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How to Improve Your Finances After Retirement

By U.S. News & World Report

You have many opportunities to fix your retirement finances before you retire. You can ramp up your savings, eliminate debt and make smart decisions about when to sign up for Social Security and other types of retirement benefits. But even after retirement, it’s not too late to fix a funding shortfall. Here are some ways to improve your cash flow after leaving your job.

Remember required minimum distributions. Retirees are required to take annual withdrawals from traditional 401(k)s and IRAs each year after age 70 ½ and pay the resulting income tax bill. Missing a distribution triggers a 50 percent tax on the amount that should have been withdrawn.

Minimize taxes. Many retirees have some of their savings in traditional retirement accounts, Roth accounts and regular savings and investment accounts, each of which has a different tax treatment. Having money in these three types of accounts gives you opportunities to save on taxes and flexibility in when you pay them. Income tax will be due on every distribution from traditional retirement accounts, but retirees can withdraw money from a Roth account that is at least five years old without incurring any additional tax on that money. “From the time they retire until they take Social Security, there’s a window of time to do a Roth conversion and to take some money out of the 401(k) account and put it into a Roth IRA,” says Anne Ward, a certified financial planner for Allodium Investment Consultants in Minneapolis. “You are actually prepaying taxes, so that later in retirement, when the required minimum distributions start, you are not forced to take out quite so much.”

Downsize. Moving into a new home, condo or apartment that costs significantly less than your current house can allow you to improve your nest egg in a short amount of time. However, you need to factor in the costs of selling your home and relocating, and make sure you will free up enough cash at the end of the house swap to make the move worth it. “If you are going to sell the home that you raised your children in because it’s a four-bedroom house in the suburbs with a bigger yard, you have to make sure you go to a lesser priced house,” says Kevin Reardon, a certified financial planner for Shakespeare Wealth Management in Pewaukee, Wisconsin. “If it’s only $25,000 less, you may save some money on annual maintenance, but much of that will go toward the expenses when moving.” If you move outside your current neighborhood, consider whether you will have friends and family nearby to spend time with in retirement.

Lower cost of living. Retirees often have time to invest in saving money. You might be able to negotiate lower rates on services you use, take the time to find and use a coupon or be able to visit several stores to comparison shop. Once you reach a certain age, you also qualify for senior discounts. “You could do a defensive driving course, and then get a discount on your car insurance,” Ward says. “You can take advantage of travel discounts that people in the workforce can’t take advantage of because they don’t have the flexibility to leave on a Tuesday.”

Extra income. Many retirees take on part-time jobs or find creative ways to bring in income, often for the cash as well as the social benefits the job provides. You might be able to find a part-time job in your community that suits your tastes. “Perhaps if they like golf, they can work at a golf course — get paid a little bit, maybe some free golf to go with it. For someone who enjoys working around the house, maybe they can get a job at Home Depot for 20 hours a week,” says Scott O’Brien, a certified financial planner for WorthPointe Wealth Management in Austin, Texas. “These part-time jobs serve a number of purposes: [You] can delay the start of Social Security payments, thus allowing the benefit to grow, may get health insurance coverage, which otherwise may be very expensive, and gives the retiree something to keep them active and engaged.” You can also use the skills from your former career to consult, mentor or occasionally take on projects when it suits your schedule.

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How to Improve Your Finances After Retirement originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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