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Why 2013 May Be A Good Year

December 24th, 2012 | Comments Off on Why 2013 May Be A Good Year | Posted in Prime Solutions News

If the fiscal cliff is averted, stocks may have all kinds of reasons to rise.

What if the future is more bullish than the bears assume? With 2013 approaching, stock market volatility seems to have increased. Equities rise on optimistic remarks about a fiscal cliff solution, then fall when another voice expresses pessimism, and vice versa.

In addition to this constant seesawing, the market is contending with anxieties about Europe, with the eurozone now officially in another recession, and the strong possibility of higher taxes on capital gains and dividends in 2013 plus surtaxes on varieties of net investment income.1

Even so, 2013 may turn out to be a good year for stocks. Our economy looks to be healing, and that may give investors around the world more optimism.

A housing comeback appears evident. Our economy won’t fully recover from the downturn until the housing market does. We have strong indications that this is happening. The October report on existing home sales from the National Association of Realtors showed a 10.9% annual improvement in the sales pace, with the median sale price rising 11.1% in a year to $178,600. (The median sale price increased in October for an eighth straight month.) The Census Bureau noted a 17.2% annual rise in new home sales in October. Lastly, the Conference Board’s November consumer confidence poll found that 6.9% of respondents planned to buy a home in the next six months. In November 2010, less than 4% did.2,3,4

QE3 is open-ended. The Federal Reserve will keep buying mortgage-linked securities for as long as it sees fit, and the Wall Street Journal has reported that the Fed will likely broaden the effort to include the purchase of Treasuries in 2013 (compensating for the absence of Operation Twist next year). So cheap money should be around in 2013 and beyond thanks to the Fed’s bond-buying efforts and its dedication to maintaining historically low interest rates.5

Earnings could improve. This last earnings season was as disappointing as analysts believed it would be, but we could see gradual improvement across upcoming quarters, assuming Congress does something significant about the fiscal cliff. Citigroup sees earnings growth of 5% next year even with minor fiscal tightening.6

Durable goods orders didn’t drop last month. They were flat in October (minus transportation orders). This implies that if some companies cut back on spending heading toward the fiscal cliff, others increased or resolutely maintained theirs. Business investment increased in October in key categories: 0.9% for computers (the first rise in demand in five months), 2.9% for machinery and 4.1% for electrical gear.7

Consumer confidence may be translating into personal spending. This month, the Conference Board’s consumer confidence index reached a mark of 73.7; the highest level since February 2008. Chain-store sales were up 3.3% during Thanksgiving week from the week before, and up 4% from last Thanksgiving week according to the International Council of Shopping Centers.7

If we get a fix for the fiscal cliff, 2013 could be promising. There is a real sense that the U.S. economy is headed for better times, along with the market. Morgan Stanley had projected the S&P 500 ending 2012 at 1,167; that certainly seems doubtful. It now forecasts the index finishing 2013 at 1,434. Other year-end 2013 projections for the S&P are even more bullish: Deutsche Bank is seeing a year-end finish of 1,500, Bank of America Merrill Lynch sees the S&P reaching 1,600, and Piper Jaffray thinks it can make it all the way up to 1,700.8

There are economists who think 2013 could be a key transitional year, a step toward a more robust economy at mid-decade. If solid economic indicators inspire companies and consumers to spend and invest more, next year might surprise even the most ardent stock market bears.

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

1 – [11/15/12]
2 – [11/19/12]
3,0,3039964.story [11/28/12]
4 – [11/27/12]
5 – [11/28/12]
6 – [11/21/12]
7 – [11/27/12]
8 – [11/27/12]

Should You Always Withdraw From IRAs Last?

December 24th, 2012 | Comments Off on Should You Always Withdraw From IRAs Last? | Posted in Prime Solutions News

Conventional wisdom says yes, but there are exceptions.

Shouldn’t you delay IRA distributions for as long as you can? According to conventional retirement planning wisdom, you should structure your retirement withdrawals so that money comes out of your taxable accounts first, then your tax-deferred accounts, and then finally your tax-free accounts. Roughly speaking, that means withdrawing income from investment funds, CDs, money market accounts and bank accounts before taking a dime from your IRAs.

The wisdom behind this is easy to discern. By postponing withdrawals from a traditional IRA and/or Roth IRA for as long as possible, you give the assets in those tax-advantaged accounts even more time to grow. You have to take required minimum distributions from a traditional IRA after age 70½, of course; if you have a Roth IRA, RMD rules are inapplicable while you are alive.1

Or should you disregard that approach? Under certain circumstances, it may be a good idea to tap your IRA(s) in the early stages of retirement. While it may seem unconventional, making IRA withdrawals in your 60s might potentially help you enhance your wealth in the long term.

How, exactly? If you start drawing down the assets in your traditional IRA before age 70½, your RMDs could eventually be smaller than they would be otherwise. Smaller RMDs mean less taxable income. Not only that, a smaller RMD might keep you in a lower income tax bracket; welcome relief if you have a large traditional IRA.

Can exemptions & deductions shelter the income? A study from Rider University in New Jersey sees merit in this unconventional strategy. In the big picture, the researchers at Rider feel it may help seniors to level out annoying fluctuations in adjusted gross income and taxable income over the long run.2

The key: sheltering some or all of the early IRA withdrawals with IRS standard deductions and personal exemptions. As an example, take a married couple in which both spouses are at least age 65. The spouses have done their homework and determined that their IRS deductions and exemptions will add up to (at least) $21,800 for 2012. If their taxable income before any IRA withdrawal would fall below $21,800, they could use “withdrawals from tax-deferred IRAs to create tax-free income,” according to Alan Sumutka, one of the researchers behind the Rider study.2

The Rider study compared 15 model scenarios. Each one used a hypothetical married couple (both 65-year-olds) retiring in 2013 with $2 million in investable assets, $80,000 in current living expenses and $30,000 arriving from Social Security. Within the mock $2 million portfolio, 70% of the assets were held in traditional IRAs, 20% in taxable accounts and the rest in Roth IRAs. The portfolio returned a steady 6% annually (again, these were model scenarios).2

What was the most tax-efficient model scenario in the bunch? It played out as follows: from age 65 to age 70, the couple drew down their traditional IRAs right to the limit of their combined deductions and exemptions. Then, they reached into their taxable accounts for the balance of the money needed to meet that $80,000 in expenses, incurring taxes of up to 15% on long-term gains. They didn’t tap their Roth IRAs.2

After age 70½, they altered their approach: they took required distributions from their traditional IRAs, withdrew money from taxable accounts until those were exhausted, and then they turned to Roth accounts with the remaining balances on the traditional IRAs representing the last of their retirement savings.2

After all that, the hypothetical couple still had $1.61 million in their portfolio at age 95. The conventional withdrawal strategy (taxable accounts first, then tax-deferred accounts, then tax-free accounts) left them with just $1.17 million at that age, and it also led to them spending 23 years in the 25% tax bracket.2

The Rider study found that this approach was ill-suited to very large portfolios (ones with assets above $8 million) and portfolios with roughly 50% in taxable assets. It was also a bad fit for couples with sizable taxable pensions.2

It is worthwhile to review your retirement assumptions. As the American vision of retirement has changed in the last generation, so have retirement planning precepts. The recession and the financial pressures facing the baby boomers have upended some of the conventional thinking. A talk with a retirement planner may lead you toward some new financial options and some good ideas worth exploring.

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is not a solicitation or a recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

1 – [8/2/12]
2 – [11/16/12]

Will You Be Hit By The Medicare Surtax?

December 24th, 2012 | Comments Off on Will You Be Hit By The Medicare Surtax? | Posted in Prime Solutions News

Your MAGI or your net investment income might put you at risk.

On January 1, a new 3.8% tax on certain kinds of investment income is set to take effect. The Medicare surtax (officially termed the Unearned Income Medicare Contribution) is slated to affect single filers with adjusted gross incomes above $200,000 and most joint filers with adjusted gross incomes above $250,000.1

What is the most important thing to know about the new 3.8% tax? This has been characterized as a flat tax on investment income for the wealthiest Americans, but it is a little more complex than that.

The 3.8% surtax will actually be levied on the lesser of two amounts: either a) your net investment income or b) your modified adjusted gross income (MAGI) in excess of either the $200,000 or $250,000 threshold. Should either a) or b) be zero, the tax won’t apply to you in 2013.2,3

Adjusted gross income is easily defined: it includes wages, income from partnerships and small businesses, retirement income, and interest, dividends and capital gains. Defining net investment income under the new surtax is a bit hazier, because (as of November) the IRS has yet to issue formal guidance.1,4

What kinds of net investment income could be taxed? Many tax professionals believe the 3.8% surtax will apply to short- and long-term capital gains, dividends, interest (but not interest from muni bonds), royalties, returns realized from partnerships and activities not requiring material participation, and forms of income linked to real estate: passive income from rental property, income from the sale of a principal residence above the $250,000/$500,000 exclusion, and net gains from selling a second home.1

Would certain net investment income be exempt? Besides muni bond interest, the surtax is not supposed to apply to regular or Roth IRA distributions, distributions from qualified retirement plans like 401(k)s and 403(b)s, veterans’ benefits, life insurance payouts, Social Security income or annuitized income from a retirement plan. Gains from the sale of property owned in an active trade or business would also be exempt, along with Schedule C income and income from a business on which you pay self-employment tax.1,4

With the surtax looming, there has been an upswing of interest in Roth IRA conversions and the acceleration of investment income into 2012. Installment sales have also become less attractive to business owners, and family businesses who are considering a sale may want to make sure sons and daughters with an ownership interest are also employees rather than sitting on the sidelines.

What about the 0.9% tax? This is actually a payroll tax, so it only applies to employment income (the self-employed are not exempt). Like the 3.8% tax, it will kick in above the $200,000/$250,000 levels. While employers aren’t required to withhold the tax until an employee amasses $200,000 in wages, this tax could prove nightmarish for high-earning married professionals who file jointly in 2013: the first $200,000 of their individual wages wouldn’t be subject to such withholding, but their combined earned incomes would be taxed once they exceed $250,000.1,4

It isn’t too late to strategize. If your MAGI or your net investment income might put you at risk for the tax, talk to a qualified financial or tax professional about your options for 2012 and 2013.

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

1 – [7/2/12]
2 – [2/23/12]
3 – [6/10]
4 – [11/9/12]

December Monthly Economic Update

December 24th, 2012 | Comments Off on December Monthly Economic Update | Posted in Monthly Economic Update

8 Reasons Your New Year’s Resolutions Didn’t Stick (and What To Do Differently Next Time)

December 24th, 2012 | Comments Off on 8 Reasons Your New Year’s Resolutions Didn’t Stick (and What To Do Differently Next Time) | Posted in Lifestyle

         Image by Vinni123 via Flickr

I know the title of this article assumes the worst in you and maybe that’s not fair. But let’s be honest here. Statistics show that, right now, about half of you have already given up on your New Year’s resolution. And, in another few weeks, half of the people left will have forgotten all about it as well.

It’s not that I don’t have faith in you. It’s the research. How can I argue with math?

So, should you happen to realize that your New Year’s resolution has fallen by the wayside (now or in the future), don’t beat yourself up. You’re not alone! There are several common reasons this happens.

Instead of getting down and thinking of this as a “failure“, focus on figuring out what happened. Do some analysis and find ways to ensure that, in the future, things will be different.

Below, I’ve compiled a list of the top eight reasons people don’t follow through on their resolutions and I’ve also provided some tips to make next time more successful. And by the way, “next time” doesn’t necessarily mean January 1, 2013. You can make a resolution any time you’d like. Just sayin.

1. You didn’t make a plan for it.

A lot of people forget that a resolution is really just a GOAL. It has to be treated as such. It doesn’t have additional superpowers just because it starts on January 1. A goal requires structure. Otherwise, it’s a wish.

Next time: Be proactive. Make your plan. Look for possible obstacles and prepare for how you’ll deal with them. Don’t just cross your fingers and hope for the best.

2. You forgot the reasons why you were doing it.

Motivation matters. If you don’t know why the goal is important, it’s easy to drop.

Next time: Clarify exactly why you’re doing this, why you NEED to do this. Write it down. Post it in visible locations. Create small reminders to help keep you focused when times get hard.

3. You didn’t plan for setbacks.

Let’s face it: No one is perfect. We all fall off the wagon at some point. You need a clearly defined plan for what to do when this happens and how you’ll get back on that horse.

Next time: Recognize that things will get hard and unexpected obstacles will get the better of you. That’s no reason to give up completely. Give yourself some leeway. Find ways to forgive yourself and reignite the passion.

4. You didn’t have a strong support network.

Friends and family are important. They can help raise you up or push you down, depending on the nature of the relationship. With any goal, it’s important to surround yourself with people who believe in what you’re doing and want to see you succeed.

Next time: Gather your groupies! Let them know what you’re doing and why and ask if you can count on them to help you reach your goal. If they’re not supportive, keep them at a distance. Who needs toxic relationships anyway?

5. You took on too much too fast.

Many of us get a little over-zealous around the New Year. We want to make huge leaps of progress overnight, but real growth is a slow and steady journey.

Next time: Take it one step at a time. Go in with reasonable expectations and be patient. It’s not about how much you achieve and how quickly. Focus on one, really important goal. Put one foot in front of the other each and every day. Momentum will naturally build as you make incremental improvement.

6. You weren’t accountable to anyone.

Sure, you wanted to succeed. But, in the dark of night when you’re all alone, it’s easy to get persuaded by that nagging negative voice inside your head. You know the one. The voice that says you’re not cut out for this. An accountability partner helps keep you focused and on track, even when you think you’re ready to throw in the towel.

Next time: Find one person who promises to hold you accountable. When you say you’re going to do something, this person follows up to make sure you’ve stayed true to your word. An accountability partner will help silence the saboteur in your head. (And of course, if you need assistance, I’d love to help out.)

7. It wasn’t that important in the first place.

Perhaps you set a goal that others wanted you to set. Or one you felt you “should” set. That’s not very motivating. It’s easy to give up on something that never really mattered that much to you in the first place.

Next time: Choose a goal that matters. Don’t do it for anyone else but YOU. If it’s not something you truly believe in, you’ll never succeed.

8. You’re afraid of success.

This sounds counter-intuitive, I know. Truth be told, a lot of goals sound great in theory but once you actually start thinking of what life will be like once it’s accomplished, fear can easily set in. Sometimes, we’re so attached to who we are and life as we know it—flaws and all—that we unconsciously sabotage ourselves.

Next time: Be prepared for this. Recognize that fear is just another part of the process. Think long and hard about what you want from life and what you’re capable of. While it’s scary to push past your pre-conceived limits, it’s also a necessary part of self-growth. Use fear to fire yourself up.

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101 Ways To Save Money In The New Year

December 24th, 2012 | Comments Off on 101 Ways To Save Money In The New Year | Posted in Financial News

Some bills are fixed — the monthly rent or mortgage payments for instance. Others fluctuate with the season — think the electric bill in winter and the water bill in summer.

For everything else you spend money on, you don’t need your mother to tell you it pays to shop around. Common sense tells you to do some homework before opening your wallet. And, with the help of the Internet, you can easily compare prices and read helpful user comments and reviews.

To help you make ends meet in the new year, we offer these money-saving tips.

Good Times

Take advantage of happy-hour deals or early-bird specials at restaurants and bars.

Meet for drinks at someone’s house then go out to eat to eliminate big-ticket alcoholic drinks.

Volunteer as event staff at favorite festivals or venues.

Join the governing board for free member perks.

Purchase season passes during early-bird dates.

Travel in periods shortly before or after peak season.

Attend reviews of professional shows or quality college productions.

Check your existing memberships, such as with the auto club and credit-card company, for discounts on things like glasses, for stores and travel.

Ask for discounts at museums and tours. Visit during scheduled free hours.

Investigate what your employer offers: group-buying discounts, free tickets, gym memberships.

Bundle your Internet, cable and phone service; conversely, if you have been bundled for years, may be time to shop around.

Restore a damaged CD with nongel formula toothpaste and a cotton cloth; rub in a straight line from the center of the CD outward to covering scratches. Rinse with water.

What You Put In Your Mouth

Eat in. Eat your leftovers.

Make a meal out of what is already in your refrigerator and pantry.

Buy in bulk: packaging equals costs equals higher prices. Grate a block of cheese instead of buying shredded. Add water to frozen OJ instead of reconstituted juice in plastic jugs or cartons.

Freeze, can and store what you can’t use immediately.

Get a group to go in on a warehouse membership and split the fee, savings.

Buy in-season fruits and vegetables.

Buy only as much as you can use before spoilage occurs.

Go meatless.

Select lower-priced cuts of beef that can be tenderized or marinated.

Pack a lunch with reusable containers.

Use coupons — but only for items you were going to buy anyway. Look for coupons or deals in your Sunday newspaper and from individual stores, your favorite manufacturers and online on Facebook or places like and

Buy generic drugs or buy 90-day supply through the mail.

How You Get Around

Keep car maintained, tires inflated properly.

Lighten load in trunk. Weight decreases gas mileage.

Ease up on the gas pedal. Ease up on the brake pedal.

Find lower gas prices at

Walk or ride your bike to any place within a mile.

Think van pool, Rideshare, bus passes, off-peak driving on toll road and biking. Consider a hybrid or electric car for your next purchase. Lower toll fees with Good to Go pass found at

Buy used.

Increase your car-insurance deductible; decrease value of car coverage.

The Shirt On Your Back

Wait for sales — even at secondhand stores. Shop the overstock section of your favorite store or brand-label website.

Buy only what you need — eliminate the expensive “wants.”

Shop your parents’ closet for yesteryear fashions that are back in vogue.

Swap clothes with friends, neighbors, community groups.

Return clothes with price tags still attached.

Update wardrobe with less expensive accessories such as belts, scarves and necklaces.

Buy items that do not require dry cleaning or special handling.

Wash in cold water.

Ask for a price match if you have found the same item cheaper at another store.

Where You Hang Your Hat

Move outside high-rent districts to areas with good mass-transit options.

Turn daylight basement or third-floor into rental. Rent out a vacant room, living space.

With record low mortgage rates and housing prices at 2004 levels, there hasn’t been a better time to buy a house or condo since, well, 2004. BUT, don’t buy more than you can afford or need.

Insulate attics, walls, crawl spaces, water heaters, pipes.

Install dual or triple-pane windows. Cover single-pane windows with clear plastic during cold, windy months.

Apply adhesive-backed, foam weather stripping to prevent cold air from seeping in around doors and windows.

Turn off and unplug appliances, lights and lamps not in use. Eliminate energy vampires with tips from

Replace old appliances with energy-efficient ones. Clean or replace filters. Check for rebates.

Turn the thermostat to 68degF or lower when you’re at home and awake, and lower 7degF to 10degF when you’re asleep or away. Use a programmable thermostat to make this happen automatically.

Find rebates and more energy-saving tips from the U.S. Department of Energy at

Fix leaky pipes.

Install CFL or LED light bulbs.

Buy reusable terry-cloth washcloths and hand towels instead of paper towels.

Use baby oil to polish chrome — from faucets to hubcaps.

Make a solution of one part vinegar to one part warm water and use a squeegee to wash windows.

Rub tough streaks with crumpled newspaper and the vinegar solution.

Clean stainless-steel surfaces with four tablespoons of baking soda dissolved in one quart of water and use a soft cloth. Wipe dry with a clean cloth and polish with a dry cloth.

What’s In Your Wallet

Avoid fees for late payments, overdrafts, ATM withdrawals. If you can’t figure it out in the fine print, ask.

Charge only what you can pay off every month.

Understand the caps, expiration dates and redemption process for your cashback credit-card rewards program.

Pay cash. Ask for a discount if you pay in cash.


Sell or trade unused gift cards at sites such as and

Check income-tax withholding form to eliminate tax rebates. File your taxes as soon as possible if you are due a rebate. See for help.

Move money out of financial instruments that have zero returns. Shop for rates at

Refinance — everything. Negotiate for lower interest rates. Move your money to take advantage of lower fees, interest rates. Pay off high-interest rate accounts as soon as possible.


Cancel services you no longer need, use.

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How to Retire Rich: 6 Smart Steps at Ages 50-66

December 24th, 2012 | Comments Off on How to Retire Rich: 6 Smart Steps at Ages 50-66 | Posted in Financial News

At this point, retirement isn’t a far-off goal you’ll worry about someday when you’re ready for your second hip replacement. Unless you plan to work until you drop, retirement is staring you in the face.

That means it’s time to get deadly serious about saving, especially if you haven’t saved enough. And that’s true for most people: Nearly a third of Americans age 55 and older have saved less than $10,000 for retirement, according to the Employee Benefit Research Institute. Only 22% have saved $250,000 or more.

With any luck, though, these are still your prime earning years, and some of your major expenses — such as a down payment on a home and college tui­tion — are behind you. “With our clients, the last ten years that they work is when they save the most money,” says Mark Bass, a certified financial planner in Lubbock, Tex. To make sure you’re on track, don’t hesitate to seek help from a financial planner or use the many resources available on the Internet.

Take advantage of catch-up contributions. Once you’re 50 or over, you can contribute thousands more to your 401(k) plan than your younger colleagues. For 2012, you can contribute an additional $5,500 over the annual limit of $17,000, for a total of $22,500. Any employer contribution on top of that is gravy.

Don’t stop there. You can also make a $1,000 catch-up contribution to an IRA, for a total contribution of $6,000 in 2012. Unlike with a traditional IRA, you don’t have to take annual minimum withdrawals from a Roth once you turn 70 1/2. There are, however, income limits on Roth contributions. You’re eligible if your modified adjusted gross income is less than $125,000 ($183,000 if you’re married and file jointly).

Dare to downsize. You may have hoped to move to smaller digs as soon as the kids were grown (and the boomerangers departed). But some homeowners who have seen the value of their homes decline in recent years are reluctant to sell until the real estate market rebounds, says Michael J. Nicolini, a certified financial planner in Elkhart, Ind. Even if your home hasn’t returned to its former value, moving to a smaller home could save you thousands of dollars a year in taxes, utility costs and insurance. That’s money you can funnel into retirement savings.

Consolidate your orphaned 401(k) plans. You’ve probably changed jobs several times, and you may still have money in former employers’ 401(k) plans. Leaving money in a former employer’s 401(k) plan isn’t as bad as cashing it out. But as you approach retirement, it’s a good idea to consolidate your savings in one IRA with a low-cost financial institution. You’ll get a better handle on how much money you have and where it’s invested. You’ll also have more fund choices, and you may pay lower investment fees, Nicolini says. Once you start taking withdrawals, it will be easier to take them from your IRA than from a former employer’s 401(k) plan.

Consider long-term-care insurance. A well-funded retirement savings plan could be decimated in a matter of months if you end up in a nursing home or require round-the-clock home health care. Medicare doesn’t cover the cost of long-term care, and Medicaid isn’t available until you’ve spent down most of your savings.

Long-term-care insurance could prevent this from happening, but make sure it fits your budget. You’ll have to pay premiums for many years, and the cost of those premiums could increase mightily as insurers are confronted with the cost of providing long-term care to millions of aging baby-boomers, says Steve Robbins, a certified financial planner in St. Louis.

Bass says he typically starts talking to his clients about long-term-care insurance when they’re in their early sixties. Instead of a policy that provides lifetime coverage from the day you enter a nursing home, he says, consider a policy that will cover a specific period, such as up to five years. (The average stay in a nursing home is two and a half years.) Adding a waiting period — for example, 90 to 120 days — will also lower your premiums. Look for a policy with an inflation rider so your coverage will keep pace with rising medical costs.

Weigh your Social Security options. You’re eligible to file for Social Security benefits when you turn 62, but if you do, your monthly check will be reduced for the rest of your life. You may have little choice if you are out of work or in poor health and need the money to pay expenses. But if you have the wherewithal to work a few more years or have other sources of income, delaying checks until at least age 66 will increase your monthly benefits by 33% or more.

That’s not the only way working longer could boost your payouts. Your benefits are based on your highest 35 years of earnings. If you’re a highly paid employee, working longer could displace some of your lower-earning years.

Earlier this year, the Social Security Administration introduced an online tool that allows you to review your earnings record and get an estimate of your benefits. You should review this record annually, because unreported or underreported earnings could reduce your monthly payments. To get your online statement, go to (Also see Don’t Gamble on Social Security, for information on a tool that helps you maximize your benefits.)

Reassess what you’ll spend in retirement. Robbins recently met with a couple who earn more than $300,000 a year but who believed they’d need only $50,000 a year to live on when they stopped working. The couple, like most boomers, greatly underestimated how much they’ll spend when they retire. While you may save on dry-cleaning and commuting costs, you’ll still need to pay for groceries, utilities and gas.

If you refinanced to take cash out of your home, you may still have mortgage payments. And even after you’re eligible for Medicare, you’ll spend a lot of money on health care costs. Fidelity Investments estimates that the average 65-year-old couple will spend $240,000 on health care in retirement.

Still convinced you can live on less? Try living on your projected retirement income while you’re still working. This exercise will force you to cut back on spending, which means you’ll be able to save more. And at this point in your life, saving is one of the few things you can control. “As we often tell our clients,” says Bass, “a good saver will beat a good investor every time.”

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