Thursday 30 April 2015

The millennial and the Contributory pension schemes- Odunze Reginald C




Image credited to independent.co.uk

Who are the Millennial, according to Millennial Legacy, “Millennial are the generation born between 1982 and sometime in the early 2000’s. However, these boundaries aren’t set in stone. Some definitions have the Millennial Generation starting as early as 1978 and starting as late as 1985. Basically, if you are born a little earlier than 1982 and you consider yourself to be more Millennial than Generation X, that is your opinion. Or if you were born in or just after 1982 and you feel that you are more Gen X than a Millennial, the same applies. It is really up to the individuals born during the cusp years (late 1970’s to early-mid 1980’s) to decide which generation they feel a stronger connection to”
Continuing it stated that “The digital generation is providing some hope for the retirement crisis. After watching their parents suffer through two major financial bubbles and the weakest economic recovery on record, the majority of millennial are placing money aside for retirement — as long as they have a job.”
It has been argued the contribution pension scheme is the main thing as most countries around the globe are migrating from the Defined Benefit Scheme to the Defined contributory scheme.
For contributors retiring within the next 10 years, they will not understand the beauty of the scheme, but for the fresh graduate of 25 years who may be expected to be in the scheme for the next 35 years, either to retire at the age of 60 or 35 years of service. They will understand better.
By simple calculation, the first batch of millennial are expected to access their retirement benefit between the period 2039 and 2042. And the real millennials are expected to access their retirement benefit between 2050 and 2060. Will it be enough? Will it match the value of the bond of their predecessors?  This therefore calls for an individual’s calculation of the estimated pension pot based on your expected date of retirement.

In a recent forum in Lagos, the AGM , public sector, National Pension Commission,  Mr. Mamman  noted that those that are entering the service at this time will be more favored than those already in the service , this is in agreement with my earlier postulations titled “ Will the Millennial  be entitled to bond” which appeared in Reginald odunze.com, in the article Odunze noted that the Millennial will be better than the present contributors based on the contributory pension scheme.
A rough estimate of the schemes indicates that even with a contribution of (Ten Thousand Naira) 10,000.00 with a zero retirement savings balance, making an annual savings of 120,000 on 9 percent interest rate with 3 percent inflation rate with life expectancy of 87 will have = N=26,936,446.54 while with 30000 monthly with the same parameters will give =N=80,809,339.61 with a monthly pension of =N=236,387.60. That’s a whole lot of money bearing in mind that the industry average is almost 13 percent.
From the analysis above which I used the pension calculator to calculate, it all means that the Millennial are more favored with contributory  pension scheme than the defined benefit scheme.



Culled from reginaldodunze.blogspot.com

Wednesday 29 April 2015

DEVELOPING SUCCESSFUL STRATEGIES FOR A HAPPY RETIREMENT-ODUNZE REGINALD



Image credited to telegraph.co.uk

In his book, “The Prince” a book on political philosophy, Machiavelli stated that the destination is far more important than the journey; he was so engrossed with it that he came up with a political maxim that still stands till today, “the end justifies the means”
And in the film Transcendence, a film on Artificial Intelligence, Dr Caster and his team noted that the journey is far more important than the destination.
But the views of financial and retirement planners are different; they believed that the journey is as important as the destination.  So is all aspect of life, the journey of any event, program, study is by far better than its destination. If the journey is well planned, the destination will be great, and if the journey is haphazard then its destination can be a dismal failure. Pension is not an exception.
In his books, “The magic of getting what you want”, and “The magic of thinking big Schwartz” noted that human beings and individuals expecting to make change in their immediate environment should be willing to prepare their 5 minutes obituary and by preparing their 5 minutes obituary, they will be able ascertain if they have achieve their expectations in life. So also should workers be able to prepare for their own retirement even when they are still working, by carrying out their pension calculations, they will be able to extrapolate in advance, their likely expected pension pot and their pension’s benefits. They will also be able to plan in advance how much they intend to make and collection as their lump sum and monthly pensions.
From these two illustrations, it can be observed that in every aspect of life careful planning, checks, measures are necessary for a better deal. Even in life, James Schwartz noted in preparing ones obituary, you will be able to ascertain what you have achieved at a particular age. In pension one should make it a duty to at one time or the other to ascertain what his or her pension pot is, bench mark it with your benefits, salaries , allowance accruable to you now, by so doing you will know whether you are making a headway or not in achieving the required pension pot. There is also need for a pension calculator.
There are steps to achieving that and according to Wall Street cheat sheet “TCRS offers the following three strategic steps for achieving retirement readiness and success:
  1. Save for retirement. Start saving as early as possible — and as much as possible to maximize potential compounding of investments. Save consistently over time. Avoid taking loans and early withdrawals from retirement accounts as they can severely inhibit the growth of long-term retirement savings.
  2. Calculate retirement savings needs, develop a retirement strategy, and write it down. In creating a plan, consider lifestyle, living expenses, healthcare needs, government benefits, and other factors, as well as a backup plan in case retirement comes early due to an unforeseen circumstance.
  3. Get educated about retirement investing. Whether relying on the expertise of professional advisers or taking a more do-it-yourself approach, gain the knowledge to ask questions and make informed decisions. Seek assistance from a professional financial adviser, if needed.” (Wall street cheat sheet)”
But in having a worthwhile retirement is a basically a function of the strategies put in place in achieving that.  Strategies according to Anao are schemes, maneuvers, and methods, plans which organizations or individuals hope to deploy in order to function effectively, Retirement is essential one of the basic facts of life, and people save for two basic reasons, to make lots of money and to provide for the retirement. And according to a recent research, people are more likely save to cater for their retirement than to be rich.
The problem of financial crises and the increase in the working age in United Kingdom and the United states has made people to start planning heavily on the retirement, coupled with a recent development where scammers target retires because of their vulnerability indicate a positive trend in having a good retirement strategies as most whites return back to work having discovered that their pension pot could not carry them through during their retirement. These are the basic strategies for retirement:
1 Save for retirement: saving for retirement is a basic requirement in life especially in Africa where there is no social security. Saving for retirement in Africa is fast becoming important as the modernization has gradually eroded African system of social communism where in most communities; people gather together build houses for old people who do not have children to cater for them. As this has eroded, it becomes increasingly important to start saving for old age
2 Make s rough estimate of retirement savings needs, the saving need is a strategic issue as most retirees came to the sudden realization that what they are getting as their lump sum is not enough, coupled with their desire to get a house and a car from their lump sum which is barely enough to cater for their immediate needs.
3 Develop a retirement strategy, it is very important to fashion a well defined retirement strategy. Transamerica Center for Retirement Studies (TCRS), noted that in developing a retirement strategy, it is important to do the following “create a plan , In creating a plan, consider lifestyle, living expenses, healthcare needs, government benefits, and other factors, as well as a backup plan in case retirement comes early due to an unforeseen circumstance
4 Know a lot about retirement investment, it is the inability for contributors knowing about investment that often drove them to annuity. Contributors should at one time or the other gets investment advice from their pension fund administrators. They can do this by attending forum organized by the various Pension Fund Administrators to get adequate information on investment strategies
5 Maintain a positive attitude towards life and pension inclusive; according to book of job what people fear most always comes to them. And according to Robert Schuler, in his book , “the power of positive thinking “ he noted that  one of the basic ingredient of success is maintaining a positive outlook to life, believe that you will make and you will make it, believe that you will not , and you will definitely not”
Therefore maintaining a positive attitude in all aspect of life is pre requisite for all facets of life and Le Boeuf (1987:21) noted that “your world is a mirror and your mind is a magnet what you perceived in this world is largely a reflection of your own attitudes and beliefs. And life will give you what you attract with your thoughts. Think, act and talk negatively and your world will likely be negative. Think, act and talk with enthusiasm and you will attract positive results.
6 Do additional Voluntary Contribution: It is also important to embark on additional voluntary contribution as the mandatory provision of 15 percent is not quite enough and I strongly commend the Federal government of Nigeria for increasing to 18 percent.  Individuals should be willing to additional voluntary contributions, the gain of AVC far more outweigh its impediments, especially now the tax is on the revenue, and not in the principal, if you are withdrawing below 5 years.
Pension is a great destination, and it requires careful journey , which comprises planning, adequate contributions, monitoring pension pot and as you endeavor to that, you will discover like Dr Caster and his team that the journey is very important as its destination. 
Odunze Reginald C
Lead Consultant, Charge Consulting

Tuesday 28 April 2015

Is Anyone Using These New Retirement Accounts? -Megan Elliott


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Back in January 2014, President Obama unveiled an ambitious new program designed to help Americans save more for retirement. Dubbed a myRA – short for “my retirement account” – the idea was to make it easier for people to save for the future. “It’s a new savings bond that encourages folks to build a nest egg,” the President explained during his State of the Union address. “myRA guarantees a decent return with no risk of losing what you put in.”
So, has the myRA revolutionized the way Americans save for retirement? Not exactly. The Treasury Department opened up myRA enrollment in December 2014, but it won’t say how many people have actually signed up, InvestmentNews reported. As of now, individuals can’t open myRAs on their own – they need to work for an employer who has set up direct deposit payroll deductions. Currently, part-time and seasonal employees with the federal government’s Office of Personnel Management are eligible to participate, but it’s not clear how many other employers have signed on, if any.
 
 
The slow roll out for myRAs may not be a bad thing, especially after all the bad press that came with the botched debut of the health care exchanges. “They’re dealing with people’s money, so they want to make sure they get all the bugs out to handle the expected volume coming,” David John, a senior policy analyst at AARP, told CNBC. “I expect there will be substantial use of the program once it’s fully rolled out.”
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The bigger issue may be whether myRAs really are a viable solution to America’s retirement savings crisis. The concept seems like a good one, at least on the surface. Twenty-one percent of employers don’t currently offer any kind of retirement plan to employees, according to research from the Transamerica Center for Retirement Studies; less than half allow part-time workers to enroll in a plan. While people can set up traditional or Roth IRAs if they are motivated to save, that requires a fair amount of work. Many account custodians also require minimum deposits of $1,000 or more to open an account. For people who are just getting started saving, that can be a lot of money.
A myRA, on the other hand, costs nothing to open and monthly recurring deposits can be as little as $2 (people can save up to $5,500 per year). Savers pay no investment fees and don’t have to worry about their account losing value, since the money will be invested in U.S. Treasury Securities. With only one investment option, people won’t have to navigate a potentially confusing landscape of options, as they do with 401(k)s and IRAs. And because the account is structured like a Roth IRA, they can withdraw their contributions without penalty at any time.
But security and simplicity comes at a price. All myRA deposits will be invested in a fund that had an average annual return of 3.19% over the past 10 years – barely enough to keep up with inflation. Once a myRA account balance reaches $15,000, savers will have to roll over the money into a Roth IRA, which will have more investment options. But reaching that level may take a while, especially if people are only saving small amounts and earning tiny returns.
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Though some retirement experts have criticized the lack of investment options and low returns, myRA proponents say that the goal is to get people who would not otherwise save – and who may be suspicious of more complicated investment vehicles – to start building a nest egg. “How do you get people to get their toe in the water in the system if the financial brokerages don’t want the small accounts?” William Gale, director of the Retirement Security Project at the Brookings Institution, told CNN. “This is a way of bridging that gap, getting people going so that they get familiar with saving.”
For myRAs to be successful, employers need to get on board and encourage people to sign up. Right now, workers can request that their employer sign up to offer direct deposit for myRAs, a process that is simple and free. Yet some people may be hesitant to ask for a favor or put an additional burden on their boss. The Treasury Department says that other ways will be available to contribute to myRAs in the future.
But there is an even bigger obstacle that may be standing in the way of myRA’s success. The people who the accounts are meant for may not have any extra money to put away. “People don’t have money to save,” Lance Roberts, chief executive at STA Wealth Management said in the Wall Street Journal. “If they had money to save, they would be — and they are — taking advantage of the options that exist. … What people are lacking is the money to save.”
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Still, myRAs aren’t dead in the water. Sixty-four percent of people surveyed by the Doorways to Dreams Fund said they’d be interested in a government-backed savings account like a myRA. While interest was slightly higher among those with higher incomes and more savings, 62% of those with less than $2,000 saved said they’d be interested in a myRA. But people made it clear they wanted more flexibility in the accounts, like the ability to deposit tax refunds and a mobile app that would allow them to track balances.
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Source: Doorways to Dreams Fund
One potential area of concern: While 54% of people said they’d use their myRA for retirement savings, 47% said they were likely to use it for more general savings purposes. If people end up using a myRA more like high-interest savings account than a retirement account, it may end up doing little to alleviate the retirement savings problem in America.

Culled from Wall streetcheatsheet

Monday 27 April 2015

Don’t Let This Common Mistake Sideline Your Retirement Goals- Eric McWhinnie


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Having too much confidence can be an embarrassing, costly character trait. In 2004, Seahawks quarterback Matt Hasselbeck became an example of what not to do in a wild card playoff game against the Packers. After winning the overtime coin toss, he infamously said, “We want the ball, and we’re gonna score!” Hasselbeck’s inflated ego played over the PA system for all of Lambeau Field to hear. Instead, Hasselbeck threw a pick six to cornerback Al Harris, costing the Seahawks their first playoff game since the 1999 season.
Hasselbeck would go on to lead the Seahawks to their first Superbowl appearance in franchise history just two years later, but most of us aren’t so lucky to have a clean slate every year, especially when it comes to money. We are only young once. If we make the mistake of being too confident in our personal finances it can set us back years and even sideline our retirement goals. Unfortunately, considering the sorry state of savings in America, it appears that many people are overconfident with their personal finances.
A new survey from the National Foundation for Credit Counseling (NFCC) finds that 59% of Americans say they deserve an “A” or a “B” when it comes to their own personal finance knowledge. Furthermore, 92% of respondents say they are very or somewhat confident in their most recent big financial decision, such as picking a credit card, buying a new car, or refinancing a mortgage. Yet the majority admit they spend money without a budget, and nearly one quarter are not paying their credit card bills on time.
Fifty-eight percent of respondents who are repaying their own student loans or their children’s educational debt claim they are unable to establish emergency or retirement savings. “Many Americans are spending their adult lives slowly chipping away at a mountain of student loan debt only to find themselves approaching retirement later in life with little or no savings,” said Susan C. Keating, president and CEO of the NFCC. “The stakes are too high for consumers to let misplaced confidence get in the way of sound financial decisions.”
How can you prevent confidence from sidelining your retirement? Recognize that ignorance is not bliss when it comes to financial literacy. Like an old football injury, it only gets worse with age. The first step is to face your situation and crunch the numbers. Make a list of your monthly expenses, including everything from rent and utilities to debt payments and entertainment. After adding up all expenses, subtract the total from your monthly income. If your expenses outweigh your income, you need to find ways to cut spending or increase income, immediately.
Once you have a surplus on paper, set a reasonable percentage to save and make the savings automatic. Instead of trying to save what money is left over at the end of the month, which always seems to be less than estimated, place money aside before spending your paycheck on anything else. This does not mean you should stop paying monthly bills in order to save, but rather, adjust your spending habits so you find a healthy balance between savings, necessities, and wants. Continue to take an active role in your finances by educating yourself about personal finance.

Culled from Cheatsheet

Sunday 26 April 2015

At what age can you really retire? By Sharon Epperson

If you're in your late 40s or 50s, you may be wondering if there is a way to retire early.
Nearly three out of 10 workers expect to retire before they're 65, according the Employee Benefit Research Institute. Unfortunately, many Americans are financially unprepared to retire at all.
A new survey finds 40 percent of baby boomers have nothing saved for retirement and 21 percent have less than $100,000 saved.


You don't want to just leave your retirement date to chance. Want to retire before your late 60s? Ramping up your savings is the first critical step. Then consider these three variables that could also impact when you'll be able to retire.
One of the biggest risks to retirement is outliving your money.
Even if you may think you want to retire early, if you expect to live longer and you're healthy, research shows you're likely to work longer. The later you retire, the less money you will need in your nest egg.

You can use Living to 100's Life Expectancy Calculator, which incorporates findings from the New England Centenarian Study of centenarians and their families around world, to do your own projections.
Health problems can have a big influence on your decision to retire early.
One analysis, using data from the National Institute on Aging's Health and Retirement Study, suggests poor health is a stronger influence than financial variables on someone's decisions to retire.

More than one-third of those 55 to 59 years old cite poor health as being very important in their decision to retire, but it is less of a consideration among those 60 and older.
Estimate how much income you'll get in retirement from all available sources, including Social Security, pensions, 401(k)s, IRAs, other retirement accounts and your savings. Will your cost of living be more or less than it is now? How long would that income allow you to maintain your lifestyle in retirement?
Having pension assets can certainly help you retire early. The NIA's study found that people with defined-benefit plans, such as traditional pensions, retire on average 1.3 years earlier than those with defined-contribution plans, such as 401(k)s.

If you have no pension, savings from retirement accounts, such as 401(k)s and IRAs, will likely be essential to helping you reach your early retirement goal. So save the maximum amount you can throughout your career to help you get there.

Culled fore From CNBC

Saturday 25 April 2015

9 secrets of successful savers-By Geoff Williams


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If your savings account is your couch -- and you go hunting under the cushions to find extra money -- then you've probably wondered many times: How do they do it? How do some people never run low on money?
After all, you don't have to rake in the dough to save it. Earlier this year, another story came to light of an elderly man who passed away last year and was, to the surprise of his friends and family, a closet millionaire. He was a high school graduate who worked as a mechanic and a department store janitor, but left behind $8 million, giving most of it to the hospital and library in his hometown of Brattleboro, Vermont.
What's the secret to saving money -- and actually keeping most of it? We asked financial advisors and academics and culled some of their best tips.
Save early. The best savers start as early as possible, says William Mahnic, an associate professor of banking and finance at Case Western Reserve University's Weatherhead School of Management in Cleveland, Ohio. "They began to save a portion of their paycheck when they started their first part-time and full-time job. This gives their savings plenty of time to grow and take advantage of the miracle of compounded interest."
This advice may seem useless if you're approaching retirement age with an empty account, but it's never too late to start saving.
Automate. Virtually every financial expert will tell you to make saving as easy as possible -- and the best way to do that is to have a system where money automatically goes to a savings account.
"Set up an automatic debit from your paycheck to a savings or investment account, and pretend it does not even exist. You can even have it invested automatically," says Bijan Golkar, a certified financial planner in San Francisco. "It's important to force yourself to live under your means if you are really trying to save up."
"This is a simple trick to put the money out of sight and into an account that is building toward your retirement," says Jon Rugg, vice president at Charlesworth and Rugg, an investment advisory firm in Woodland Hills, California.
Don't spend your raise. Peter Nigro, a professor of finance at Bryant University in Smithfield, Rhode Island, suggests that the next time you get a raise, automate or budget so that half of it goes into your retirement fund -- the rest, you can keep.
"And make sure you're getting your employer's retirement match. It's free money," he says, referring to how some companies match contributions to your retirement plan, up to a certain amount.
When you pay debts off, don't reduce your budget. After you pay off that massive credit card bill or those student loans, it's natural to want to use the extra money for clothes, entertainment and whatever else you can think of, but that's exactly what you shouldn't be doing, according to Adam Nugent, managing partner at Foresight Wealth Management in Salt Lake City.
"Rather than spending that money you were paying towards a certain debt, either take that same amount and pay it against the highest-interest debt you have on something else, or take those same dollars and increase your savings and/or investment accounts," Nugent says.
He does make an exception, though. If your finances feel really tight, just save half of that debt payment. "Take the difference and enjoy life along the way," he says.
Diversify as much as possible. It's always smarter to save in several ways than just one. If you really want to save, you'll want to put your money into not just a savings account but a retirement savings plan like a 401(k) or a money market deposit account, or maybe you'll want to invest in the stock market.
"The old adage about the eggs and one basket is true," says Andrew Meadows, the consumer and brand ambassador for Ubiquity Retirement + Savings, a company headquartered in San Francisco that specializes in offering retirement plans to small businesses. "Should something happen to that one method of saving, you'd be left with nothing. The same can be said for what you invest in. Many folks found in 2009 that their home was no longer an investment [they could] bet on for wealth or stability. Making sure you're taking advantage of several ways to save will mean less stress about your preparation for the future."
Watch out for fees. It's easy to forget, but it can cost money to save money. You'll likely have to incur expenses like monthly maintenance fees on savings accounts and deferred sales charges with mutual funds. That's normal, but the best savers, Mahnic says, watch those costs. "They choose mutual funds or exchange-traded funds that have low annual operating expenses and negotiate the fee they pay to financial advisors. They keep as much of their return on investment as possible."
Compensate. It may not be enough to just tell yourself you're going to put money aside every month for your child's education or an upcoming summer vacation. Especially if when your paychecks arrive, most of your money is already spoken for. You may have to eliminate something from your budget to support what you're saving for.
Take what John Thornton did, for example. Thornton is an accounting professor at Azusa Pacific University in Azusa, California. He has a Ph.D. in accounting and is a certified public accountant, "which means I spent way too long in school, so I have a lot of personal experience living at well below the poverty line, as well as advising the poorest of the poor: college students," he quips.
Thornton says he and his wife once paid for a trip to Hawaii in part by his giving up eating out for lunch every day. He spent about a buck on his prepared lunch versus $5 eating out. "The $4 saved each day for 250 work days per year added up to $1,000," he says.
Don't overdo it. Some people manage to live a frill-free life and apparently do just fine, but especially if you're just starting to get serious about saving, you might do better to aim low and then work your way up to stricter savings goals.
"Allow yourself some fun every now and then," advises Claudia Cieslak, manager of consumer education at the American Institute of CPAs. "Completely depriving yourself of any fun spending is like depriving yourself of your favorite foods when trying to diet; ultimately it will make the entire process less enjoyable and likely lead you to splurge even more when you do."
And budget. You really can't save money if you don't have specific plans on how to spend your income every month.
"Know what you make, and live within your means," Nigro says. "A lot of new college grads buy a new car, which depreciates the minute you drive it off the lot. And you do not need the latest iPhone."

Culled from US News


Friday 24 April 2015

How Retirees’ Pensions Work Against Social Security Benefits


If you receive a government pension, your Social Security benefit may suffer a reduction due to a rule called the Windfall Elimination Provision. It pays to know how it works when you plan for your retirement income.
This provision, or WEP, reduces your Social Security benefit when you receive a pension based on work where you did not pay Social Security taxes. The point of this rule is ostensibly to act as an offset, since the pension is intended to replace Social Security benefits for that worker.
First, you should understand a few things about how the Social Security Administration views your pension.
  • The WEP applies to pensions based on your earnings from non-Social Security-covered employment, regardless of your years of service.
  • The pension is your own, not your spouse’s or someone else’s. In other words, receiving a survivor pension from a non-covered job does not trigger the WEP. (However, another reduction called the Government Pension Offset may come into play.)
  • The SSA uses the amount of pension you receive per month for calculation. If you receive payments on a different schedule, such as quarterly or in a lump sum, the SSA translates them into a monthly amount.
WEP impact calculation. Two figures determine how much the WEP reduces your benefit: 50% of the amount of your pension and the maximum WEP reduction for the year ($413 in 2015). Whichever is lower is the amount of reduction to your Social Security benefit.
If half of the pension is more than $413, the maximum WEP impact is limited to $413. If not, the WEP impact is half of the amount of your pension (as a monthly amount).
The SSA lowers the maximum WEP reduction if you paid Social Security tax on substantial earnings for more than 20 years. For each additional year, it dropped 10%.
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Below are a couple examples to help explain how this works.
Example 1. Rick is due to receive a lump sum pension from his work for the state government. This lump sum benefit calculates to a monthly pension amount of $300. Rick also worked part-time for 20 years in a job that Social Security covered. He is due (before WEP impact) a Social Security benefit of $900 per month at his full retirement age.
Rick began receiving Social Security benefits earlier this year. When he receives the lump sum from his state pension, the WEP kicks in. Rick’s impacted Social Security benefit will be $750 ($900 minus $150), because 50% of his pension ($150) is lower than the maximum amount of reduction ($413).
Example 2. Brad worked alongside Rick for several years. However, Brad, being a more highly skilled worker, has a pension coming from the state government in the amount of $1,400 per month. Brad had the same part-time job as Rick, which garnered him a Social Security benefit of $900 per month.
Reducing his benefit by $413, we come up with $487; reducing his benefit by 50% of his pension ($700), we come up with $200. The higher of those two amounts, $487, is what Brad receives after the WEP impact.
Example 3. Freddy worked the exact same job as Brad, earning the monthly pension of $1,400, but Freddy had a part-time job where he received substantial earnings for 24 years, and his Social Security benefit is $1,200 per month.
Since Freddy had substantial earnings for more than 20 years, the maximum WEP reduction decreases from $413 to $248, a 40% drop for the four additional years.
For the calculation, we reduce Freddy’s Social Security benefit by $248, resulting with $952; again, subtract 50% of his pension ($700), we get $500. The higher amount, $952, is Freddy’s Social Security benefit.

Culled from Adviceiq

Thursday 23 April 2015

5 Ways to Help Your Retirement by Going Green - Megan Elliott


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Americans are worried about their retirement security. Nearly three-quarters say that it’s nearly impossible for the average person to save enough for retirement, more than half are planning to continue working after their official retirement date, and 42% think they may have to sell their home in order to afford their retirement, a 2015 survey by the National Institute on Retirement Security found.
At the same time, Americans’ level of worry about the environment is at a near-record low, according to a March 2015 Gallup poll. A still-sluggish economy may be behind the relative indifference to issues like air pollution and global warming, since people tend to worry more about these problems when the economy is doing well.
Yet retirees have good reason to give environmentalism some thought, if they haven’t already. That’s because going green is not just good for the planet, but can also be good for your retirement budget. From simple steps like turning down the thermostat a few degrees to bigger lifestyle adjustments like swapping driving for public transit or switching to a vegetarian diet, an eco-friendly approach can help you do more with a limited retirement budget.
Not every investment in going green is going to save you cash. Some, like outfitting your home with solar panels or a geothermal heat pump, require a significant upfront expense, which may take some time to recoup. But other eco-friendly moves are easier to implement. Below are five things you can do to go green in retirement and save money in the process.
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1. Stay local

Sixty percent of Americans are interested in relocating in retirement, according to a 2015 survey by Bankrate, but pulling up stakes can be expensive. The average cost of moving to a new state is $5,630, according to the American Moving and Storage Association. That doesn’t include the other expenses associated with relocating, such as closing costs when you sell your current place or furnishing a new home.
Not only could staying put help you save some much-needed cash, it can also help you reduce your carbon footprint. Retirees who relocate may find themselves traveling back their original home a few times a year to visit family or old friends. All those trips cost money and spew greenhouse gases into the air.
Whatever your retirement travel plans, don’t always assume that driving is the greener choice. A recent study found that flying is actually more fuel-efficient than driving in many situations.

2. Rethink transportation

Want to save big in retirement? Consider getting rid of one of your cars. It costs $8,876 a year to own and operate a vehicle, according to AAA. Vehicles also represent 51% percent of the average household’s carbon footprint, according to the U.S. Department of Energy. Parking those wheels and opting for walking or public transit instead will not only save you big money, but it’s also good for the planet.
Retirees already drive less than most other Americans, since they’re not commuting to and from work every day. Those over age 65 drive about 7,646 miles per year, compared to 15,291 for those between the ages of 35 and 54. Cutting miles driven by roughly 20%, or 1,529 miles, would save you $905 per year (based on AAA cost-of-driving estimates).
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3. Opt for earth-friendly hobbies

Golf may be the quintessential retirement hobby, but it’s a costly pastime. Playing 18 holes on a public course cost an average of $44 in 2013, according to the National Golf Foundation. The environmental cost of golf is a little harder to determine, but there’s no doubt that many courses use a lot of water and pesticides, though they can also provide a refuge for birds and other wildlife.
Whether or not you’re a golfer, you can help your wallet and the environment by being smart about which hobbies you pursue in retirement. Working in your vegetable garden, hiking in local parks, bike riding, and volunteering could all be ways to keep busy without doing much damage to your wallet or the planet.

 4. Downsize your home

Big houses require a lot of resources to maintain. American homes have been growing steadily larger in recent years, from an average of 1,525 square feet in 1973 to 2,169 square feet in 2010, according to the U.S. Census. Sprawling structures with high ceilings often means spending more on heating and cooling, water (both inside and out), and powering all the different appliances and other devices scattered throughout the house.
Choosing a smaller home is one of the best ways to reduce your carbon footprint, according to a study by the Oregon Department of Environmental Quality. Many of the benefits come from the reduced energy and fuel use that comes with smaller homes, which also saves homeowners money.
Don’t assume, however, that a small home is always more energy efficient than a larger one. Newer homes are generally more energy efficient than older homes, according to the U.S. Energy Information Administration. If you want to downsize to save money and help the environment, look for a smaller home that also has energy-efficient features, like windows that don’t leak, proper insulation, and Energy Star appliances. The U.S. EPA has more tips on reducing energy use in your home on its website.
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5. Choose a green retirement community

If you’re planning on moving to a retirement community, you can do your part for the environment by looking for one that’s eco-friendly. Some retirement communities are LEED-certified, which means that a third party has confirmed the building’s eco-friendly status. You can also look for communities that use solar energy, natural landscaping techniques, organic cleaning products, or take steps to reduce food waste.
In one Arizona retirement community, residents took the lead in adopting eco-friendly initiatives, like switching to energy-efficient lighting and updating landscaping with natural plants. The efforts helped cut costs and avoid fee increases for residents, reported Eco Building Pulse.
Some retirees may even choose to build their own green retirement community. That might involve choosing to live in denser urban areas within walking distance of amenities, living with roommates rather than alone, and building connections with neighbors to create support networks and share resources, like cooking communal meals one or two nights a week.

Culled from wallstreetcheatsheet

Wednesday 22 April 2015

5 Problems That Only Rich People Have-Sam Becker


US tycoon Donald Trump arrives to speak at the annual Conservative Political Action Conference - Source: Nicholas Kamm/AFP/Getty Images
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You may be familiar with the term “first-world problems,” which essentially pokes fun at the issues people from advanced economies or relatively well-off backgrounds complain about. These problems are most appropriately highlighted in their absurdities when compared to the problems faced in developing or emerging economies, where subsistence living and poverty are more common.
But even as most of us in America find ourselves fretting here and there over one first-world problem or another, these issues don’t even come close to some of the problems the ultra wealthy face. America’s upper crust has an entirely separate slate of issues that most of us will never need to worry about. As they say, more money, more problems.
 
 
What kind of problems are we talking about? Here are five that only the extremely rich ever have to deal with, and some real-world examples of these outlandish problems taking place.

1. Sinking your yacht

Unless you’re sitting on top of a Scrooge McDuck-like pile of coins, you’re probably not anywhere close to getting a yacht. The average cost of a yacht under 30 feet long is more than $100,000 — this is the low-end of the spectrum — and operating costs can come in at around 10% of purchase price annually. Needless to say, these things are expensive as hell. So, in order to even be concerned about sinking one, you first need a lot of money in the bank.
Nonetheless, it has happened. Jordan Belfort, the infamous Wolf of Wall Street, sank his yacht in a storm off the coast of Italy. That was a 167-foot ship, complete with a seaplane and helicopter. But he’s not the only victim. Others have lost their beloved yachts to the sea as well, to the tune of millions.
(Profanity warning for video above.)

2. Crashing your Bugatti Veyron

For those of you who don’t know, the Bugatti Veyron is more than just a simple car. It’s one of the fastest cars in the world, and is incredibly expensive with a price tag of roughly $2.25 million. Much like a luxury yacht, this is one of those things that the majority of us will probably never lay eyes on, let alone get inside of. One plus side of that is that we don’t need to worry about scratching the paint, or completely destroying one.
But it’s happened, as you can see in the video above. The man in that particular Veyron was a rich Texan named Andy Lee, who bought the car for $1 million. He then took out a $2.2 million insurance policy on it, and drove it into that lake, claiming that a pelican had caused the accident. Now, he faces up to 20 years in prison for insurance fraud.
Middle class America, just be glad you won’t even get the chance to develop a scheme like that.
Dustin Johnson of the United States and Donald Trump pose with the Gene Sarazen Cup - Source: Sam Greenwood/Getty Images
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Dustin Johnson of the United States and Donald Trump pose with the Gene Sarazen Cup – Source: Sam Greenwood/Getty Images

3. Getting your golf resort rejected

If there’s one rich person who gets a lot of heat, it’s Donald Trump. Granted, Trump does seem to bring it on himself a lot of the time, like when he reportedly threw a fit because Scottish authorities decided not to let him build a luxury golf course along a remote stretch of coastline. The Scots, in an effort to keep important rare bird habitat intact, told Trump he would need to build somewhere else, much to Trump’s dismay.
“Mr. Trump is shocked, extremely disappointed and dismayed at this decision,” said George Sorial, managing director of Trump International Golf Resorts, per Golf.com. “This is certainly not something we expected.”
Mr. Trump is someone who is used to getting what he wants, so when something like this happens, it’s a big deal. For the rest of us, well, it’s a problem we could only dream about having. But don’t worry, Trump made up for it by buying an Irish golf club instead.
Models check a phone backstage ahead of the Missoni show - Source: Lisa Maree Williams/Getty Images for Audi Fashion Festival
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4. It’s harder to keep your indiscretions secret

With wealth and fame comes increased public scrutiny, and the realization (or lack thereof) that you’re living under a microscope. When you have a lot of money and influence, people look at you differently and dissect your every move. Protecting your privacy can be hard, and it becomes a lot harder to get away with just about anything. We’re constantly hearing about — and subsequently becoming outraged over — the indiscretions of the rich.
Case in point, look at what happened to Tiger Woods. After an auto accident, it was revealed that he had been involved in extramarital affairs. Another example is former Los Angeles Clippers owner Donald Sterling, who was caught on tape saying some questionable things. Both of these incidents gripped the public’s attention for weeks, whereas had they happened to the average person, few people outside of their own social networks would have taken pause.
TV personality Billy Gardell attends the "Monopoly Millionaire's Club" lottery launch - Source: Andrew H. Walker/Getty Images
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5. Poor people poke fun at you

When you’re in the public eye, because of fame or fortune, it’s easy for people to take their shots. Look at celebrities like Justin Bieber, who face all kinds of ridicule. But many wealthy people haven’t been able to take it in stride, and as social issues like income inequality and tax rates have become more pronounced in recent years, many rich people have taken to the wires to voice their concerns over shifting public sentiment.
The rich feel that they are under fire and in some cases being actively discriminated against because of their socio-economic situation. They are constantly lampooned by the media and are often stereotyped as being mean.
Let’s face it, that can’t be fun. But that’s just one more problem that huge swaths of cash will bring you.

Culled from wallstreetcheatsheet

Tuesday 21 April 2015

A wealth building plan for you: Ready to retire-By Greg Ostrowski



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Investing can be such a confusing, scary proposition sometimes. You're never really sure if the information you find is exactly right for you (in the case of some online publications), if the data is relevant (in certain financial studies) or if the advice is credible (such as when you receive a stock tip from your Uncle Fred because "he knows a guy").
Although we can't help you avoid a bad recommendation from a relative, we can at least give you some steps to take that are a bit more tailored to you. As part four in our series, "A Wealth Building Plan for You," we'll address the needs of those ready to retire.
Where to start. You've decided that you're going to retire soon. Congratulations. Now what do you do? Retirement planning presents with it an array of questions that don't usually have right or wrong answers. Much of your decision-making is going to be based on both what you have already saved and your personal preferences.
It's important to remember though, that although you're not going to be working as much, your money does not have the same luxury. In fact, in some ways, your wealth needs to work harder than ever, since you won't have an income stream like you did during your peak earning years. With that, here are some questions to consider as you get ready for some of the best years of your life.
How much income will you need? We're seeing more Americans live well into their 80s, 90s and even longer. That means if you plan on retiring at 65, you'll have 20 to 30 years of expenses to consider, if not longer. A general rule of thumb is that you'll want to aim to have 70 to 80 percent of your current income in retirement. In January 2014, Fidelity Investments estimated that to get there, you'll need retirement savings totaling at least eight times your ending salary. How much will you need to save? The answer to this question depends a lot on factors you have some control over.
Do you plan on spending more, less or the same as what you're currently spending? Does a vacation look more like a visit to Orlando or an excursion to Bali? Will going out to dinner consist of steak and lobster or burgers and fries? Even if you're no longer paying for a home or a child's college education, your expenses could remain the same, or even increase, if you're planning on taking dream vacations and traveling more.
The typical retirement budget*
29% on housing
9% on utilities
8% on taxes and insurance
6% on rent/mortgage
6% on maintenance
20% on healthcare
8% on insurance
6% on drugs
4% on health services
2% on medical supplies
13% on food
12% on transportation
10% on entertainment
10% on gifts
6% on other expenses
*Source: The Urban Institute
Everybody's different, but begin to examine all of your monthly expenses and consider comparing them against a typical retirement budget. What can you do without? What is an absolute must? Eliminate all that you can actually live without, like that Costco membership you hardly use. That's money that could be reallocated toward a safari or week in wine country.
Will you take on any type of consulting or part-time work? Not everyone wants to completely retire. Some people want to continue to do some consulting or part-time work to stay busy and help out with expenses. If your current line of work could translate into teaching what you know, look into serving as an adjunct professor at a local community college. It could be a great way to stay active, teach what you know to the next generation, and earn a little extra money in the process.
Or maybe you want to transition completely away from your career's line of work and try your hand at doing something new. This could be an opportunity to earn money from a hobby you enjoy. Maybe you could instruct others on how to keep their gardens flourishing throughout the season or teach a painting class. Your options are only limited by your imagination.
Are you diversified enough if one of your income sources dries up? Have you had a conversation with a financial professional about the possibility of a stock market dip or other financial issues? It used to be that you could retire and shift all of your assets to fixed-income investments, but in today's low interest rate environment, fixed-income investments may not keep pace with inflation. Make certain that your eggs aren't all in one proverbial basket.
Do you have a contingency fund set aside in the event of a medical or other emergency? An emergency fund is not only for people just starting out, who are concerned with job loss. Medical and long-term care expenses that aren't covered under insurance could be costly, and long-term care rose 8.6 percent compared to a year ago, according to the 2015 Long Term Care Insurance Price Index. Having funds already set aside provides you with greater peace of mind.
When you're first starting out, it's a good idea to have three to six months of expenses put away. However, as you near retirement, it's a better idea to put away just a little more. In this case, eight to 12 months is a better goal, and can add a little more of a cushion in the event something unforeseen happens.
Do you want to leave any type of legacy to your family or community? Do you have a special charity or organization that you'd like to see benefit from your generosity? Or do you want your family to have some financial security to pursue dreams of their own?
Do you have enough money to enjoy those big-ticket experiences? This is your retirement. It's for you to enjoy. But it's also important to understand budget limitations. If you have some big-ticket items you've been looking forward to for years, be sure that you have a plan in place to make it happen responsibly.
"You are never too old to set a new goal or to dream a new dream." -- C.S. Lewis. Retirement planning can be confusing, since every situation is different. But it doesn't have to be with the help of a financial planner. By having an understanding of what your retirement will look like before you get there, you can better plan to make your dream a reality.
Securities offered through SII Investments, Inc. (SII), Member FINRA, SIPC. Advisory Services offered through Scarborough Capital Management (SCM), a Registered Investment Advisor. SII & SCM are separate companies. Neither SII nor SCM provide tax or legal advice.
Opinions, estimates, forecasts and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.

Culled from US News

Monday 20 April 2015

Worst states for retirement 2015-By Stacy Rapacon


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Choosing the best place to retire is a personal decision. No amount of number-crunching can make it for you. Only you can decide how close to your grandkids you want to live or whether you want to hit the road or even head abroad. However, an examination of some of the objective factors that matter to retirees--in particular those tied to safety and economic security--can help you narrow the options. With this goal in mind, we rated all 50 states and the District of Columbia in terms of how well each suits the unique needs of retirees.
Our rankings favored states that are affordable and economically healthy, as well as those with lower crime rates. We also took into account the presence of a robust retirement-age population. Finally, we weighed the tax situation for retirees in each state. Note that we did not account for weather because some retirees yearn for year-round warmth while others might prefer the changing seasons.
SEE ALSO: Cheapest Places You'll Want to Retire
We found the worst places for retirees scattered throughout the country. And though they are geographically diverse, they have one thing in common: All have above-average living costs that can strain fixed incomes. The following states might be great places to work, raise a family or visit, but they hold the least appeal when judged strictly as retirement destinations.
10. Texas
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Total population: 25.6 million
Share of population 65+: 10.7% (U.S.: 13.4%)
Cost of living: 1.5% above the U.S. average
Average income for 65+ households: $49,842 (U.S.: $48,665)
Retiree tax picture: FriendlyRetirees may feel lonely in the Lone Star State. Just two other states have a smaller percentage of residents age 65 and older. In fact, the median age in Texas is a strapping 33.8 years old, the third-youngest in the country (the U.S. median age is 37.3).
Another deterrent for retirees: The poverty rate for seniors is 11.3% in Texas, compared with 9.4% in the U.S., and the overall state poverty rate is 17.6%, versus 15.4% for the U.S. Texans of all ages must also cope with above-average crime rates.
Certain metro areas rise above the state's drawbacks: The city of Sherman actually made our list of Cheapest Places Where You'll Want to Retire, due to the metro area's low costs and the state's tax-friendliness for retirees. We also recommend Austin as a great place for golfers to retire, based on its 32 public courses and low greens fees.
9. Utah
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Total population: 2.8 million
Share of population 65+: 9.3%
Cost of living: 3.4% above average
Average income for 65+ households: $48,925
Retiree tax picture: Not FriendlyThe Beehive State may be buzzing with life, but it's not necessarily the style retirees are seeking. Utah's population has the second-lowest share of people 65+ in the U.S., trailing only Alaska. Indeed, it's the youngest state in the country, with a median age of 29.6, nearly eight years younger than the national median. That small pool of older residents is also 63.8% married--the highest share in the U.S.--which may make Utah particularly unattractive for single retirees.
High costs are another detractor. The median home value for the 65-and-up population in Utah is $203,300, 23.7% higher than the U.S. median of $164,400. Unfriendly state tax laws for retirees add to their burden: Utah is one of the few states that taxes Social Security benefits.
SEE ALSO: Worst Social Security Mistakes You Can Make
St. George, however, offers a pocket of affordability in Utah. The metro area made our list of Cheapest Places Where You'll Want to Retire, due to extraordinarily low living costs reported by local retirees, not to mention the natural scenery and outdoor lifestyle.
 8. Oregon
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Total population: 3.9 million
Share of population 65+: 14.5%
Cost of living: 14.3% above average
Average income for 65+ households: $39,872
Retiree tax picture: Least Friendly
Taxes in the Beaver State gnaw away at fixed incomes. Among the 10 Least Tax-Friendly States for Retirees, Oregon levies one of the highest state income tax rates in the country, ranging from 5% to 9.9%. And although Social Security benefits are exempt, most other retirement income is taxable. Not that there's much to tax. Oregon seniors bring in below-average household incomes--18.1% less than the national average of $48,665, to be exact. There is no state sales tax.
Despite low incomes, expenses are high. In addition to the overall high cost of living, the median home value in Oregon for seniors is $227,400, versus $164,400 for the U.S. as a whole. At least you can defer paying property taxes if you are age 62 or older and meet income requirements. But when you sell, move or die, those taxes will come due.
Oregon's rate of property crime is above average, as is the state's overall poverty rate.
 7. Nebraska
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Total population: 1.8 million
Share of population 65+: 13.7%
Cost of living: 2.0% above average
Average income for 65+ households: $39,441
Retiree tax picture: Least Friendly
The smallest state on this list (not counting the District of Columbia) offers equally small incomes. Despite being home to billionaire Warren Buffett, Nebraska's typical household income is woefully below average. Aging Cornhuskers have the lowest average household income on this list, at 19.0% less than the national average.
Those low incomes may now get retirees a break on taxes, at least. Though it's currently one of the 10 Least Tax-Friendly States for Retirees, starting in 2015 Nebraska has introduced new rules exempting some residents from paying taxes on Social Security benefits, depending on income. Otherwise, benefits are taxed to the same extent as the federal rate. There are no breaks for most other retirement income. Also, there's an inheritance tax of 1% to 18%, depending on the beneficiary's relationship to the deceased.
SEE ALSO: 9 Reasons Women Will Never Retire
On the plus side, rates of both violent crimes and property crimes come in below the national average, as do Nebraska's poverty rates for both seniors and the general population.
 6. North Carolina
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Total population: 9.7 million
Share of population 65+: 13.4%
Cost of living: 2.1% above average
Average income for 65+ households: $39,769
Retiree tax picture: Mixed
The mild winters and pretty scenery may not be enough to lure you into Tar Heel country. Typical household incomes in North Carolina don't track with the state's above-average living costs. The average for all households is $64,490, the second-lowest among the 10 states we examine here and 14.0% less than the U.S. average. Older residents fare even worse, with income for 65+ households falling 18.3% below average.
Poverty is a concern. Ten percent of seniors live below the line, versus 9.4% nationwide. More troubling, the poverty rate for the whole state is 17.5%, compared with 15.4% for the U.S. Property crime in North Carolina is above average.
As for taxes, besides Social Security benefits, which are exempt, most other retirement income is subject to tax. Effective in 2015, North Carolina switched to a flat income tax rate of 5.75%. There is no inheritance tax or estate tax, and older homeowners may qualify for a property-tax exemption.
 5. Minnesota
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Total population: 5.3 million
Share of population 65+: 13.3%
Cost of living: 3.6% above average
Average income for 65+ households: $41,991
Retiree tax picture: Least Friendly
The Land of 10,000 Lakes may drown retirees in taxes. Yet another of the 10 Least Tax-Friendly States for Retirees, Minnesota taxes Social Security benefits the same as the feds. Most other retirement income, including from military, government and private pensions, is also taxable. And the sales tax and income tax rates are high, at 6.875% and 5.35% to 9.85%, respectively.
Most older residents won't have to worry about those top tax rates. The average household income for Minnesotans 65 and older falls 13.7% below the U.S. average--and far beneath the thresholds for the highest tax bracket.
SEE ALSO: 11 Common Medicare Mistakes
Yet the state's cost of living is above average. According to health care research firm HealthView Services, lifetime health care costs for a healthy 65-year-old couple retiring this year and covered by Medicare parts B and D and a supplemental insurance policy total $403,562 in Minnesota. The U.S. average is $394,954. And the median home value for 65+ homeowners is $173,600, compared with $164,400 for the U.S.
4. New York
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Total population: 19.5 million
Share of population 65+: 13.8%
Cost of living: 52.7% above average
Average income for 65+ households: $61,754
Retiree tax picture: Least Friendly
One pricey Big Apple spoils the entire Empire State. In 2014, the city reigned as the most expensive place to live in the U.S., with costs soaring 120.4% above the national average. New York also sports the highest living costs of any state in the country. No wonder, despite the above-average incomes of residents age 65 and older, the same age group suffers a poverty rate of 11.3%, worse than the national 9.4% rate.
Health care and housing are notably expensive in New York. A healthy 65-year-old couple retiring this year will face lifetime health care costs totaling $413,597, the most expensive on this list and 4.7% higher than average. New York has the second-highest median monthly rental costs for seniors after California on this list, according to the Census Bureau. And the median value of a home owned by someone 65+ is $270,600 in the state, compared with $164,400 in the U.S. Homeowners also face some of the highest property taxes in the country.
3. New Mexico
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Total population: 2.1 million
Share of population 65+: 13.8%
Cost of living: 3.6% above average
Average income for 65+ households: $42,160
Retiree tax picture: Mixed
When it comes to taxes, the Land of Enchantment presents a lackluster reality to its retired residents. Social Security benefits are subject to tax, though at least some of the income can be included in an exemption allowed for people age 65 and older. There's also a statewide gross receipts tax (similar to a sales tax) of 5.125%. County and city taxes can add another 3.56%.
Other notable negatives: Safety may be an issue. For every 100,000 residents in New Mexico, there were 3,705 property crimes, including burglary and car theft, and 613 violent crimes, such as rape and murder, in 2013. (Comparatively, across the U.S., 2,731 property crimes and 368 violent crimes occurred per 100,000 people.) The poverty rate for older residents is also high at 12.1%, versus 9.4% for the U.S.
SEE ALSO: 6 Savvy Moves to Stretch Your Retirement Savings
If you're eyeing the Southwest for its sunny climate and multicultural vibe, check out Arizona, one of our 10 most tax-friendly states for retirees, instead. The Grand Canyon State does not tax Social Security benefits, prescription drugs or groceries, and its top income tax rate of 4.54% is lower than New Mexico's 4.9%.
2. California
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Total population: 37.7 million
Share of population 65+: 11.8%
Cost of living: 34.7% above average
Average income for 65+ households: $60,440
Retiree tax picture: Least Friendly
Another one of the least tax-friendly states for retirees, the Golden State could be a foolish retirement choice. Except for Social Security benefits, retirement income is fully taxed, and California imposes the highest state income tax rates in the nation (the top rate is 13.3%). The current state sales tax of 7.5% is also daunting. The sales tax can reach as high as 10% in certain cities and counties that collect additional local levies.
If that doesn't burden your budget enough, living costs will likely add to the stress. The biggest state in the country bears the third-highest cost of living, behind New York and the District of Columbia. The median home value for those 65+ in California is $368,600, more than double the national median. Retirees who rent will fare no better: Monthly rental costs for renters 65 and older are the steepest in the nation.
1. District of Columbia
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Total population: 619,371
Share of population 65+: 11.4%
Cost of living: 39.9% above average
Average income for 65+ households: $90,755
Retiree tax picture: Not Friendly
America's seat of power is no place to retire. Spanning just 68.3 square miles, the District's population is tiny, and only a small share of those residents are 65+--a total of 70,363 people. The median age in D.C. is a green 33.8 years old, compared with 37.3 for the U.S., which makes the metro area a better choice for new grads than for retirees.
The nation's capital has the second-highest cost of living in the U.S. after New York, and the greater metro area is among the most expensive in the country. Specifically for folks 65 and older, the median home value is $424,400, the highest on this list and second only to Hawaii. And though it boasts the highest average income for 65+ households in the country--the D.C. area is home to a great many millionaires--it also suffers a painfully high 14.0% poverty rate among seniors (tied with Mississippi for most impoverished). Violent crimes occur at 3.5 times the national rate, and the property crime rate is also higher than average.
High taxation (without representation, no less) is another deterrent. D.C.'s top income tax rate is 8.95%, among the highest in the country, according to the Tax Foundation. The sales tax is 5.75%. One bright spot on taxes: Social Security benefits, as well as up to $3,000 of military, federal and D.C. pensions, are tax-exempt.

Culled from kiplinger in yahoo finance