European governments face debt problems that seem to threaten the survival of the euro. The future is uncertain, as it always is when major economic events are concerned. On this side of the lake, however, our main concern with this debt crisis is what the potential impacts could be on our own retirements and on the retirement income of those who have already retired. Some tactics in the fight again a collapse in the Euro One of the government responses to the crisis has been a series of austerity budgets. Government spending is being cut back so that deficits can be reduced and even balanced at some time in the future. The impact of these budget cuts will have serious impacts on the citizens of the countries involved. Some countries are even considering cutting back on retirement benefits...

Bloomberg recently published an article called “The Worst Deal in Mutual Funds Faces a Reckoning.” The article begins, “Imagine an investment that is guaranteed — at least initially — to lose you money. Such an investment was once quite common and still exists: the front-loaded mutual fund. To buy into such funds, investors pay as much as 5.75 percent of their initial investment in a load charge. That $40,000 you wanted to invest? It instantly shrinks by $2,300.” What is a “load fund”? Load funds have long been a staple of the financial planning industry. The rationale to support the immediate loss is that the planner deserves to be compensated for their advice. The truth is that they receive trailing commissions for as long as you hold your funds, and that ...

First, the good news is that you can expect to enjoy two decades of retirement if you start retirement when you’re 65. Life expectancy of men at the age of 65 is about 20 years and woman of the same age can look forward to an average life expectancy of about 22 years. Life expectancy is really just a table that shows odds. So what it actually means is that the odds of a 65 year-old man living to the age of 90 are about 1 in 3, while a woman has about a 1 in 2.5 chance of reaching 90. About 60 percent of the time, at least one spouse will live to 90. There may be a number of reasons why you might not live to 90, of course, but when it comes to planning for your financial future, it makes sense to assume that you will reach that age. If you are enjoying life in your 90s, having to worry ab...

Maintaining a home requires some expense. Over time, paint chips and fades and appliances wear out. Roofs need to be replaced and landscaping requires attention. There are both big and small expenses involved, some predictable and some that come at unexpected times. These costs vary and no one seems to know what a typical home owner spends to maintain their home. Realtors seem to use general and very broad guidelines, such as 1 to 4 percent of the home’s value. For an average home that might be worth around $170,000, the homeowner could expect to see annual costs of $1,700 to $6,800 a year under that rule. Most home owners seem to spend significantly less than that. More facts about home maintenance The Census Bureau truly does track as much data as possible on what Americans do. Th...

Saving for retirement usually includes contributing to a 401(k) plan at work or opening one of the many possible individual retirement accounts that offer tax benefits now and income later in life. Many people have automatic payments made into these accounts with each paycheck. In that way, the retirement account is like a monthly bill. While working, you accumulate wealth by paying that bill each month and after 30 years or more you turn to that wealth for retirement income. Mortgages are usually paid off over 30 years, although some home owners have used a 15 year mortgage to speed up their equity accumulation. No matter how long the loan is amortized over, each monthly payment generally reduces the amount you owe and increases the amount you own. Interest-only mortgages are a notable ex...

Recently, an insurance expert pointed out that many home insurers may offer a discount to retired home owners. The logic behind this discount is that retired customers often spend a great deal of time at home, and that means they are more likely to spot a potential home hazard before it becomes serious. For example, if a water pipe bursts while you’re home, you are probably going to turn the water off within a few minutes. If you were at work, the basement could be flooded, with thousands of dollars of damage inflicted before you even learned that the pipe was leaking. These retirement discounts could be as much as 10 to 25 percent of your annual premium. It could pay for you to ask your insurer if you or your spouse is 55 or older and retired. Other home insurance discounts available to...

It seems like ancient history now, but gas really did cost less than $1 a gallon at one time. Gas first broke above that level, on average, in 1980 after more than doubling the prior year. Almost everything costs more now than it did 30 years ago, so it isn’t surprising that the price we pay at the pump has risen. To gain some perspective, it can be useful to look at the average price of a gallon of gas as a percentage of the minimum wage. Digging deeper into the gas price crisis In the 1970s, the minimum wage more than doubled. At the beginning of 1970, the wage was $1.30 an hour and it rose steadily to reach $3.10 by January 1, 1980. Over that time a gallon of gas averaged about 25 percent of the minimum wage. In other words, you had to work about 15 minutes to make enough to put a gal...

Professional designations can demonstrate that an individual has a great deal of knowledge. These designations are becoming increasingly common in a competitive job market. While there are definite advantages to working with someone who has earned a designation, the fact that someone has passed a few tests and are now allowed to put initials following their name is not a guarantee of professionalism. There are a number of certifications available to professionals working in the financial services field. Accountants will generally have a CPA, which means they have passed required tests and met all other professional standards to become Certified Public Accountants. Financial planners may hold a CFP designation showing they are a Certified Financial Planner. Because there are so many designa...

A $9 airline ticket seems like an unbeatable way to travel. But when you buy the ticket, you find that there is a passenger usage fee you are required to pay for the privilege of buying the ticket that adds almost $40 to the price. When you check in, there’s a $5 fee to print your boarding pass, and of course you have to factor in the the now standard fees to check your baggage. You decide to splurge on an aisle seat for an additional fee. At the gate you get charged another fee, a rather steep $40, for your carry-on bag. That $9 ticket has now cost you almost $200, and a bottle of water to sip on the flight will be another $3. The fees are all disclosed, but the print is small and you had to look in a number of places to find it all. It was impossible to know what to ask the company rep...

Traditionally speaking, retirement has included leisure and a slow, relaxed pace of living.  Fishing or golfing every day after sleeping in is a common image of what life in retirement will be like for many. Yet after working 50 years to be able to reach that dream, many senior citizens discover that they are bored. It turns out that the human brain is not really suited to a life of leisure in many cases. A recent article in The Fiscal Times explained that modern workers are knowledge workers. In the early 1900s, the typical job was physically demanding, with twelve hour days and six-day work weeks being fairly common. That has changed since the early 2000s and now many jobs require more mental exertion than physical activity. In the old days, retirement was a necessity because a worker�...