Don’t let these Retirement Expenses Surprise You

For many retirees, or those getting close to retirement, the scariest thing about retirement is that they don’t know exactly what’s going to happen as they get older. The fact is, many retirees face financial surprises in retirement that they aren’t prepared for and can ruin their well-laid plans.  But, after you read today’s blog, you won’t be one of them. Enjoy.

Surprise Expense 1: Home expenses. Even retirees who are on a budget, and know what they need to pay for their mortgage, groceries, utility bills and so forth, can see their budget blown out of the water if they suddenly need a new roof on the house, or new siding, a new HVAC system or any one of a number of large expenses that owning a home sometimes brings. As a retiree your best bet is to have a supplemental budget so that, if surprise home expenses like these arise, you can take care of them without blowing your regular budget.

Surprise Expense 2: Health costs. It’s actually surprising how many people don’t budget for major health costs like surgery, accidents and so forth. The fact is however that, even if you have insurance, and Medicaid is helping out, there’s almost always a portion of those doctor bills that you will have to pay yourself. Having excellent insurance is a must in retirement, no doubt.

Surprise Expense 3: Delayed decisions about investments. Many people, in the heat of activity during the last few years before retirement, forget to reformulate their investments like IRAs, 401(k)s and so forth. The fact is however that  after retirement your financial and investment objectives change from accumulating wealth to preserving wealth and producing several streams of income. Sitting down with your financial advisor to reformulate your investments is vital to having enough money during retirement.

Surprise Expense 4:  Badly timing the start of your Social Security benefits. Many consumers make the mistake of starting to collect their Social Security benefits too early, which reduces their payments significantly. We’ve talked about this in many other blogs but, suffice to say that waiting as long as possible to start collecting Social Security will increase those payments substantially and, if you can wait, you really should.

Surprise Expense 5: Forgetting to calculate inflation into the equation.  Let’s say that today you can handle a budget of $2700 a month, but you’re in your 60s. Consider this;  you might live approximately 20 more years and, with the rate of inflation, that same $2700 will only be worth about $1700 at that time. Many experts will say that, because of inflation, consumers need to consider carefully whether or not to retire early.

Surprise Expense 6: Becoming a victim of fraud. Unfortunately, as most people get older their cognitive abilities begin to wane and, as they do, it seems that sleazy salesman and con-man become aware of it much more easily. Sure, most of us believe that we’re “too smart” to fall for their scams but, inevitably, many do. As you get older  it’s vital that you become a little more skeptical and, if something seems too good to be true, it probably is.

Surprise Expense 7: Believing that you won’t live  as long as you actually do. Did you know that one out of five men and one out of three women will actually live to be 90 years old or older? It’s true and, if you’re only in your 60s now, that means it’s possible you will live another 30 years. That being said, managing your money so that you have enough to support yourself for the rest of your life becomes even more important than it already was.

There you are, dear readers, 7 Surprise Expenses that, if you don’t prepare for them, can seriously damage your finances in retirement. Now that you know them, you can prepare yourself better so that, as you head into your “golden years”, you’ll have fewer surprises than most.

Avoid these 5 Least Tax-Friendly States

Many American consumers decide to sell their home and move to another state when they reach retirement in order to save costs on a number of things including taxes, health care, gas and their overall cost of living.

If you happen to be one of those consumers, Kiplinger releases a list of their Top 10 least tax friendly states every year and recently released their newest list for 2014. Practically all of the states that they have on their list have state taxes that are well above the $1324 national average, as well as overly high state income taxes, state and local sales taxes and overly high gas prices as well.

If you’re keen on avoiding these overly expensive states in retirement, read below for the Top 5 worst tax States from Kiplinger’s 2014 list. Enjoy.

1) California

With state income taxes that range between 1% and 13.3%, 7.5% sales tax and gas taxes and $.53 per gallon (the National average is $.31) the Golden State is not just the home of movie stars and beautiful beaches but also one of the most expensive places to live in the world. Unless you get paid like a movie star, retiring in Cali isn’t a great idea.

2) Connecticut

The Constitution State that income taxes that range between 3% and 6.7%, state sales tax of 6.35% and gas taxes and fees of $.49 per gallon. They also have the second highest property taxes after New Jersey in the United States. Although they don’t have local sales taxes, luxury items like jewelry that are $5000 or more are taxed at 7%.

3) New Jersey

After New York, the Garden State has the highest combined state and local taxes in the country and seven of the top 10 counties with the highest median real estate taxes. With state income taxes between 1.4% and 8.97% and estate sales tax of 7%, retiring in New Jersey is probably not a good idea. One small thing that New Jersey has going for it is that food, drugs, clothing and footwear are all exempt from the 7% state sales tax, but that’s really not enough to make it worth retiring there.

4) New York

Right next door to the Garden State is the Empire State and, like its much smaller neighbor, New York has very high state income taxes of between 4% and 8.82%, as well as gas taxes and fees of $.49 per gallon. Unfortunately, if you retire there you will have the highest combination of state and local taxes in the United States (and have to live next door to New Jersey).

5) Hawaii

While it might be one of the most desired vacation destinations in the world, the Aloha State has an extremely high cost of living. State income taxes range from 1.4%  to 11% and taxes and fees on gas are $.48 per gallon. One bright spot (pun!) is that, as a percentage of home value, property taxes are low in Hawaii.

And there you go, the Top five most expensive States in the United States as reported by Kiplinger. If you’d like to see their entire list of Top 10 least tax friendly states, you can follow this link:

Best Money Saving Tips for the Big City

City living is difficult for anyone living on a budget. Add in Los Angeles, New York, and San Francisco and you have a real conundrum on your hands. If you’re not good at saving money, you have to read this guide. These are some of the best money saving tips for the big city we could come up with.

Don’t Live Alone

Living alone essentially doubles your potential costs. Living with someone else cuts them back to a more manageable level. If you’re single, take in a roommate or move in with someone who’s looking for a roommate.

If you want to live in a bigger property, you could even live with multiple people.

Take Advantage of the Freebies

If your job happens to offer free lunch benefits, eat as much as you can. If you know of a free event going on in the park, take it up. There are so many freebies available in the big cities, but you have to look if you’re going to pick them up.

This can vastly cut down on your food and entertainment costs.

Shop on a Budget

Shopping on a budget is easy. If you follow these crucial tips, you can save a lot of money:

  • Buy in bulk.
  • Buy at the end of the day when things are about to go into the trash.
  • Buy only what you actually need.

Save on Transport

Walking and cycling is free. Use them often. On a side note, you will get fit and healthy at the same time.

The average American will spend up to $11,000 on owning a car each year. Get rid of the car and invest in a much cheaper bus pass. Unless you’re regularly travelling long distances, you have no reason to own a car.

Nightlife – The Killer of Budgets

Nightlife is so often outrageously expensive in the major cities. The easiest way to still have a life while not breaking the bank is to limit the amount of times you go out per week. You could even hop around different bars so you only hit them during happy hour.
An alternative is to start the night drinking at home with friends, before heading out for an hour or two.


Living in the big city can cause real problems when it comes to your budget. Create a firm financial foundation by always knowing your current situation. Keep records that you can easily refer back to as and when you need to.

Following these tips will make living in the big city that much easier.

Culture, the Unquantifiable Factor that Makes a Big Investing Difference

Trying to figure out which companies will yield excellent returns over the long haul certainly isn’t easy, even though your average investor certainly looks for those that will outperform.

One of the most intangible assets about corporate foundations is culture, and knowing the culture of a corporation can give you a powerful and competitive advantage that can provide a significant edge over other investors.

Here’s the problem however; grasping exactly what culture means is quite difficult. Many experts will tell you that one of the most important factors about culture is simply how the management at a company interacts with its employees, and vice versa. Another is “stakeholder friendliness”, and, simply put, the corporations and companies that take care of their stakeholders, as well as take care of the world around them, usually have employees that are happier because they feel better about what they’re doing.

Culture is difficult to quantify, to say the least, and that’s why many investors tend to dismiss it. You can’t break it down in a financial statement and, frankly, it’s more art than science, but ignoring the role of culture in the overall equation can be a serious investing mistake.

How to find companies with the best culture

One of the resources that many investors use these days to determine a company’s culture is the annual Best Places to Work rankings from Fortune magazine. It makes sense that happy employees who are pumped up about the company that they work for will help that company transcend paychecks and time cards.

Don’t forget that intangible factors like so-called “goodwill accounting” aren’t exactly unknown in the investing community. Goodwill accounting takes intangible assets on company balance sheets and gives them a value and, while it’s been argued for years about how to treat these intangible assets, their value can’t be dismissed.

Goodwill also strengthens a brand or a company over their rivals, as their cultural policies impact consumers who see them as more socially responsible and thus tend to purchase more from those companies. .

One mistake that investors continue to make however is that they assume these goodwill companies, who have more expenses because they are taking better care of their employees, customers and suppliers as well as the environment, are doomed to underperform. While this isn’t always the case, it’s difficult to prove that it isn’t in the eyes of many investors.

Culture certainly isn’t the only factor that will lead to outperformance, far from it. Even some corporations that have a truly fantastic culture can, if mishandled, still fail. A company that uses an improper strategy, for example, doesn’t innovate or takes on a debt load that is too heavy can have an incredibly marvelous culture but still not be successful.

That being said, the fact is that how consumers feel about a company or corporation have real-world effects on their success, and any investment philosophy must take into account the risk that a negative corporate culture can have. An area like employee satisfaction might go unnoticed but it can most assuredly decide a company’s fate.

In the end, an investor needs to be both artist and scientist when it comes to figuring out there investing strategy, and melding the two is a very good, albeit difficult, way to be successful. When you’re looking for excellent long-term returns, the art of investing is nearly as important as the science, meaning that it’s not a waste of time at all to focus on corporate culture. In the end, a positive culture helps to build a strong foundation and excellent,