February 2013


Here is February’s review of blog posts. We hope you find something you enjoy!

The Simple DollarThree Drawbacks to the Dave Ramsey Plan – Dave Ramsey’s plan can be a help to many people, but that doesn’t mean his plan needs to be followed 100%.

The Simple DollarThe “I’m Never Going to Retire” Retirement Plan – Saving for retirement is important for everyone, even those who plan on never retiring.

U.S. News Money7 Ways to Quell Fears of Running Out of Money – Don’t let a fear of running out of money in retirement stop you from living a full life while you are still working.

U.S. News Money Why More Americans Are Working Past Age 65 – There are many reason to work past 65, and for many people, this is the best option.

U.S. News Money How to Decide Whether to Relocate in Retirement – If you are thinking about relocating when you retire, make sure to consider these important points.

Please let us know if you have a favorite financial blog that you think we should be reading.

 

  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.
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Retirement planning can be a difficult and confusing project. Most people understand that they have to save money to retire. Most people also understand that their lifestyle will change, often dramatically, when they retire. But how many truly understand what that all means?

Please check out U.S. News Money’s post “5 Retirement Myths to Avoid” by David Ning. For anyone who isn’t quite sure what planning for retirement really entails, this post is great. You may have even heard these “retirement myths” before. Unfortunately, these myths are not actually true (though they would make retirement planning much easier). And for anyone planning for retirement using any of these myths as a guideline, you may be in surprise when get there (and not a pleasant surprise).

Saving more is always the ideal choice” is our favorite myth. This is one we often see people following. The assumption always seems to be that if you save enough money, retirement will be a breeze, and all the sacrifices you made to save will be worth it. It’s true saving for retirement while you’re working is extremely important, as we have seen how devastating not saving enough can be; however, there is much more to good retirement planning. Have you taken care of your health? Do you have close relationships with family and friends? Have you cultivated hobbies or activities you can spend time doing during your retirement? As with most things in life, while important, money isn’t everything in retirement.

Please check out the rest of the myths. You don’t want to make the mistake of getting too wrapped up in any of these ideas while planning for retirement.

 

  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.

By now, you should have started receiving information in the mail regarding your taxes—1099s, W-2s, etc. Hopefully you’ve been setting these aside in a safe place for when you are ready to file your 2012 taxes.

We’ve talked here before about tax preparation, and whether you should do-it-yourself or hire a tax professional to prep your return. Both options have merit; however, we are of the opinion that those people with complex tax situations should not attempt to do it themselves. Paying the cost of hiring a professional can be well worth it in complex tax situations.

Even if you have a simple tax return, you may feel more comfortable hiring out the job. Whatever situation you are in, we came across the post “Tax Prep Costs: What’s it worth to you? by guest poster Richard Barrington over at Get Rich Slowly. Barrington takes a look at an annual survey Get Rich Slowly does on the average cost of a number of tax preparation options. This is a great resource for anyone trying to decide how they want to file their 2012 returns.

Additionally, Barrington makes a few good points about hiring a tax professional:

“Getting professional help with tax preparation may be more important than ever with respect to the 2012 tax year, because the tax code wasn’t completely set until the passage of legislation to avoid the fiscal cliff. While most of the discussion of the fiscal cliff focused on tax rates for 2013, some changes, such as reinstating certain energy-efficiency tax credits, were made retroactive to 2012.

This means that the tax code for 2012 wasn’t even set when the year ended. Unless you have the time and resources to keep track of the final changes, some assistance – either via software or a paid professional – might be crucial this time around.”

  • “According to IRS statistics, more than 110 million tax refunds were issued last year, averaging $2,803 apiece. So, getting what you’re entitled to can more than pay for the cost of tax preparation. Even if you don’t get a refund, the difference between paying too much and paying the right amount can similarly outweigh the cost of paying for tax preparation.
  • The cost of making a mistake on your taxes could add more to your tax bill in penalties than you would have paid to have a professional prepare your return.
  • A paid preparer might be able to give you advice on actions you could take now to reduce your tax bill in future years, so there could be a payoff beyond just this year’s return.
  • You have to weigh the cost of having someone else prepare your taxes against the amount of time it would take you to do it. After all, your time is valuable.”

Whatever you decide, make sure you have all the relevant information gathered together before you begin.

 

  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.

The Simple Dollar had a great post this week by Trent Hamm entitled “The Sandwich Generation and You.” “The Sandwich Generation” consists of those people who are supporting both their children (either minors or adults) and their parents. Stuck between both financial and emotional support of both children and parents, this group of people can be in a very bad position for planning their own future.

Hamm’s post is great because it goes into some ideas on how you can lessen the impact this situation may have on your life. The biggest issue is to talk things through. You don’t want to be in a position where you are blindsided and find out that your parents or an adult child needs financial help from you.

If your family is not one that is comfortable talking about money, then sorting through the situation can become even more important. Maybe your parents aren’t comfortable admitting they need help. Or maybe they don’t know they need help. It may be up to you to start the conversation.

You not only want to understand your parents’ or child’s situation, but also make sure they understand your own. Let them know how much financial support you are able (and willing) to give them. We think this is especially important for your children to know.

Your Own Future

It can be very difficult for those in “the Sandwich Generation” to concentrate on their own future. However, it’s very important that you do. You may need to trim your budget to compensate for the additional costs, however, please don’t skimp on your own retirement savings. Being well prepared for your own retirement will not only be beneficial to your own future, but your children’s as well. The more prepared you are, the less likely your children will become part of “the Sandwich Generation” in the future.

 

  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.