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6 Strategies to Avoid Working in Retirement

By U.S. News & World Report

Take it easy in retirement.

Work is an expectation of life. Through school and part-time jobs, one figures out what she will do for a career, then it’s time to pursue that profession through adulthood until it’s finally time to sit back and relax. But has working in retirement become an expectation as well? According to a recent survey, Bankrate found that 70 percent said they would work as long as possible, even through retirement. But not everyone wants to keep stepping through the office doors — 25 percent of respondents said they had no plans to work in retirement. Here are a few tips to ensure the glory days remain work free.

Pick a strong savings rate.

Outside of starting young, one of the most important ways to ensure there’s enough money in retirement is to save each month. These funds get invested, and after compounding over 40 years, even small figures add up. For those with a 401(k), make sure to select a large enough percentage in order to qualify for the entire company match. And if over the age of 50, “take advantage of catch-up contributions,” says George Reilly, an advisor at Safe Harbor Financial Advisors in Occoquan, Virginia. This allows savers to contribute an additional $6,000 per year for those already contributing the limit of $18,000.

Keep fee exposure low.

The silent killer of most savings goals comes in the form of fees. Because they’re automatically deducted from accounts, it’s difficult to even see the impact. But the difference in 1 percent in fees can cost more than $100,000 over a lifetime. Reilly suggests looking at a target-date fund filled with index funds, if the 401(k) offers the option. However, instead of selecting the fund corresponding to the year one hopes to retire, pick the one that’s five to 10 years later. It ensures the fund exposure to stocks remains higher, in order to encourage more growth.

Delay Social Security.

People can start tapping Social Security at 62, but try to avoid it. By taking it early, Social Security will only pay out 70 percent to 75 percent of the monthly payment that one would receive by waiting until retirement age. And if you delay even longer, such as to age 70, you can receive 132 percent of that original payment. To get to 70, Peggy Kessinger, an advisor at Cedar Financial Advisors in Beaverton, Oregon, suggests tapping tax-deferred accounts. Since one must pay taxes on these accounts, it’s best to do so before Social Security hits, to avoid inflating one’s income bracket.

Get a government job.

When it comes to retirement perks, there are few cushier jobs than working for the government. That’s because employees are enrolled in the Federal Employees Retirement System, which includes an annuity that is built up throughout one’s tenure. This annuity, which employees and the agency pay into, is returned in the form of monthly payments for the rest of one’s life. The guaranteed income comes on top of a Thrift Savings Plan and Social Security, which is a “luxury that some clients don’t have,” Reilly says.

Delay retirement as long as you can.

Working a few years longer stretches out savings into the twilight years. It’s not the most appealing of options, but most advisors suggest saving enough money that will last between 25 and 30 years, depending on the spending ratio. By delaying retirement, the employee gives himself more time to reach that necessary figure.

Control your spending.

How one spends her money in retirement is as important as how one saves. And spending ratios will depend on the individual. “Generally speaking if they average around 3 percent or less annual withdrawal, their savings will last,” Kessinger says. But how much one spends depends on how much expenses are cut in retirement. While analyzing costs, cut out work-related expenses like commuting. If those costs are replaced by travel or redoing the house, then the expense line won’t move much. That requires a higher spending rate each year, decreasing the time it takes to get through the money.

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6 Strategies to Avoid Working in 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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