking for a place to start investing in your future? Connect with us today at 503-275-0300 or email info@usacu.org for more information!

Educational

What to Do with Your First Paycheck

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As part of the changes you’re gearing up for in the months after you graduate, you’re poised to enter the working world as a long-term employee, perhaps for the first time in your life. As you prepare for this transition, you might have dollar signs dancing in your head while you dream of what you’re going to do with your first paycheck.

Before you start planning a one-in-each-color shopping spree at the mall or a weekend in Vegas, check out our list of responsible things to do with your first paycheck.

Start an emergency fund

Your first step when earning a regular salary should be to start an emergency fund. According to financial experts, it’s best to have 3-6 months’ worth of living expenses socked away in case you are unable to work for any reason. Otherwise, an expensive emergency or surprise layoff can force you into debt that can take years to recover from. When working out a budget, set up a plan for building your emergency fund in as short a time as possible. Once it’s fully funded, you can use that money for other savings.

Open a savings account

If you haven’t already done so, open a savings account at USAgencies Credit Union and start putting away a small amount of money into it each month. There are several schools of thought regarding how much of your monthly income to earmark for savings, with most experts recommending that you set aside 20 percent of your paycheck. If you can’t afford to do that right now, especially as you work on building your emergency fund, it’s still crucial to put away as much as you can, simply to build the savings habit. You can use these savings for long-term goals, like buying a house or a new car within the next few years, and short-term goals, like a summertime getaway or a large purchase, like a new entertainment system.

Start saving for your retirement

Your retirement might still be light-years away, but the sooner you start planning for it, the less you’ll have to put away each month. Plus, you’ll have a bigger nest egg when you quit working.

First, speak to an HR representative at your workplace to ask about a 401(k). Many companies will match your contributions up to a set amount. These funds are not taxed until you withdraw them, so any money you contribute from your paycheck is almost like free money.

If your company doesn’t offer 401(k) contributions, you can also look into opening an IRA on your own.

Make a payment toward your student loan

Before you can claim the rest of your money as your own, you’ll need to make at least the minimum monthly payment on your student loan. If you haven’t started your job immediately after college, you may have already made the first few payments toward your student loan debt. But, whether this is your first payment or not, it’s best to maximize the amount you pay toward debt each month. Keep in mind that student loan companies, like credit card companies, are out to make money. The simplest way for them to do that is to keep you in debt for as long as possible by making it easy to pay only the minimum monthly payment. Beat the system by increasing your payments to the maximum amount you can handle.

Budget wisely

Now that you’ve gotten all of the boring stuff out of the way, you’re free to spend your money as you please. Establish responsible spending habits by setting up a workable budget that incorporates all of your fixed expenses and your non-fixed expenses. With careful planning and an eye toward the future, you can enjoy your new status as a responsible, working adult.

Need help getting started? USAgencies Credit Union is here for you. Connect with us today at info@usacu.org or call/text 503-275-0300.

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