LEARNING CENTER

Just starting out

It starts with a paycheck. When you create a savings account, set up an emergency fund, and develop smart physical and financial strategies, you have a better chance of keeping your budget in a happy place.

As you find firm financial footing, consider ways that might help you protect against the unexpected and increase your wealth potential.

Let’s talk about the unexpected

Building healthy fitness and finance habits today can help you bounce back from setbacks that much faster. Setting aside enough money to cover at least four to six months of expenses can help make it a little easier to ride out a job loss, unexpected medical diagnosis, roof leak, or frustrating car repair.

Building a budget might start to alleviate financial stress you may be feeling. You can spend confidently knowing you’ve made room in your budget so you don’t have to second-guess your purchases. It can also help you avoid credit blunders and improve your credit score, which is essential for gaining access to lower interest rates when you borrow for a car or a home. Credit scores can also affect your car insurance rate, application processes for home rental, or even a job.

To start, examine your essential (needs) and discretionary (wants) expenses. Essential items can include housing, a vehicle (plus fuel and insurance), food, and retirement contributions. Discretionary expenses can include concerts, dining out, travel, and gifts.

It’s easy to make your retirement contributions automatic if you have access to a plan through your job. Most employers deduct retirement plan contributions directly from your paycheck  in most cases before taxes — so you won’t have to make space in your budget. Sometimes employers match your contribution, so you can get the most out of automatic contributions when you contribute as much as (or more than) the match.

Have a Transamerica retirement account through your employer?

Whether or not you have access to a retirement plan through your work, there are still options for you. Consider an individual retirement account (IRA). These are even accessible if you have a plan at work if you want to boost your retirement investment potential!

Can you predict the future? Neither can we. Workplace benefits such as accident insurance can go a long way – and cost you less per month than some designer T-shirts – so you don’t have to foot the bill when the unexpected occurs.

If your family relies on you, term life insurance can help your loved ones maintain their lifestyle if something happens to you. Accident or medical expense insurance can cover the costs that your major medical insurance doesn’t.

Accidents happen, and the high deductibles associated with many of today’s major medical plans could leave you footing the bill. Thankfully, Transamerica’s employee benefits can help fill gaps in your major insurance, providing cash payments that may help cover deductibles and other medical expenses. Dependable protection — it’s no accident.

Start saving at the earliest possible date. Don’t make excuses that you can’t afford it.
-2017 Aegon Retirement Readiness Survey

WELL INTO MY CAREER

Where did the time go?
You’re in your prime earning years, but expenses tend to rise, too. Bigger house, more expensive vacations, and, if you have them, kids need financial support with sports and college expenses. You might even be a caregiver for an older relative.

Like a fine-tuned machine

You’re well into your working career, and you’ve learned a lot. Sometimes it can be helpful to get another perspective on ways you can optimize your budget, get enough physical exercise, cover your family with appropriate insurance, and fine-tune your spending habits to help set yourself up for a bright future.

Consider this a refresher on ways you can leverage your momentum to propel yourself toward the next decade and beyond.

Even if you don’t have access to an employer-sponsored retirement plan like a 401(k), there are still options.

In 2018, you can contribute up to $5,500 to an individual retirement account (IRA). And if you're 50 or older, you can contribute another $1,000 in "catch-up" contributions.

A term life insurance policy can help provide protection for loved ones at a competitive cost. Add living benefits and it can help cover expenses related to a qualifying chronic, critical, or terminal illness and offer death benefit protection.
Mutual funds offer professional management and a range of investment objectives. You can choose to increase time in the market instead of timing the market.
 
That said, choosing the right investments for mid-term goals can be more complex than any other time period. The challenge is striking an effective balance between preserving your assets while still achieving growth.
 
You might want to consider balancing your mid-term portfolio with a mix of high-quality fixed-income investments with modest growth investments. Balanced funds, growth and income funds, or equity income funds that invest in well-established companies that pay high dividends might be appropriate. Here are some possible strategies designed for goals that are three to 10 years in the future.
 
Three to four years away
You might limit your stock to less than 30% of your portfolio.
 
Eight or nine years away
You might invest 60% or more in a stock fund. Your tolerance for risk comes into play.
 
Before investing, consider the investment objectives, risks, including possible loss of principal and charges, and expenses.
What does risk mean in terms of investing for retirement? How much risk are you comfortable with?
 
When you’re younger – in your 20s, 30s, and into your 40s – it’s common to invest more aggressively, with the idea being that you have time to potentially make up for any market dips. An aggressive portfolio would include more stocks, and fewer bonds or cash.
 
As retirement approaches in your 50s and 60s, it’s typical to become more conservative and to replace some of those stocks with bonds and cash, which are generally considered less volatile. That’s because we’re now trying to protect our investments heading into retirement.
 
That’s the general philosophy, but risk is a deeply personal thing. If having a lot of your retirement investments in stocks is going to keep you awake at night, a portfolio heavily weighted with stocks may not be for you.

RETIREMENT IS APPROACHING

The next step awaits.

The prospect of retirement – whatever that means to you – is on the horizon. You may feel the need to make up for lost time or reassess how much income you will need as your lifestyle shifts.

Plus, when it comes to health, what are the things your doctor thinks you should know as you get older?

How will I know when I can afford to retire?

Up until now, your goal has likely been saving for retirement. Now that it’s time to really get ready to retire, the first step is to determine how much you can sustainably spend in retirement and how long you will need it to last.

It’s important to consider all of your potential sources for retirement income, including any employer-sponsored plans you may participate in, Social Security, and any pension benefits that may be applicable.

In this cheat sheet, we'll guide you on some important things to consider.

Now could be the time to act

This is a pivotal time when you have some special opportunities to make the most of your retirement strategy. Not all of them may be right for you, but here's a quick list of what could be available. You can use it to start an informed conversation with a financial professional.

When you have certain retirement investment accounts, the government sets limits on how much you can contribute each year. In the year you turn 50, these limits rise. For individual retirement accounts (IRAs), this amount increases from $5,500 to $6,500 in 2018. For most employer-sponsored plans, the contribution limit increases from $18,500 to $24,500 in 2018.
 
Got questions on IRA contributions, how much you can contribute, and how your spouse’s situation can affect you? Check out the IRS IRA FAQs.
 
The IRS also has some helpful information on 401(k) and Profit-Sharing Plan Contribution Limits.
An IRA rollover is often promoted as a straightforward transaction that can help simplify retirement planning.
 
But rollovers have pros and cons that can affect your long-term path toward retirement. You can use this handy checklist to dive into the nuances. Discuss this possibility and share the checklist with your financial professional before you take the leap.
If estimated Social Security income won’t meet retirement needs, you can consider a variable or fixed-index annuity as a part of your income strategy. An annuity with optional living benefits purchased prior to retirement may offer you years of guaranteed income.
 
As with any financial strategy, be sure to talk to your financial professional to determine if an annuity would be a smart option for you. All guarantees, including optional benefits, are backed by the claims-paying ability of the issuing insurance company.
Pensions aren’t unheard of, but there could be a lot of questions about how these work. These days many employers combine these retirement benefits with a defined contribution plan, too, such as a 401(k) or 403(b). Your retirement income from a pension is generally based on your salary, years of service, plus some other pretty complex equations.
 
Fortunately, the closer you are to your retirement years, the easier it should be to understand what you can expect to receive as retirement income from this type of plan.
 
How will your pension payment complement your Social Security checks? Have you got additional retirement investment or savings accounts?
 
Start by contacting your human resources department to begin the process of estimating your retirement income. The sooner the better – if there is a gap between your anticipated expenses and income, you’ll want to know right away.

An experienced transition team at your side

Our retirement counselors can help you with the inevitable complexities that arise with an approaching retirement. These counselors are here for you, with insights on how to create a retirement income strategy, optimize Social Security, or which health care options may be available.

Register for a live webinar, or make an appointment with a retirement planning consultant.

If you're thinking about retiring in the next two years or so, give us a call at 866-616-4191 to speak with one of our retirement advisors. They're available Monday through Friday, 9 a.m. to 6:30 p.m. ET.

IN RETIREMENT

High five! This is your time.
Hopefully your hard work has paid off and you’re ready for the next step on your journey. We’re here to help with some of the more complicated questions you may have about making your assets last – and provide some encouraging words along the way.

The milestones of retirement: ages 62 to 70½

Wishing you the best of wealth + health on the road ahead! You've got some key milestone birthdays to remember and reference materials to help as you approach some important financial opportunities.

The month following your 62nd birthday is the month in which you first become eligible to collect Social Security retirement (individual and/or spousal) benefits. Unless you’re disabled, the individual benefit at age 62 will be about 75% of the full retirement benefit. If eligible, a reduced spousal benefit may also be available. Social Security generally recommends applying for benefits three months prior to the month in which you would like them to start.
 
Keep in mind, any benefits collected prior to Full Retirement Age are subject to the earnings limit and earned income may reduce benefits.

The month in which you turn 65 is the month you become eligible for Medicare. Anyone not collecting Social Security should enroll in Part A three months prior to your 65th birthday to avoid a gap in health insurance coverage. Most people will be eligible for premium-free Part A coverage.

Unless covered by an employer-sponsored health plan, you must also enroll in Medicare Part B to avoid future penalties.

If you continue to work, you can check with your employer’s plan to see how it integrates with Medicare and whether or not you are eligible to opt-out of Part B.

If you turn 66 before January 1, 2021, Full Retirement Age for Social Security is your 66th birthday.

Assuming you have not received a retirement or disability benefit yet, in the month following your 66th birthday, you are eligible to collect your full retirement benefit. If eligible, a full spousal benefit may be available in place of your benefit, if it is a greater amount.

Social Security generally recommends applying for benefits three months prior to the month you would like them to start.

The year in which you turn 70½ is referred to as the “first distribution year” and required minimum distributions (RMDs) from qualified accounts must begin. The IRS allows the first RMD to be postponed until April 1 of the year following the “first distribution year.” Subsequent RMDs are due by year end of each year.

Postponing the first RMD results in the need to take both the first and second RMDs in the same tax year.

Do you have healthcare insurance? Don’t forget to keep your policy up to date.

Need to talk?

We're here to help you with these topics, and more.