Speros Financial Retirement Tip of the day!
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Part-time work is the fastest-growing source of retirement income.
By Emily Brandon Jan. 27, 2014
 
Unlike most adults who depend on a single paycheck, most retirees receive income from several sources. Monthly Social Security payments, income from savings and investments and a part-time job are among the most common ways seniors are financing their retirement years. These and other retirement income streams produced an average income of $31,742 for people age 65 and older in 2012, according to a recent AARP Public Policy Institute analysis of Census Bureau data. Here's how older Americans are paying their bills in retirement:
 
Social Security. The majority (84 percent) of people age 65 and older received income from Social Security in 2012. "We still see that Social Security is the foundation of retirement income," says Gary Koenig, director of economic security at AARP's Public Policy Institute. "Pretty much everyone who is 65 and older receives Social Security." Social Security has consistently provided more than a third of income for retirees over the past two decades, and retirees in the lowest income quintile received more than 80 percent of their income from Social Security. The median Social Security benefit was $16,295 for men and $11,999 for women in 2012, AARP found.
 
Retirement savings. Just under a third (30 percent) of retirees receive income from either a traditional pension or take withdrawals from a retirement savings account such as a 401(k) or individual retirement account. The median amount of income retirees received from these sources was $12,000 per year. High-income retirees are the most likely to have a pension or retirement account from a former employer. Over half of retirees (55 percent) in the highest income quintile had retirement accounts that provided them with a median of $30,000 in 2012, compared with just 5.2 percent of people in the lowest income quintile who received a median of $2,400.
 
Many seniors have additional retirement savings outside of their designated retirement accounts, but in most cases, they only receive a small amount of interest income. While 47 percent of retirees receive interest generated by their personal savings, half reported $255 or less in annual interest payments. "There are some folks for who it is providing a significant amount of income, but the majority is not receiving much income from assets," Koenig says. The share of asset income from interest, dividends and rent has declined from 24 percent in 1990 to 11 percent in 2012, largely due to the decline in interest rates, AARP found. "The Federal Reserve policy keeping interest rates down isn't good for seniors. They need a magnifying glass to see how much they have been earning on their savings," says Pamela Yellen, author of "The Bank On Yourself Revolution: Fire Your Banker, Bypass Wall Street, and Take Control of Your Own Financial Future." "Let's say you have $250,000 in savings and you planned on earning 4 percent. That's $10,000 per year. If that drops to 1 percent, as it has now, you end up with only $2,500 per year."
 
Earnings. Those who can't generate enough money to retire well though Social Security, pensions, or savings and investments are increasingly choosing to stay in the workforce at least part time. "If their portfolio, their investments, their savings that they have accumulated to retire with are not enough to provide them with the lifestyle that they want in retirement, then a part-time job is certainly something that they should consider," says Ken Moraif, a certified financial planner for Money Matters in Plano, Texas. "If you are 60, you could work for another 10 or 15 years part time to generate some income."
 
Some 22 percent of people continue to work during the traditional retirement years, earning a median of $25,000, the highest amount of any income source, AARP found. The proportion of income retirees earn by working has doubled from 15 percent in 1990 to 30 percent in 2012. "For people who are working, it is a very significant source of their income," Koenig says. "We anticipate that earnings will become a growing source of income for older Americans."

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Speros Financial Retirement Tip of the day!
http://www.sperosfinancial.com/  602-531-5141

Once you’ve purchased a life insurance policy, you may think that the hard part is over. But that doesn’t mean you can forget about your coverage. As time passes, you might want to make changes to the policy — and if you do, it helps to know the right language.
 
Here are some terms that may come up as you’re managing your policy.
 
Beneficiary
Your beneficiary is the person who will receive your policy’s death benefit. While you probably designated a beneficiary, or beneficiaries, when you bought your policy, you may need to revisit the selection over the years.
For example, if you divorce, or if one of your beneficiaries dies, you may need to designate a new one. You can also specify percentages of the payout for each primary beneficiary (for example, 70% for one and 30% for another) or choose contingent beneficiaries in order to prioritize who receives the life insurance payout.
 
Cash value
Permanent life insurance policies — whether universal, variable or whole life insurance — place portions of your premium payments in a separate account. This account grows as part of or in addition to your death benefit, depending on your policy, and is called your cash value.
Once you’ve built up enough cash value, you can make withdrawals or take loans from it in order to fund expenses or pay premiums. Keep in mind that cash value typically takes several years to start to build up.
 
Conversion
Some people buy term life insurance because it’s the best option at the time, then later find that they prefer a permanent life insurance policy. For this situation, many term life insurance policies have a “term conversion rider,” which allows you swap your term policy for permanent life coverage.

You won’t have to undergo a new medical exam to qualify, but you must generally convert within a certain time period after buying the term life policy. So if you know you want to switch, don’t delay. Ask your life insurance agent what the conversion time horizon is.
 
Dividends
You may have heard of dividends as they relate to stocks, and life insurance dividends are no different. They’re a piece of your life insurance company’s profits that you may be issued if you have a “permanent life insurance policy.” You can receive the dividend payment in cash, add it to your cash value which also grows your death benefit or use it toward premiums. Once the dividend is has been received the company cannot take it back.
 
Lapse
A lapse occurs if your life insurance policy is discontinued for nonpayment of premiums. Sometimes a lapse is intentional — maybe you decide you no longer need a term policy, or can’t afford your premiums. Or you might simply forget to pay your bill, in which case your insurer probably offers a grace period — around 30 to 90 days — to get caught up on payments. Universal life policies tend to laps if not structured properly in the beginning.
 
Maturity
Your life insurance policy matures when the amount you’ve paid in premiums matches your death benefit. Many policies mature when you reach a certain age, for example, 100 to 121 years old. When your policy matures, your insurer pays you the death benefit and the policy ends.
 
Reduced paid-up
When you switch to a reduced paid-up policy, in most cases your dividends will be used to pay for your premiums. If your dividends are not equal or greater than the premium you can use the cash value of the policy to match the difference. This will lower the total death benefit. But eventually your dividends will be greater than the premium and your policy will begin to grow once again. This is dependent on the insurance company that you are with.
 
Surrender value
If you decide you no longer want your permanent life insurance policy, you might expect that you can cash out — that is, cancel your policy and take the accumulated cash value. What you’ll get instead, however, is the surrender value of your policy. That’s the cash value minus any surrender fees, which will ‘vary by insurance company’. For the first few years, surrender fees will probably make it impossible to drop your policy and receive any cash value.
 
Your cash value is 90% tax free, the other 10 percent keep in in-force. When cashing out your entire policy, you will be taxed on the growth of the cash value inside the policy. Surrender fees are dependent on how the policy was structured originally. Always ask your life insurance agent about the surrender process, to make an informed decision.

Vasilios "Voss" Speros 602-531-5141
#LifeInsurance #RetirementStrategies #‎sperosfinancial
http://www.sperosfinancial.com/
https://www.linkedin.com/pub/vasilios-%22voss%22-speros/60/722/67b
vsperos@sperosfinancial.com
85254