The Secret to Acing an Interview After 50

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  • The biggest stumbling blocks to older workers are…
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Dear Rich Lifer,

Finding work in your 50s or 60s is no easy task, but new and somewhat surprising employment data suggests that prospects are improving, especially for older job seekers.

One big reason?

This is the tightest labor market in nearly two decades, causing employers to look beyond the sea of Millennial candidates.

At the end of July, there were nearly 7.3 million unfilled jobs, but only 6.1 million people looking for work, according to the U.S. Department of Labor.

The unemployment rate in July for Americans 55 years and over was 2.7 percent, less than the overall unemployment rate at 3.7 percent.

What’s more encouraging is the average length of unemployment for older job seekers has dropped significantly since 2012.

It’s down from roughly 50 weeks to 34 weeks for job hunters age 55 to 64 and down from about 62 weeks to 30 weeks for those 65+.

In other words, it takes about seven to eight months on average to find a job if you’re over 55.

Stumbling Blocks for Those Over 50

Something I don’t think is given enough attention today are the unique challenges the over-50 crowd faces when looking for work.

Older applicants are competing with tech-savvy Millennials who often come at a cheaper price, and although age discrimination is technically illegal, it’s still pretty hard to enforce.

A study by the Government Accountability Office found five common barriers to employment for older workers:

High salary expectations — You may need to compromise on pay as your skills might not be as up to date as they once were.

Younger bosses — It’s human nature to want to work with people who are like you. If that’s the case, you need to learn how to address this obstacle in an interview.

Out of date skills — Technology is evolving faster than ever. Whether it’s applying for a job online or actually being able to operate new software, the pace can be overwhelming.

Expensive health benefits — The older you get, the more expensive your health premiums become. Bigger companies will be less impacted by this than smaller firms.

Bias — Old habits (and ideas) die hard. Know what biases you’re up against so you can get in front.

Acing the Interview

If it’s been a while since you were actively looking for work, you’ll notice certain aspects of the application and interview process has changed.

My hope today is to give you a few pointers on how to land your next gig, whether you’re coming off a layoff or looking for part-time work as a recent retiree.

If you follow these 10 tips, your inbox should be full of offer letters in the next few months.

Tip 1: Tap Your Network

A major benefit to having been in the workforce for so many years is your network of contacts. Don’t be shy to reach out to old bosses, co-workers, even subordinates.

Let them know you’re on the job hunt. Companies like referrals and it’s a lot easier to get your foot in the door if you know someone.

Tip 2: Get on LinkedIn

A quick way to tap your network is to connect with them on LinkedIn, the popular business-oriented social platform.

If you don’t have a LinkedIn profile, create one now. LinkedIn has become the go-to site for recruiters and hiring managers.

There’s plenty of good advice online that will walk you through how to build an attractive profile that will grab the attention of headhunters.

Bonus: just having a decent LinkedIn profile shows that you’re somewhat tech-savvy helping fight the ‘tech-illiterate’ label.

Tip 3: Update your Wardrobe

This might sound superficial but you need to dress for the job you want, and I don’t mean wearing a C-suite suit.

Your look should appear vibrant and modern. You don’t want to look dated because it’ll make the interviewer think that your skills are dated too.

The goal is to look age-appropriate yet current. Invest in a new suit, a slimmer fitted dress shirt, or a new pair of shoes. If you wear glasses, prioritize getting those updated first. Nothing ages someone more than an out-of-date pair of eyeglasses.

Tip 4: Update your Email Address

If you’re still using an old AOL or Hotmail account, you need to sign up for a newer email service. Get a Gmail or Outlook account to show you’re keeping up with the times.

It probably won’t win you a job, but it definitely won’t raise any red flags during the screening process either.

Also, check out Zoho and iCloud Mail, these are newer email services that’ll show you’re a little more tech-forward.

Tip 5: Modernize Your Resume

First, be sure to keep your resume to two pages max. Even if you’ve had a long and successful career, don’t bother listing every job you’ve held.

A good rule-of-thumb is to go back 10 to 15 years in your work history. This will also help disguise your age a bit should you be unfairly categorized. You can leave off the year you graduated from school, as well.

Be sure to include your LinkedIn profile URL and newly updated email address. If you have a landline, it’s best to leave it off and just use your cellphone.

These are minor details that will show a hiring manager you’re up to date.

Tip 6: Use Experience to Your Advantage

A major advantage you probably have over younger applicants is your experience, make sure you point that out and show how your expertise will help the company.

Don’t just tout your past though. Talk about the future and how you can mentor and groom the next generation of leaders in the company.

Tip 7: Show Adaptability

There’s a notion that older workers are typically going to be set in their ways. This is a common hurdle the over-50 job seeker must face. To fight this stereotype, you need to show that you’re adaptable to change.

When you speak to hiring managers, talk about situations where you adapted to change and the positive outcomes from doing so. Another way to show your flexibility is your willingness to take on temporary, part-time, or project-based work.

Employers understand that young job seekers want full-time jobs with benefits and security for their families. Older workers can fill the void especially for jobs that are seasonal or temporary by nature.

Tip 8: Keep up on Trends in Your Field

An easy way to impress hiring managers is to show that you’ve been keeping up in your field. To do this you can simply read industry newsletters, books, or watch videos online.

There are plenty of online courses you can take for further career development. Udemy, Lynda, and Coursera are all good places to start looking.

Tip 9: Highlight Your Tech Skills

You can’t get around it. In today’s workplace, you need to have a solid understanding of the technology used in your field. Find ways to weave the tech skills you have and are learning into the recruitment process.

For instance: instead of just saying you’re proficient in Excel, give a quick example of how you used Excel to filter large sets of data using pivot tables.

Tip 10: Show You’re High Energy

You want to give the impression that you’re ready to hit the ground running and not simply winding down for retirement. Terms like energetic, fast-paced, and looking for a new challenge are easy ways to liven up your resume.

No doubt, finding work as you get older becomes more challenging.

But that certainly doesn’t mean that you have less to offer than younger candidates. You just have to exert a little more effort to show that in your resume and during the interview process.
Stick to the basics and follow these 10 tips, it’ll help improve your odds of landing a job, or two.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

The post The Secret to Acing an Interview After 50 appeared first on Daily Reckoning.

9 of the Smartest Retirement Locations in the US

This post 9 of the Smartest Retirement Locations in the US appeared first on Daily Reckoning.

When it comes to retirement destinations, you can find an endless number of lists ranking the best and worst spots to live out your golden years.

My take is it really depends on how you want your retirement to look.

Of course you want to stretch your dollar as far as it will go, but you’re also not going to do it at the expense of losing friends and family.

A survey by Merrill Lynch and Age Wave, found that the top reason people move in retirement is to be closer to family.

So, if your kids and grandkids are living in Michigan and you have your eyes set on sunny Florida, you might not be renting that U-Haul so fast.

That said there are some key factors to consider when choosing where to live in retirement.

Two of the most common factors you should consider are cost of living and quality of life. Other factors to be weighed are:

  • Housing costs
  • Tax rates
  • Health care
  • Climate
  • Overall happiness of residents

As I said, the best place to retire will ultimately depend on the retiree but here are my top 9 destinations in the US.

Most of the cities on this list have a moderate to low cost of living, and all are located in states that exempt all or a portion of retirement income from taxes, with the exception of one.

Bella Vista, AR

Located in the northwest corner of Arkansas, 200 miles south of Kansas City, Bella Vista is a scenic town in the Ozarks.

The median home price is $171,000, 31% below the national median. Cost of living is 4% below the national average.

Pros: Good air quality, warm climate. Many lakes. Low crime rate. Good economy. Adequate doctors per capita. No state income tax on Social Security and up to $6,000 of other retirement income per person. No state estate or inheritance tax.

Cons: Not very walkable.

Delray Beach, FL

Delray Beach is a beach town with a population of 69,000, just north of Fort Lauderdale. Median home price is $205,000, 18% below the national median. Cost of living is 10% above the national average.

Pros: Abundant doctors per capita. Good air quality. Walkable and bikeable for the most part. Good economy. No state income or estate/inheritance tax.

Cons: Serious crime rate above the national average.

Clearwater, FL

Population 116,000 and wedged between the Gulf of Mexico and Tampa Bay, the sun is always shining in Clearwater. Median home price $211,000, 15% below the national median. Cost of living is 5% above the national average.

Pros: Good air quality. High number of doctors per capita. Highly bikeable, somewhat walkable. Strong economy. No state income tax or estate/inheritance tax.

Cons: Serious crime rate somewhat above the national average.

Pittsburgh, PA

Home of Carnegie Mellon University, University of Pittsburgh, Duquesne University, and Chatham University, Pittsburgh is clustered around three major rivers. The population is 303,000.

Median home price is $151,000, 39% below the national median. Cost of living is 6% below the national average.

Pros: High number of doctors per capita. Great for biking and walking. Strong volunteer community. Good economy. No state income tax on Social Security or most retirement income.

Cons: Cold winters. Poor air quality. Serious crime rate above the national average.

Rochester, NY

Home of the world-famous Mayo Clinic, with a population of 116,000 people, Rochester is about 85 miles southeast of Minneapolis.

Median home price is $221,000, 11% below the national median. Cost of living is 2% below the national average.

Pros: High ratio of doctors per capita. Good air quality. Low serious crime rate. Good economy. Very bikeable.

Cons: Cold winters. Not very walkable. State estate tax. State income tax imposed on all Social Security earnings and pension income.

Lawrence, KS

Lawrence is a college town, home of the University of Kansas and it has a population of 97,000 people. Median home price is $208,000, 17% below the national average. Cost of living is at the national average.

Pros: High rank on Milken Institute list of best cities for successful aging, adequate physicians per capita. Strong economy. Low crime rate. Good air quality. Very bikeable, somewhat walkable.

Cons: Cold winters, state income tax on Social Security earnings.

San Antonio, TX

Located in the south of Texas, San Antonio has a population of 1.5 million. Median home price is $176,000, 29% below the national median. And cost of living is 3% below the national average.

Pros: Good ratio of doctors per capita. Good air quality. Warm climate. Good economy. No state income tax, no state estate/inheritance tax. Somewhat bikeable. Big cultural scene.

Cons: Serious crime rate above the national average. Not easily walkable.

Palm Bay, FL

Population 114,000, Palm Bay is located 75 miles southeast of Orlando. The median home price is $178,000, 29% below the national median. Cost of living is 3% below the national average.

Pros: Sunshine. Good air quality. Ratio of doctors per capita above the national average. Good economy. No state income or state estate/inheritance tax.

Cons: Serious crime rate somewhat above the national average. Not easily walkable.

Savannah, GA

Savannah has a population of 146,000, it’s located 30 miles inland from the Atlantic Ocean and is a beautiful river city. The median home price is $135,000, 46% below the national average. Cost of living is 12% below the national average.

Pros: Mild winters. Good air quality. Enough physicians per capita. Good for walking and biking. Social Security plus up to $65,000 per person of retirement income exempt from state income tax. No state estate/inheritance tax.

Cons: Serious crime rate slightly above the national average. Flat economy.


There is a lot to take into account when you are looking for a place to settle down.

Your family, finances, and personal taste will play a huge role in your decision, but it’s important to know what your options are.

If you are able, visiting some of these locations may be a good excuse for a vacation so you can “test retire” there for a week or two.

There is no “cookie cutter” answer. Just make sure wherever you find yourself, it’s a place you want to see yourself for some time to come.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

The post 9 of the Smartest Retirement Locations in the US appeared first on Daily Reckoning.

Endless Summer of Low Interest Rates

This post Endless Summer of Low Interest Rates appeared first on Daily Reckoning.

My summer is in full swing.

South swells are rolling through the ocean…

The California sun is shining in all its glory…

The water temps are balmy (at least for the Pacific)…

And there’s enough daylight to put in a full day of work and still surf for hours on end.

Of course, there are still plenty of things that can ruin my best-laid plans.

The wrong tide… onshore winds… simply too many people out in the water.

In today’s market, I think central bank policies are the biggest wild card of them all.

I will be the first to say that members of the Federal Reserve – and most global central bankers – are all very smart people.

At the same time, they are not immune to the same foibles that plague the rest of humankind.

They want to keep their jobs and their power. Some may be overconfident in their own abilities.

Others may actually be scared by the massive responsibility they have.

The list of emotional baggage goes on and on. But the point is that over the last two decades, U.S. central bankers have repeatedly turned toward easier and easier money at every rough patch in the road.

And now they’re discovering that it is nearly impossible to reverse course in any meaningful way.

Current Interest Rates

For a little while, it seemed like they were actually getting us back to some semblance of normal.

In my mind, “normal” is around 5%. I say this because the long-term average Fed Funds rate is 4.8%.

Right now, we’re at a targeted range of 2.25-2.5 and an effective rate of 2.41%.

You’d think half of normal is low, but it’s actually high based on the last two decades.

Take a look…

As you can see, ever since the original tech bubble popped, the Fed has only managed to get its interest rate target back above 2.5% for a relatively brief period before another bubble – this time in real estate – rose up and popped.

Now, after finally tip-toeing back up over the last several years, we’re already hearing talk of a new round of rate cuts.

Based on Fed-funds futures, market participants are essentially certain that we will see a rate cut at the end of this month… and they see a 16% chance it will be for half of a percentage point!

What a massive reversal!

Take a look at the Federal Reserve’s so-called “dot plots,” which show each individual voting members’ forecasts for interest rates going forward.

This first one is from June, 2017…

As you can see, most FOMC members were expecting rates above 2.5% by this year and holding somewhere between 2.75% and 3% beyond.

Now here’s the one from June, 2019…

Notice that seven members of the FOMC now expect rates to go back below 2% this year and to stay there in 2020…

Five see that continuing all the way through 2021…

And 14 of 16 FOMC members now believe rates will be at 3% or lower in 2022 and possibly beyond.

There’s always some new reason why rates need to stay low (or go lower still).

This time around, it’s a nebulous batch of uncertainties.

How Market Uncertainty Affects Rates

As Chairman Jerome Powell told the House Financial Services Committee during his two-day stint on Capitol Hill last week:

“It appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook. Inflation pressures remain muted.”

You might also translate that as, “President Trump wanted lower interest rates and has essentially forced our hand”… or as “we’re doing everything we can to avoid a Japan-style deflationary period… or both… but I digress.

The point is that it feels like the U.S. is in an endless summer of below-normal interest rates.

And things could go lower still.

Heck, in Europe they’ve been employing negative interest rates – a perverse arrangement where it actually costs people to park their money – since 2014.

Just remember that the weather can change quickly – it can get hotter or cooler, and it’s entirely possible for a storm to blow in… one that can’t be stopped by any amount of monetary policy.

For me, all of this simply argues for a renewed focus on income-oriented investments… especially at the value end of the spectrum.

Specifically, I continue to believe that dividend stocks give the best combination of immediate income… continued capital appreciation potential… and the chance for growing yields even if interest rate targets stay low for years to come.

Many of my favorite names have been lagging just as other parts of the markets look fairly overheated.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

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7 Financial Mistakes to Avoid After a Divorce

This post 7 Financial Mistakes to Avoid After a Divorce appeared first on Daily Reckoning.

Raise your hand if you’ve heard that half of all marriages will end in divorce?

Even if that statistic was once true, it’s not anymore. Divorce is on the decline and has been since the 1980s in America.

Experts now put your chances of uncoupling at about 39% in the U.S.

The drop in divorce rate seems to be, in large part, due to Millennials making their vows stick. A 2016 study found that young people were 18% less likely to get divorced.

And similar data is echoed across the pond, young Brits are 27% more likely to make it through their first decade together — the prime divorcing years — versus those who got hitched in the ’80s.

But divorce still happens and it can be one of the most emotionally and financially devastating events you have to go through. If you or someone you know is currently going through a tough divorce, here are seven mistakes to avoid that will impact your finances.

1) Retail Therapy

It’s tempting to start throwing money at the new problems you have. But buying a new car or a new house, or taking an expensive vacation won’t help your situation much, in most cases it’s going to make it worse.

Avoid the cliche of retail therapy and try to avoid making any big decisions that will affect your finances. The retail therapy high is short-lived, and what you’ll find is you’re left with bills and payments you can no longer afford when it’s all said and done.

2) Cashing in Investments

Legal bills are no joke, and you might be tempted to cover some of your fees by cashing in your investments. I’d advise against that. When you are selling highly appreciated assets, you typically owe substantial taxes. Additionally, since those assets will no longer be invested, you’re likely pulling yourself off track to meet your larger financial goals.

This can get worse if you’re retired. Ensure that you’ll have enough income to live off if you do decide to pull money out. The last thing you want is to have to go back to work years after being in retirement.

3) Forgetting the New Divorce Tax

Back in the day before Trump’s new tax plan went into effect for 2018, a spouse paying alimony would get a tax deduction for paying spousal support. The receiving spouse would be the one having to pay taxes on that income.

Under Trump’s new tax plan, the person paying alimony no longer gets that tax break. That is for divorces finalized after December 31st, 2018. And the spouse paying alimony is typically in a higher tax bracket anyway than the recipient. This means less money to go around and not great for divorcing couples altogether.

4) Pulling Money out of Your 401(k)

As I said, money can be tight during a divorce. Between attorney bills and that aforementioned new car payment, your 401(k) might look like a pile of cash that could solve all your short-term money problems.

But if you don’t have taxes withheld, you can face another huge tax bill, and the IRS will slap a 10% penalty on you if you’re under the age of 59 ½.

If your divorce settlement includes a qualified domestic relations order, which basically means you get some portion of your former spouse’s retirement accounts, you can put this into an IRA account under your own name, and continue to defer taxes.

What you should avoid doing is taking all the cash now, this could bump you into a much higher tax bracket and you’ll lose a large chunk of those funds.

5) Fighting Over Who Gets the House

If you anticipate any tension over who will get the house, consider this first: while your house might be gorgeous and worth a lot of money, it can also come with high costs to maintain and a mortgage to pay.

It’s not uncommon for recently divorced couples to leave one person with a house that’s worth less than what they owe (negative equity). Consider all your options before you decide who gets the house.

For instance, if you’ve lived there for a number of years, it might be beneficial to one party to keep it. But if either of you alone can’t afford the up-keep or mortgage payments, then it doesn’t really matter who gets the estate.

6) Quitting Your Job to Avoid Paying Alimony

I’ve heard of angry couples where the main breadwinner in the relationship literally quits their day job so they don’t have to pay alimony. I’ll tell you right now, it’s not a smart financial move.

This will end up costing you more time in court, more attorney fees and you’re delaying the inevitable, which is you’ll eventually go back to work and have to pay alimony. If you don’t end up working again, you risk losing steady income that likely will outweigh the alimony check.

7) Not Having a Plan

When all is said and done, you might feel like you’re finally free to do whatever you want with your money. And this is of course true. However, one of the biggest mistakes you can make is not having a financial plan after the divorce.

It’s tempting to start spending money on things that might bring you joy, especially if you’ve been in an unhappy marriage for awhile now. But the financial mistakes you make right after a divorce can haunt you for the rest of your life.

So take a pause and sit down with someone to get help to plan out your next steps. With everything settled, you should feel like you have total control over your financial life and hopefully can start fresh.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

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Until the Tax Man Do Us Part

This post Until the Tax Man Do Us Part appeared first on Daily Reckoning.

Are you planning a wedding for this year? Congratulations!

Whether it’s going to be one with hundreds of guests in a grand setting or something much more intimate… like a ceremony on the beach with a few close family members and friends… you have a lot going on now.

What to wear, whom to invite, what to serve, where to go on a honeymoon are surely on your checklist.

Furthest from your mind is what getting married will mean for your income taxes. But between now and next April, it will pop up. So the sooner you know what to expect, the more time you’ll have to plan, which could be especially important when it comes to…

The Marriage Penalty

If the two of you will pay more taxes as a married couple than you would if filing as two single persons, you are getting hit with the marriage penalty.

The Tax Cuts and Jobs Act that took effect last year eliminated the marriage penalty for many couples. Others might still feel the pain.

Let’s Start with the High Earners…

Two people without children each earning $500,000, taking the standard deduction, and filing as singles would be in the 35% bracket. If they marry, their combined income will be $1 million. That will push them into the 37% bracket and translate into $7,264 of additional income taxes.

Source: Tax Foundation

For our million-dollar couple and those with slightly more modest incomes, the 0.9% Medicare surtax could consume a piece of their paycheck. When single, the threshold amount was $200,000. For a married couple it’s $250,000.

So two singles each earning $150,000 don’t have to worry about this tax. Once they are married, though, their combined income will be $300,000 — exceeding the threshold by $50,000. 

Additional tax: $450

Then there’s the Net Investment Income Tax (NIIT).

The NIIT is a 3.8% tax on certain sources of income, including: interest, dividends, and capital gains.

As a single-filer, you’ll owe this tax if you have net investment income and your modified adjusted gross income (MAGI) is more than $200,000.

After you’re married and file jointly, the tax kicks in when the two of you have a combined MAGI of $250,000.

Now let’s look at…

Lower Income Folks…

Perhaps you’re not in the million-dollar club or even close to it. In fact, you’re way at the other end of the scale.

Then you might be familiar with the earned income tax credit. Keep in mind that a credit is different from a deduction in that a credit could result in a refund even when your tax bill is zero.

This credit is available to low earners and qualified working taxpayers with children.

The maximum amount of the credit is:

  • $529 with no children
  • $3,526 with one child
  • $5,828 with two children
  • $6,557 with three or more children

Say you and your future spouse each earn $40,000 annually and each have a child. In 2018, you were both eligible for a $3,526 tax credit since the threshold was $41,094 for a single filer. In other words, the two of you received a total of $7,052 in tax credits.

However, when you file for 2019, your combined income will be $80,000 — far exceeding the $52,493 married filing jointly limit.

So you can kiss that $7,052 goodbye.

Source: IRS

Tax Implications for Retirees…

Retirees tying the knot could see more of their Social Security benefits taxed.

If you file as an individual and your provisional income (total adjusted gross income, nontaxable interest, and half of your Social Security benefits) is less than $25,000 — you won’t owe tax on your benefits.

Provisional income between $25,000 and $34,000 will mean up to 50% of your benefits will be taxable. If your income is more than $34,000, up to 85% of your Social Security is subject to tax.

Logic would tell you that after you’re married these thresholds would double to $50,000 and $68,000 respectively.

Sorry, but logic plays no role here.

In fact, for married couples filing jointly the initial threshold is only $32,000. Between $32,000 and $44,000, you may have to pay tax on up to 50% of your benefits. And if it’s more than $44,000, up to 85% could be taxable.

 Filing status

Provisional income

Amount subject to income tax

 Single 

 Under $25,000

 0

 $25,000 – $34,000

 Up to 50%

 Over $34,000

 Up to 85%

 Married filing jointly 

 Under $32,000

 0

 $32,000 – $44,000

 Up to 50%

 Over $44,000

 Up to 85%

Regardless of your Income…

The amount you can deduct for state and local taxes (SALT) is capped at $10,000 for singles and married couples. This would only affect you if you itemize, which few do since the standard deduction is now $24,400 for married filing jointly.

Still, single taxpayers who do itemize and live in high tax states, like California and New Jersey, could see part of their deduction disappear after they tie the knot.

The Tax Policy Center has a handy tool that will calculate how much federal income tax two people might pay as individuals vs. as a married couple.

If you find that your taxes will increase after marriage, you could look into ways of reducing taxable income such as contributing to a traditional IRA or your employer’s qualified retirement plan, like a 401(k).

Also if there will be a big difference in the amount of tax you’ll owe, you should fill out a new Form W-4 so you don’t get any surprises come tax time.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

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Ditch Senior Living and Stay in Your Own Home

This post Ditch Senior Living and Stay in Your Own Home appeared first on Daily Reckoning.

A lot of Americans diligently save up for retirement, but it doesn’t occur to most to plan for home renovations in their later years.

It can be hard to picture yourself having trouble with stairs, using a walker or wheelchair or needing assistive devices in the shower.

But three quarters of Americans aged 50 and over say they want to remain in their homes as they age, according to a survey by AARP, yet very few are taking any action toward that goal.

In fact, most people don’t take any steps to try and make their homes more accessible until disaster strikes, typically after a bad slip or fall.

According a report by the Joint Center for Housing Studies of Harvard University, 65 million households in the U.S. are now headed by someone over the age of 50. Yet, only 3.5% of the U.S. housing stock incorporates three vital features for aging in place: single-floor living, no-step entries, and extra-wide halls and doors, says the report.

The good news is there are clever ways you can save some money and make your home more age friendly.

Home Design

Instead of installing a chairlift on a staircase to access the second floor, it often makes more sense to convert a room on the main floor into a master bedroom.

Living on a single floor can reduce renovation costs. For example, it might allow you to only widen a few doorways versus many on both floors.

Another bonus in taking action now is with the right documentation, certain aging-in-place modifications will give you a tax write-off.

A wheelchair ramp may qualify you for a deductible medical expense. And veterans may also be eligible for financial assistance from the Department of Veterans Affairs.

Here are three of the most practical aging-in-place modifications you should consider, along with cost estimates.

Note: costs may vary by contractor and location. Also, if you’re thinking these modifications sound expensive, consider the cost of inaction and the price of a nasty fall.

Here are three home renos to make if you want to live independently for as long as possible:

Bathroom Fixes

One in four Americans age 65-plus falls each year, making falls the biggest cause of fatal and non-fatal injuries in older Americans. And the place where people fall the most? The bathroom.

For fifty bucks each plus another hundred for installation, you can retrofit your existing bathrooms with grab bars. This will eliminate you having to remove your bathtub and install a walk-in shower.

However, if you’d prefer a walk-in shower, you can install one for around $4,000-$6,000.

Additional add-ons like hand-held shower heads that move toward you, rather than having to move yourself are also worthy of consideration.

When you shop, look for ADA compliant products, there’s a surprisingly large selection of ADA product out there that doesn’t look half bad.

Floor and Lighting Fixes

As you age, muscle weakness, joint pain and other issues can make navigating different surfaces in your home a challenge. You might have one room that’s hardwood floor, another that’s tiled, and another that’s carpet.

For around $12.50 a square foot, you can rip out your old carpet and install new laminate flooring. Keeping the surface friction and height relatively consistent in your home is key. Also, try to get rid of other trip hazards like area rugs.

Another major fall hazard is your lighting. Having different levels of lighting throughout the house can make moving around challenging as you get older. Uniform lighting means your eyes don’t have to adjust every time you leave a room, helping you keep your balance.

Starting at $6, you can buy non-glare LED light bulbs. Try to make every room as bright as possible and consider motion sensor lighting that turns on automatically when you enter a room.

Door and Staircase Fixes

The current recommended width of a doorway is a minimum 32 inches, according to the International Residential Code. Unfortunately, most older homes have more narrow doorways than this.

To prepare for old age, the recommended width is at least 36 inches to allow for easy wheelchair access. You’ll pay anywhere from $400-$500 to widen one doorway. This price will also depend on the doorway you’re trying to fix, like say having to move light switches or other fixtures that might bump up the cost.

The last reno you should be thinking about for your home are wheelchair ramps. These can run you anywhere from $5,000-$6,000 for a temporary aluminum ramp, all the way up to $12,000-$14,000 for a permanent 8-step structure that’s attached to your home.

If you know you’ve found your forever home and want to make it as future-proof as possible, renovations ideas like these can help make it easier to manage – and much safer.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

The post Ditch Senior Living and Stay in Your Own Home appeared first on Daily Reckoning.

A New Tax Warning for Business Owners

This post A New Tax Warning for Business Owners appeared first on Daily Reckoning.

I’ve been self-employed for the last decade and I’ve been doing my own taxes for as long as I’ve had income so I’ve learned an awful lot about both things over the years.

Now, after recently getting a letter from the IRS regarding my 2018 return, I have some new insights to share with you about where the two areas intersect – specifically why the advantages of a special retirement plans for business owners have just gotten a bit less attractive under the new tax laws that went into effect for 2018.

Here’s the Background…

As a self-employed person, I’ve been using a special type of retirement plan for years now and it’s already helped me keep more than $500,000 in income away from Uncle Sam’s greedy hands (at least for the foreseeable future).

It’s called a Solo 401(k) or an Individual 401(k) and I’ve universally recommended them to anyone else with self-employment income… whether from a primary business or a side hustle.

To use one, you just have to own a business and you can’t have any employees other than your spouse.

You can be a sole proprietor… a partnership… a corporation… it doesn’t matter.

Solo 401(k) plans have many of the same features as their regular brethren.

One of the biggest? You can deduct your contributions come tax time.

The difference is that you can put away a lot more money every year.

Just to illustrate the point:

Like regular 401(k) plans, your employee “elective” contributions couldn’t exceed a maximum of $18,500 for the 2018 tax year ($24,500 if 50 or older).

But in addition to that amount, Solo 401(k) plans also allow your employer — i.e. YOU — to make additional profit-sharing contributions every year – up to a maximum of $36,500 last year.

All told, that means the total limit was $55,000 for 2018 (or $60,000 for folks 50+).

To take full advantage of the sky-high maxes, you have to earn a significant amount of money in any given year. All the details on the rules and calculations via the IRS here.

However, the point is that Solo 401(k) plans offer the most generous total contribution caps available just about anywhere.

One New Wrinkle with Trump’s Tax Changes…

The amount you deduct for contributing to a solo 401(k) – or another pre-tax retirement account like a SEP or SIMPLE IRA – reduces the amount of money that benefits from the new 20% deduction for qualified business income (QBI).

That came as a surprise to me.

After all, you don’t deduct your retirement contributions on Schedule C… which is the record of your net self-employment income. They’re a separate line item on the 1040 itself (more specifically, line 28 on Schedule 1 of the new 1040).

As a corollary, any deductions you have related to self-employment health insurance also reduce the amount of pass-through income that qualifies for the deduction (line 29 of Schedule 1). 

Same goes for the deductible tax on your self-employment income (line 27 of Schedule 1).

You can get the full set of regulations here.

Here’s the Upshot…

The new 20% QBI deduction somewhat reduces the value of contributing to a tax-deferred plan like a Solo 401(k).

Does that mean you should forgo contributing? No. Everyone’s situation and goals are different.

Just as an example: I live in the high-tax state of California. My Solo 401(k) contributions reduce my taxable income at the state level even as California ignores the new QBI deduction.

I’m simply pointing out that anyone with self-employment income has a new variable to consider when they pencil out their yearly tax planning.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

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How Do You Picture Your Golden Years?

This post How Do You Picture Your Golden Years? appeared first on Daily Reckoning.

When you picture yourself in your golden years, are you lying on a beach, hitting golf balls, or working behind a desk?

For a lot of soon-to-be retirees, the office will be where they spend most of their golden years. Working in retirement not only gives you the opportunity to earn more money, but you can maintain structure in your days and keep your social connections alive.

But working in retirement is not for everyone. There are several drawbacks to working during your retirement years as well. For instance, some people are surprised when I tell them their retirement income is subject to tax.

If you’ve started Social Security benefits and you pick up part-time work, your earnings may push your income to a level where your Social Security benefits are taxable. And if you’re younger than full retirement age, working may temporarily lower your Social Security benefits.

Today I’m going to outline some of the pros and cons of working in retirement to paint a clear picture in your mind of what’s ahead if you decide to continue working.

Here are some of the pros to staying in the workforce during your retirement years:

Earn More

A lot of people worry they won’t have enough money saved for retirement. Continuing to work is a good way to allow yourself time to continue boosting your retirement savings until you’re comfortable. If your money is invested, you also get the added benefit of being able to wait out a poor performing market or ride out the highs with less risk.

Also, the longer you delay collecting Social Security, the higher your benefits. So your benefits will be higher if you start collecting Social Security at age 70 than if you started collecting at age 65.

Work Keeps You Mentally Fit

There is plenty of research to support that working delays the onset of age-related diseases like dementia and alzheimers.

Work also keeps you feeling younger. A lot of older workers report feeling younger than their actual age due to their sense of purpose and regular daily routine.

Social Connections

If you choose to work in retirement, you likely have more friends. Work provides opportunities for social interaction.

Some people get bored without work to do. They like having a place to go every day, people to meet, and problems to solve.

Bonus Cash

Even if your retirement is fully funded, some retirees will go back to work part-time to make a little bit extra so they can splurge on small luxuries.

Working a retirement job can give you some bonus cash for traveling, meals out with friends, gifts for your grandchildren or to cover the cost of any other planned and unplanned social activities.

Work-life Balance

If you decide to continue working in retirement, your job will likely become more flexible than your typical career job. Several 60-somethings transition to retirement by arranging part-time work, bridge jobs or a phased retirement.

For example, a lawyer might cut back to three days a week for lower pay. A product engineer might give up his management responsibilities to go back to the laboratory part-time, with flexible hours.

Some retirees will even negotiate work from April through December, and then take off somewhere warm for the winter months.

Try Something New

Just because you decide you want to continue working, doesn’t mean you have to stay in the same field or role. Most jobs offer the opportunity to learn new skills and stay up to date with changes in the industry.

If you know you need mental and intellectual stimulation, staying in a job that offers continuing education might be a good idea.

These are just  some of the pros to working in retirement. Here are some of the drawbacks to working in retirement you should know… 

Taxes

As I said earlier, some people are surprised when I tell them their retirement income is subject to income tax. When you start your Social Security benefits, even if only part time, you run the risk of boosting your income to a threshold where your Social Security benefits become taxable.

Self-employed retirees are hit with almost 15 percent payroll tax. And after age 70, your tax bill could go up again when you’re forced to take distributions from an IRA or 401(k) plan.

Wishing You Were Not Working

This ones obvious but it’s the reality for a lot of eligible retirees. Sometimes your financial situation is such that you can’t afford not to keep working.

Therefore you find yourself in situations where all your friends are retired and you can’t participate in all the fun activities they have planned because you have to go to work.

Having a Boss

You’ll get to a point (or maybe you’re already there) where you’re tired of constantly arranging your schedule to have enough time to do the things you actually want to do.

If your work is stressful, unrewarding or physically tiring and you have a bad boss, your stress levels will drop significantly after you stop working.

Lots of retirees find their back aches go away, headaches disappear and they lose excess weight when they stop working. Not to mention, you don’t have to deal with an exhausting commute every day.

Hard to Pursue New Goals

Possibly the most important reason not to keep working is the opportunity to pursue a new life and make it your own. Maybe you want to retire while you’re still healthy enough to travel.

Several retirees develop their creative side by taking up music, painting, woodworking, and pottery. While others just want more time with their grandchildren, which you can’t have if you’re stuck at work.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

The post How Do You Picture Your Golden Years? appeared first on Daily Reckoning.

The Wisest Investment You Might Ever Make

This post The Wisest Investment You Might Ever Make appeared first on Daily Reckoning.

Retirement planning generally focuses on working from your 20s and retiring in your 60s or later. That gives you 40-odd years to squirrel away 10% to 15% of your annual income to accumulate a sufficient nest egg to last the rest of your life.

Yet the reality is that many folks are only a minor emergency, such as needing new tires for the car, away from bankruptcy. Most live paycheck to paycheck.

In fact, a study by Northwestern Mutual found that:

  • 21% of Americans have nothing saving for the future
  • 33% of Baby Boomers only have between $0-$25,000 in retirement savings
  • 46% have done nothing to prepare for the possibility they could outlive savings

Building up a retirement savings that can last 20, 30, or 40 years is indeed a challenge.

But there’s a group that has redefined retirement planning by sacrificing today so they can have a better tomorrow…

The FIRE Movement

Financial Independence Retire Early (FIRE) folks realize that retirement planning is not like it was for past generations. Gone are pension plans and other benefits for loyal, long-term employees. 

FIRE champions push themselves to live frugally, saving up to half their income while young and retire in their 40s. Then the next 30 years their goal is capital preservation. And thereafter, is the time to consume their nest egg.

Not everyone in the FIRE movement group expects to quit working as midlife creeps in. Rather many hope to move on to an endeavor that they would gladly do without the paycheck… something that gives them the freedom to be themselves.

So what does the FIRE crowd recommend you do to achieve such a level of financial wherewithal?

Let’s start with…

How Much You Make

Go for the Bucks When You are Young

When you are young, say in your 20s and 30s and just starting out, go for the money rather than what you think is your passion. That way you’ll have enough put away to do what you love in your 40s, 50s, and beyond.

Besides, how many know what their true passion is at a young age?

By the time you hit 40 or 50, you’ll better appreciate the freedom that comes by deviating from the typical 9-5 work environment and be ready to move on to something you feel good about, even if there is little or no pay. 

That passion might allow you to live a more simplified lifestyle in a less expensive part of the U.S., or even in another country.  

Passive Income

FIRE advocates like money you earn regularly with little or no effort. Examples of passive income include rental real estate, dividend stocks, and bonds.

Suppose though that you don’t have much to invest right now? Here are two ideas to consider… 

You can start off with a small amount and take advantage of a company’s dividend reinvestment plan, better known as a DRIP.

DRIPs are programs that allow investors to use dividends to buy additional whole or fractional shares direct from a company. The minimum investment in most plans is $250 or less. Moreover, you bypass the broker and the associated commissions.

Another low-cost idea for generating passive income is to rent out rooms in your home to students or visitors to your community.

Airbnb is one source that gives you a platform that will help you generate thousands a year in passive income.

Now for the part that many financial gurus and large financial institutions tend to skip over…

How You Spend

Great saving habits are the cornerstone of FIRE movement followers. Some, however, take thriftiness to what may be considered an extreme.

For instance, they might dumpster dive for produce or other food products. Or drive around town the night before trash pickup looking for useable items. Those with creative cooking skills and tough palates scout highways for fresh road kill.

You might not be into digging through other people’s trash or preparing possum on the half-shell (armadillo). Although, sharing a car with your spouse and eating more meals at home may be more to your liking and can help you on your path to monetary freedom.

Avoid Inflating Your Standard of Living

Learning to live below your means can give you that extra money you need to save aggressively.

Still, many Americans are tempted to buy a fancier car or go on a spending spree when they receive a raise, bonus, or other boost in income.

Before falling into that trap, remember that the pleasures of driving a new $40,000+ SUV will soon disappear. While the satisfaction of successfully investing that $40,000 and watching it grow, will stick with you.

Pay off All Debt

The S&P 500 has averaged an approximate 10% return over the past 90 years. Although there’s no guarantee it’ll do the same down the road.

On the other hand, credit card interest can run 15% or higher. Interest rates for student loans, car loans, and home mortgages can be considerable lower.

However, you have to pay interest charges regularly… no matter what the stock market is doing.

So it doesn’t make much sense to invest stocks until you get those debts out of the way.

Two Possible Downsides to the Fire Plan

The first is that you’ll likely lose any group health insurance you have from your employer if you jump out of the workforce early. That means you’ll have to buy coverage or pay out of pocket for medical care. Another option is to go offshore if you need an expensive procedure.

The second is that your Social Security benefits will take a hit.

But as long as you had worked the 10-year minimum, you’ll be eligible for a benefit.

It’s not something I would count on in its present form anyway since the system is on shaky grounds and set to be broke by 2035 as indicated in its latest annual report. 

Of course you could fail to save enough and have to work longer than hoped. And you always have the option to decide the FIRE lifestyle is not for you. You may even be one of the lucky few who find a career you truly love while you’re in your 20’s or 30s.

The gigantic upside…

Leading the happiest, most satisfying life possible.

So are you willing to do what it takes to achieve that sort of financial freedom — your independence date — by the time you’re in your 40s or 50s?

A few simple habits, like turbo-charging your savings and chopping spending, may seem like a small price to pay — and it could be one of the wisest investments you’ll ever make.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

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Turning 66? Here’s How You Can Boost Your Income…

This post Turning 66? Here’s How You Can Boost Your Income… appeared first on Daily Reckoning.

For couples to receive the largest monthly Social Security check possible, experts generally recommend that the higher wage earner holds off until age 70 to begin collecting retirement benefits.

But often people cannot afford that delay if they retire before then, which explains why about 50% of them file early.

Some though, have discovered a perfectly legal way to increase their Social Security benefits by tens of thousands of dollars without waiting those extra years…

When you file for Social Security, you are automatically applying for your own retirement benefit and for any spousal benefit that is available. You’ll receive the higher one. You can’t choose which benefit to take; Washington does that for you. And that decision can never be changed.

On top of that, your benefit may be reduced for the rest of your life if you are not yet 70, which could also affect survivor benefits.

But a restricted application allows the husband or wife to file for spousal benefits only.

You could do this at your full retirement age — 66 — or later.

The Payoff

You received 50% of your spouse’s full retirement age benefit for up to four years while your delayed benefit grows. To use this strategy, your spouse must have already filed for benefits.

In 2015, Washington killed that loophole as part of the Bipartisan Budget Act.

The reasoning according to the Social Security Administration:

“Historically, spousal benefits were designed to be paid only to the extent they exceeded any benefit the spouse earned based on his or her own work record. This change in the law preserves the fairness of the incentives to delay, but it means that you cannot receive one type of benefit while at the same time earning a bonus for delaying the other benefit.”

In other words … the change is meant to prevent you from collecting only spousal benefits while your retirement benefit earns delayed credits.

The opportunity to file a restricted application for spousal benefits ended on April 30, 2016.

However, there are exceptions for an estimated 13 million boomers, but they expire the end of this year.

To Qualify to be Paid Now and Even More Later …

You must:

  • Have been born between 1950 and 1953
  • Be married or divorced
  • Have not yet have filed for Social Security benefits

And your spouse or ex-spouse must have filed for retirement benefits.

Here’s an example of how a restricted application could work:

Harry and Sally are married; both are 66. Harry qualifies for a $2,300 monthly Social Security benefit, while Sally can get $1,200.

Harry could file a restricted application for a $600 monthly spousal benefit.

This accomplishes four things:

  • Harry will receive half of Sally’s benefit, or $600 per month, without filing for his own benefits. Over four years that’s an extra $28,800 of spousal benefits (plus cost of living increases). Their combined monthly Social Security income will be $1,800.
  • Since Harry is not receiving benefits based on his earnings record, he earns an 8% delayed credit each year for four years until he turns 70 when he switches to his own benefit.

That’s a whopping 32% in additional benefits ($736 more) at age 70 for a monthly benefit of $3,036. Their combined benefit will then be $4,236 plus any cost of living adjustments.

  • When Harry files for his own benefits, Sally could qualify for additional spousal benefits based on his record.
  • If Harry predeceases Sally, she switches to survivor benefits based Harry’s higher retirement benefit at the time of his death.

Divorcées and Divorcés

If you are divorced, the exception rules vary a little:

  • You must have been married at least 10 years
  • If you were divorced within the last two years, your ex must have filed for benefits
  • If you divorced more than two years ago, your ex must be at least age 62 and entitled to Social Security
  • You are unmarried

Widows and Widowers

Widows and widowers don’t have to worry about the Jan. 1, 2020 deadline; they’re not affected by the new law. The only criteria are that you must have been married for at least nine months and be age 60-70 when using this strategy.

So you could file a restricted application for survivor benefits then switch to your own retirement benefit, assuming it’s larger, as late as age 70.

Bottom Line

Take your time to understand your options when filing for Social Security. After all, there’s no point leaving a boatload of money on the table.

And if you qualify, filing a restricted application is a great way to maximize the higher earner’s benefit, coordinate benefits between you and your spouse, and maximize survivor benefits.

But time is running out. So look closely at the “be paid now and even more later” strategy before it vanishes.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

The post Turning 66? Here’s How You Can Boost Your Income… appeared first on Daily Reckoning.