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What is a Reverse Mortgage? Safe Retirement Solutions Explains

Friday, April 19th, 2013

As people get older, the costs of living and the effects of aging add up to sometimes monstrous totals. Many seniors look for ways to supplement their income and protect themselves from future hardships. One way to do this is by getting a reverse mortgage.

A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that you built up over years of making mortgage payments can be paid to you.  However, unlike a traditional home equity loan or second mortgage, HECM borrowers do not have to repay the HECM loan until the borrowers no longer use the home as their principal residence or fail to meet the obligations of the mortgage.  You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

With traditional mortgages, the homeowner makes monthly payments to their lender, with a reverse mortgage, money is received from the lender and given to the borrower. As a general practice, this money isn’t expected to be paid back during the lifetime of the homeowner; it is only repaid during a resale or in the case of death – in which case the homeowner or his heirs must repay their debts.

The difference between a reverse mortgage and a home equity loan is that with a second mortgage, or a home equity line of credit, borrowers must have adequate   income to qualify for the loan, and they make monthly payments on the principal and interest.  A reverse mortgage is different, because it pays you – there are no monthly principal and interest payments.  With a reverse mortgage, you are required to pay real estate taxes, utilities, and hazard and flood insurance premiums.

To be eligible for a FHA HECM, the FHA requires that you be a homeowner 62 years of age or older, own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, and you must live in the home.

That’s where we come in. The financial advisors in Annapolis at Safe Retirement Solutions can help you develop a diversified portfolio to help you make the most of your investments. The Baltimore financial advisors at Safe Retirement Solutions can help you determine whether a reverse mortgage is the right choice for you, and provide alternative retirement savings guidance. To get started, call 877-268-4086 or visit our website today!

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Source: Frequently Asked Questions about HUD’s Reverse Mortgages, HUD.gov

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Is Early Retirement a Wise Idea? Tips from Baltimore Retirement Planners

Friday, February 15th, 2013

Retirement has all the magnetism of a charismatic crush, but is it a wise idea to retire early? If you’re considering doing so, we recommend buckling down and analyzing if you can realistically live comfortably off of your savings and reduced income. Though the perks of escaping the fast-paced work force are undeniable, the trade-off of potentially not having enough to see you through life after your career mightn’t be worth the risk. Here are some things to keep in mind if you’re thinking about retiring early.

Penalties for Withdrawing From Retirement Plans Early

Withdrawing money from retirement accounts like 401(k)s or individual accounts early will leave you forced to pay penalties to the IRS when you file your taxes, generally 10% of the total amount you take out.

Life Expectancy

The average lifespan of Americans is growing greater and greater. According to the Social Security Administration, a man who reached age 65 in 2012 can expect to live to 83, and a woman, to 85. That means that before you retire, you must have at least enough money to make it through twenty years of life.

Financial Planning

The financial advisors in Baltimore at Safe Retirement Solutions will be realistic with you about whether retiring early is a smart move for you, and can assist you in developing a plan to help you meet your savings goals for retirements so you can lead the lifestyle you’ve always looked forward to having.

For more information about retirement planning and consultations in and around Baltimore, Maryland, call 877-268-4086 or visit our website today!

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Sources:

Calculators: Life Expectancy

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Retirement 101: IRA Investment Tips from Baltimore Retirement Advisors

Friday, January 18th, 2013

Whether you’re just launching your plans to save and invest for retirement or have been banking money for years, it’s always a good idea to have a reminder of what each of your accounts can offer you. This week, we’re providing a few insights on how to expand retirement plans with the addition of an IRA, or Individual Retirement Account.

One of the biggest advantages of opening an IRA? Just as with a 401(k), the annual profits, gains, and dividends from an IRA are exempt from taxation. There are two types of IRAs: traditional and Roth. Let’s take a look at the former:

Traditional IRAs…

Allow for tax-deferred growth, making it so that taxes are only paid on withdrawals made in retirement. Some retirees may even qualify for a deductible IRA, meaning that either all or a portion of contributions made to the individual’s account may be exempt from taxes. You may be eligible for tax deductions if…

-          You don’t have another retirement savings system in place and you’re under the age of 70 ½. Investing in a deductible IRA in this situation will allow you to deduct the full amount from taxes.

-          You have a qualifying adjusted growth income (AGI). In this case, you may be able to completely or partially deduct contributions to your IRA, even if you have other retirement savings plans in place. If you are a single who makes over $68,000 or a couple raking in more than $112,000 each year, you won’t be able to take advantage of the deductions

-          You don’t personally have a retirement plan, but your spouse is covered under one and your joint AGI falls under $183,000 for the 2012 tax year.

The Maryland financial advisors at Safe Retirement solutions in Towson can help you make the most of your Traditional IRA and educate you on the ins and outs of this savings system. For more information, call 877-268-4086 or visit our website today!

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Sources:

Retirement: IRA investment advantages

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Retirement 101: 401(k) Field Guide from Towson Financial Advisor

Friday, January 11th, 2013

Want the 411 on 401(k)s? We’re here to offer it. Signing up for a 401(k) is like signing up for free money in the bank, and in fact, the more money you put towards it, the more no-bars cash will wind up in your pocket. Here are the top three most miraculous money-making aspects a 401(k) has to offer:

-       Whatever you put towards your 401(k) gets taken out of your paycheck before taxes are withheld, meaning you get an instant tax break and decreasing your overall taxable income.

-       Many employers will match at least part of what you put away in your 401(k). The standard offer is 50 cents to every dollar for the initial 6% invested.

-       Until you withdraw your investment, you wont have to pay annual taxes on capital gains, dividends, and other distributions. This is known as tax-deferred growth.

What’s more? As of the 2012 tax year, the federal cap on contributions is $17,000. In addition, under the Tax Relief Act, workers aged 50 and older are permitted to play catch-up, contributed up to an extra $5,500 each year to their 401(k). That being said, individual employers may have different restrictions on the amount of contribution – check with your benefits team to determine how much you can put away every year. Also be sure you’re aware of how much time you have to put in at a company before you can walk away while still gaining your employer’s contributions.

One important consideration: withdrawing money prematurely from your 401(k) does not come without penalties. Access your cash before the age of 59 ½ and you’ll have to pay income taxes on whatever you take out, plus a 10% penalty.

The Maryland financial advisors at Safe Retirement solutions in Towson can help you make the most of your 401(k) and educate you on the ins and outs of this savings system. For more information, call 877-268-4086 or visit our website today!

Follow us on Facebook, Twitter, LinkedIn, and Google+ for more retirement planning tips.

Sources:

Retirement: Virtues of the 401(k)

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Tips from Maryland Financial Advisors: Get Your Social Security Statement

Friday, December 28th, 2012

Social Security Statements: they used to be issued annually, allowing Americans to have convenient access to the retirement benefits ahead of them, but in efforts to save money, the Social Security Administration has seriously cut back on distribution in recent years. Now, that’s beginning to change, as Social Security Statements can be viewed online as of May of this year.

So how can this be of benefit to you as you plan for retirement? See our quick rundown on the pertinent information contained in Social Security Statements:

-          A predication of the retirement and disability benefits available to you in the future

-          An Assessment of the benefits bequeathed to your family when you receive Social Security, or upon your death

-          A catalogue of the earnings you’ve made over your lifetime, according to Social Security’s records

-          An estimate of how much you’ve already paid in Social Security and Medicare taxes

-          Instructions on signing up for Medicare and your qualification status

-          Tips to keep in mind for those nearing retirement age

-          Facts and updates about Social Security on a broad level

-          Information about how to apply online for retirement and disability benefits

The biggest and probably most important takeaway from your online Social Security Statement? The information it provides on the benefits you will receive upon retirement based on your earnings, referred to as your “Primary Insurance Amount” (PIA). This data is calculated based on the assumption that you will continue earning your present salary up until retirement.

A fairly comprehensive forecast of your benefits in retirement, the Social Security Statement details information that serves as a good springboard for retirement planning: log on and access yours today.

Need help making sense of the information on your statement? Don’t know what the numbers you see mean for your retirement? The financial advisors in Maryland at Safe Retirement Solutions can help. For more information, call 877-268-4086 or visit our website today!

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Sources:

Get Your Social Security Statement Online

The First Steps in Retirement Planning

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Insights from Baltimore Financial Advisor: What is a Reverse Mortgage?

Friday, December 21st, 2012

The closer we get to reaching retirement, the more we start searching for effective means of supplementing our income to subdue financial troubles as we age. Many consider taking on reverse mortgages as a retirement income technique, which makes it possible to turn part of your home’s equity to cold cash without selling your home or adding to monthly billing expenses.

Whereas with a traditional mortgage, the homeowner makes monthly payments to their lender, with a reverse mortgage, money is received from the lender and given to the borrower. As a general practice, this money isn’t expected to be paid back during the lifetime of the homeowner; it is only repaid during a resale or in the case of death – in which case the homeowner or his heirs must repay their debts.

Three types of reverse mortgages exist:

- Single-Purpose: generally offered by state and local governments and even non-profits

- Federally-Insured: Home Equity Conversion Mortgages or HECMs, which are funded by the U.S. Department of Housing and Urban Development

- Proprietary Reverse Mortgages: Private loans backed directly by the businesses that offer them

Regardless of the various different kinds of reverse mortgages on the market, it’s important to know who makes an ideal candidate for a reverse mortgage. Though risks will always apply, a reverse mortgage might make sense for older but healthy retirees who don’t have the means to meet their living expenses. Be forewarned, though: if borrowers make the mistake of withdrawing all the cash accrued from equity at once, they lose the opportunity for it to accumulate interest on a line of credit, and may be more tempted to spend it on non-necessities, when it is better reserved for essential living expenses.

The Baltimore financial advisors at Safe Retirement Solutions can help you determine whether a reverse mortgage is the right choice for you, and provide alternative retirement savings guidance.

Follow us on Facebook, Twitter, LinkedIn, and Google+ for more retirement planning tips.

Sources:

Reverse Mortgages

Reverse Mortgage Risks

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Maryland Retirement Planning: Misconceptions about Retirement Planning

Friday, December 14th, 2012

Last week, we gave a rundown on some commonly made errors when it comes to retirement planning – from getting a head start on saving to busting misconceptions about retirees living off of less to the problem with relying on Medicare to cover all medical expenses, and more. Every day, millions of Americans are misguided about what to do in saving for retirement, which more often than not results in inadequate funds for life after the workforce.

1)      Putting too much Stock in Bonds: Many people heading into retirement think that bonds hold more weight than stocks, but with the current rates of inflation, savings get eat into more and at a faster rate. With the risk of a continually increasing rate of inflation as well as increases governmental debt, Treasury bonds don’t have the best future. Stocks are becoming the recommended alternative, with 110-120 minus the retirees’ age as a percentage calculation for how much to invest in stocks.

2)      Leave it Alone: While target-date funds have their advantages when it comes to 401ks and other retirement plans, they have the tendency to lend a false sense of security and divert future retirees’ attention from continuing to save. Make sure you know the following details before investing in one: the rate of change for allocations, when the asset mix becomes more conservative, and how much money you have to sink into fees.

3)      Making up for Lost Time is Easy: A lot of times, people make plans to work part-time in retirement or to retire later on in order to make up for any periods in which they were saving less during the course of their career. But a lot of people over the age of 60 have to stop working sooner than they had anticipated, generally due to health reasons, the need to care for a loved one, or a layoff. This means that relying on the ability to continue working for income isn’t the safest financial decision.

The financial advisors at the Maryland retirement planning center can assist you in saving safely and wisely with our professional guidance. For more information, consult the financial advisors at Safe Retirement Solutions by calling 877-268-4086 or visit our website today!

Follow us on Facebook, Twitter, LinkedIn, and Google+ for more retirement planning tips.

Sources:

7 retirement planning myths debunked

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Annapolis Retirement Planning: What to Avoid in Saving for Retirement

Friday, December 7th, 2012

We can’t always have a manual of “mistakes to avoid making” – even in the cases where we need them most: parenting, our love lives, and of course, how we manage our money. In the era of DIY, many Americans attempt to tackle retirement planning single-handedly, and in so doing, wind up making mistakes that will impact their lives in a big way – and for the long term. We’re here this week to educate you on what to avoid while planning for retirement.

1)      Putting it off for Another Day: Don’t be one of the many who waits too long to start saving for retirement. Trust us, you’ll always be able to come up with an excuse: money is tight, other needs are more pressing, and so forth. Ideally, saving should begin as soon as employment does in order to maximize your money.

2)      Leave it to Medicare: If you think Medicare has got you covered through and through, think again: Medicare covers only about half of all the health care cost of enrolled individuals. Don’t forget to factor in unexpected medical costs – problems will pop up as you age that demand treatment.

3)      Retirees Can Live Off Less: Some people justify their inadequate retirement savings with the thought that retirees spend less money than employed individuals. Surveys have shown, however, that people in retirement spend either as much or more than they did before they reached their golden years.

4)      Reaping Social Security Benefits: If you claim your Social Security checks early, you’ll receive money on a monthly basis, but benefits will end up being 25% less than if you had waited it out until retirement age, and 75%-80% less than if you had held off until age 70.

Keep these tips in mind and you’ll be on your way to dodging some of the disastrous mistakes many make when planning and saving for retirement. Tune back soon to read more on commonly made errors in the retirement planning process.

The financial advisors at the retirement planning center in Annapolis, Maryland and surrounding cities can help you to save safely and wisely with our professional guidance. For more information, consult the financial advisors at Safe Retirement Solutions by calling 877-268-4086 or visit our website today!

Follow us on Facebook, Twitter, LinkedIn, and Google+ for more retirement planning tips.

Sources:

7 retirement planning myths debunked

 

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Financial Advisor, Towson: Social Security Checks Rise for Retirees

Friday, November 30th, 2012

Social Security recipients will see an increase in their monthly payments by the New Year – a result of a measure of inflation. Currently, the average monthly Social Security check received by retirees comes in at around $1,237, which adds up to about $14,800 a year. With the anticipated 1.7% increase, payments will inevitably increase by close to $21 a month, which makes up $252 a year. In other words, retirees will be collecting more green from Uncle Sam in 2013.

And there’s more:  about 8 million individuals who receive Supplemental Security Income will also collect cost-of-living adjustment, or COLA, which is expected to assist retirees avoid poverty amidst the rising prices of food, utilities, and health care.

According to the Social Security Administration, the majority of retired Americans rely on Social Security as their primary source of income, with COLA helping to augment their annual intake of money over the past decade.

Even with the soon-to-be increase in Social Security checks, though most retirees ultimately discover that Social Security alone isn’t an adequate means of income to usher them through all of retirement. Alternative investments and retirement savings plans are generally deemed necessary in making money last over the course of the post-work lifetime. To help in determining where and how to invest, the advice of professional financial advisors is sought by many future retirees.

The financial advisors in Towson, Maryland at Safe Retirement Solutions help our clients in all phases of their retirement planning. We ensure a retirement free from financial worries, so that the retirement years can be enjoyed as they were meant to be. Safe Retirement Solution’s financial advisors assist in enabling our retired clients with the transition of their wealth into a carefree income that will last them a lifetime.

For more information about Social Security and our services or for professional financial advice, consult the financial advisors at Safe Retirement Solutions by calling 877-268-4086 or visit our website today!

You can also follow us on Facebook, Twitter, LinkedIn, and Google+!

Sources:

Social Security benefits to go up by 1.7% in 2013

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Retirement Financial Advisor in Annapolis, Maryland: Overlooked Benefits

Wednesday, November 21st, 2012

Talk about standard retirement benefits – Social Security, Medicare, and the like – crop up so often in news media and elsewhere that even most school-aged children are at least aware of the terms, even if they haven’t memorized their definitions like the words in weekly vocabulary lists.

Many Americans are unaware of alternate retirement benefits, though – ones that could earn them thousands of extra dollars as they save for the golden years. Most of the time, these benefits are ones that future retirees have already paid for with their tax dollars or through their work with a company. Below, we’ve listed some of the most commonly overlooked retirement benefits.

Retirement Accounts from Past Employers

Even though many employers allow workers to transfer their retirement plans when they leave the company, a recent study conducted by ING DIRECT USA revealed that around 50% of Americans neglect to do so. Even worse – 20% of said individuals abandoned accounts valued at $50,000 – or more. Be sure to manage investments and update beneficiaries to avoid losing your savings. Think about merging preexisting retirement accounts into an IRA or your current company’s plan to prevent this problem from happening to you.

Unclaimed Pensions

In a similar fashion to forgotten retirement accounts, many Americans fail to claim pension benefits, and in fact the Pension Benefit Guaranty Corporation (PBGC) says that over 36,000 Americas have unclaimed pension benefits – totaling to nearly $197 million, and ranging in value from $1 to $676,436.

Employee Stock Purchase Plan

Though you don’t want to invest all your funds in one place – your employer – it can nevertheless be worthwhile to see if your employer will allow you to buy company stock at a discount. With rates of up to 15% off, it’s a quick way to get a return on your investment – even if it doesn’t appreciate – by selling it later for more than you paid. Just make sure you’re not putting more than 5-10% of your portfolio in employee stock.

In order to make sure you’re making the most of your retirement benefits, consider consulting with a professional financial advisor. Safe Retirement Solutions services the Annapolis, Maryland and surrounding areas, preparing clients for retirement, with assistance in planning income distribution, tax benefits and deferrals, and the security of their nest egg.

For more information about Saving for Retirement and our services or for professional financial advice, consult the financial advisors at Safe Retirement Solutions by calling 877-268-4086 or visit our website today!

You can also follow us on Facebook, Twitter, LinkedIn, and Google+!

Sources:

7 Valuable Benefits You May Not Even Know You Have 

 

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