Retirement Income

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One of the best strategies for ensuring that loved ones will be able to carry on financially in case of the unexpected is to purchase a good, solid life insurance policy. This is because the proceeds that are received through life insurance – which is income tax-free to beneficiaries – can be used for continuing to pay living expenses or to pay off large debts. It can also be used for paying for the funeral and other final expenses of the insured. That way, loved ones will not have to go into debt – especially at an already difficult time in their lives.

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When buying life insurance, it is important to consider several criteria. These include the type and the amount of coverage that you are purchasing. This is because you do not want your loved ones to have too little protection.

It is also essential to know that the insurance carrier you are purchasing the coverage from is strong and stable from a financial standpoint. That is so that you can better ensure that the company will be able to pay out its promised policy proceeds if or when the time should come. One company that made our honorable mention for best life insurance companies in the US and many individuals buy life insurance coverage from is Americo Life Insurance Company.

The History of Americo Life Insurance Company

Americo Life Insurance Company has been in the business of offering life insurance and other coverage products for more than 100 years. The growth of the Americo family of companies has built primarily on the successful acquisition of more than 15 insurance entities – each having its specific advantages.

The company has also won other accolades and has been the first insurer in a myriad of different events. For example, in 1922, a predecessor of Americo, Great Southern Life – which was initially founded back in 1909, became the first company in the United States to insure the lives of children.

In 1971, another predecessor of Americo Life Insurance Company, Ohio State Life, was the first insurer to advance death benefit payments to sustain the life of a policyholder. Likewise, in 1981, Great Southern Life led the way as one of the very first insurers in the U.S. to offer universal life insurance coverage – and more recently, Americo was also one of the very first to offer indexed universal life and annuity products.

Americo Life Insurance Company Review

Today, Americo Life Insurance Company has more than 659,000 insurance policies in force. The company has more than $6 billion in total assets, and the company’s statutory premiums have increased substantially over the years. Americo has more than $32.7 billion of just life insurance in force.

Americo is very competitive in the life insurance market – and the carrier maintains a high quality, liquid investment portfolio that consists of more than 95 percent investment grade bonds in its fixed income investments.

Personalized and trusted service is the cornerstone of Americo Life Insurance Company’s business. The company is considered to be progressive in its thinking, and it is highly solutions-oriented.

The company is one of the largest independent and privately held insurance groups in the U.S. Americo is headquartered in Kansas City, Missouri, and it serves it sales force via more than 350 company associates.

Insurer Ratings and BBB Grade

Due to its safe, yet liquid, portfolio, Americo Life Insurance Company has been given a rating of A (Excellent) from A.M. Best Company. This rating is the third highest possible rating on an overall scale of 15 total ratings.

Although Americo Life Insurance Company is not an accredited company through the Better Business Bureau (BBB), the company has been given a grade of C. This is on an overall grading scale of A+ to F.

Over the past three years, the company has closed out a total of 19 customer complaints via the Better Business Bureau. (Twelve of these 19 complaints have been closed out over the past 12 months). Of the 19 complaints, 12 had to do with problems with the company’s products or services. Another six were in relation to billing or collection issues, and one was in regard to delivery issues.

Life Insurance Products Offered Through Americo

At Americo Life Insurance Company, there are many different life insurance plans to choose from. This variety is beneficial in helping clients to more closely plan for their anticipated needs. Americo offers term and permanent life insurance protection.

Term Life Insurance

Term life insurance coverage provides pure life insurance protection only, without any cash value or savings build up in the policy. Because of this, term life insurance is often quite affordable – even for a large amount of death benefit coverage.

With term life insurance, the coverage is purchased for a certain amount of time – or “term” – such as for five years, ten years, 15 years, 20 years, 25 years, or even for 30 years. During this term of coverage, the premium will typically remain the same over time, and the amount of the death benefit will remain level.

Permanent Life Insurance

Permanent life insurance offers both life insurance protection and cash value. The funds that are in the cash-value component of the policy are allowed to grow on a tax-deferred basis, meaning that there will be on tax due on this growth unless or until the money is withdrawn.

The funds that are in the cash value component of a permanent life insurance policy may be withdrawn or borrowed by the policyholder for any reason that they see fit – including the payoff of debts, the supplementing of retirement income, or even for taking a nice vacation.

There can be many different types of permanent life insurance coverage. These include:

  • Whole Life Insurance – Whole life insurance offers a fixed amount of death benefit coverage, as well as a fixed premium that is typically locked in throughout the entire life of the policy. Whole life insurance is meant to be kept for an individual entire lifetime, or the “whole” of one’s life. The cash value that is in the cash component of the policy is able to grow via a fixed and guaranteed rate that is set by the issuing insurance company. In some instances, the insurance company will pay dividends to the policyholder of whole life insurance – although these are not guaranteed. A dividend may be taken as cash, or alternatively, it could be used to purchase additional insurance coverage or to add to the cash component.
  • Universal Life Insurance – Universal life insurance also offers death benefit coverage, along with a cash value component. In this case, however, universal life insurance is considered to be more flexible than whole life coverage. One reason for this is because a universal life insurance policyholder can – within certain guidelines – determine how much of his or her policy premium will go towards paying for the death benefit, and how much will go towards the cash value. Also, the timing of when the premium is due with a universal life insurance policy may also be altered to better fit with a policy holder’s changing needs.
  • Indexed Universal Life Insurance – Over the past several years, indexed universal life insurance has become a more popular product. That is because this type of coverage can be beneficial both for its life insurance coverage, but also for the opportunity that it provides for both growing and protecting funds. In this case, the return on the cash value in an indexed universal life insurance policy is based upon the performance of an underlying market index, such as the S&P 500. If the underlying index performs well during a given time period, the cash value will be credited – up to a certain cap. However, if the underlying index performs poorly in a given period, the cash value’s return for that time will simply be credited with a 0 percent. So, while there is no gain, there is also no loss for that time. Many who are savings for retirement can benefit from this ability to grow, yet still protect their funds.

The company’s specially designed life insurance products offer unique benefits, and there are simplified issue products available. This means that an applicant for coverage may not be required to take a medical examination as a requirement for policy approval. Because of that, there may be a better chance of someone qualifying for the life insurance coverage that they need – even in the event that they already have an adverse health condition.

The face amount of coverage on most of the life insurance policies that are offered by Americo Life Insurance Company can range between $25,000 and $400,000.

Final Expense Coverage

While all individuals and families may have differing needs, most people will have at least some amount of final expenses. Americo Life Insurance Company offers a series of whole life insurance products that are designed for helping to cover the costs that are associated with funeral and burial expenses, as well as uninsured medical bills and other financial obligations that one’s loved ones may face.

These policies can offer face amounts that range from $2,000 to $30,000. There are both fully underwritten and simplified issue policies – and, those who smoke cigars or pipes, as well as smokeless tobacco, could qualify for a non-smoker premium rate.

Mortgage Protection Coverage

One of an individual or a couple’s biggest expenses in life is their home mortgage.

Therefore, if an income earner passes away unexpectedly, this could mean that his or her survivors would no longer be able to pay the mortgage – and in turn, be forced to move from their home. This occurrence can be made even more difficult, as the family is already facing pain.

With mortgage protection coverage, should the unthinkable occur, this policy will pay out an amount that can pay off the survivors’ mortgage balance. Americo Life Insurance Company offers mortgage protection policies with face amounts of between $25,000 and $400,000.

There is no proof of mortgage required, and depending on the policy that is chosen, the applicant for this coverage may not even be required to undergo a medical exam. There are also some optional riders available that can allow policy holders to customize their coverage to better fit with their specific needs.

Other Products Offered By Americo Life Insurance Company

In addition to life insurance protection, Americo Life Insurance Company also offers a wide range of other products that can help its customers to grow and protect their wealth. These products include the following:

  • Medicare Supplement insurance – While Medicare Part A and Part B offer a long list of coverages, there are also many out-of-pocket expenses that are associated with Medicare coverage, such as co-payments, coinsurance, and deductibles. Having a Medicare Supplement insurance plan can help with covering some of the costs. There are several different Medicare Supplement plans to choose from – including a basic set of core benefits, as well as more comprehensive coverage.
  • Retirement Annuities – A retirement annuity can help individuals and couples to save in a tax-advantaged manner for the future, as well as to lock in an ongoing retirement income that can last throughout the remainder of their life – regardless of how long that may be.

How to Get the Best Life Insurance Premium Quotes

When seeking the best life insurance quotes, it is recommended that you work with an independent insurance brokerage. If you are shopping for life insurance coverage, we can help. We work with many of the top life insurers in the industry. If you are ready to compare, then just take a moment to fill out the quote from on this page.

Source: goodfinancialcents.com

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For many of my baby boomer clients who are close to retirement, calculating their Social Security Benefits is an important part of the financial planning process. 

It’s important to have a good understanding of the monthly benefit so that we know which other retirement buckets will be producing the shortfall (if any) of their income needed for retirement. 

In many of my client situations, the husband has been the primary breadwinner, so there isn’t much question on their Social Security Benefit.

What does arise some questions is the spouse’s social security benefit. It can be confusing in situations where the spouse worked some years back and is not totally sure to how much they paid into social security.

If you are married, you can claim social security benefits based on your history of earnings or you can collect social security spousal benefits which are equal to 50% of your spouse’s social security benefit.

There are several advantages for married couples and their social security benefits, and you have the ability to receive benefits for a longer period of time in some cases.

If you’re a widow, you can also claim social security spousal benefits.

How Social Security Spousal Benefits Work

You have the option of claiming your own social security benefits, calculated from your work record, or claiming up to 50% of what your husband or wife will receive as your spousal benefit if your husband or wife has filed for social security. 

You can’t collect both your own social security benefits and your spousal benefit at the same time. If you are entitled to both, you’ll receive the larger of the two.

A widow who collects survivor benefits at the normal retirement age (or later) will receive 100% of the deceased spouse’s social security benefit. 

If you file for social security spousal benefits between the age of 60 and your normal retirement age, the amount you receive will shrink 71 to 99%. 

It’s always better to delay receiving social security benefits for as long as possible to increase the amount you’ll receive.

Early Retirement and the Social Security Spousal Benefit

If you begin collecting the spousal benefit before you reach full retirement age, the benefit is permanently reduced over your lifetime.

Before electing for this option, it’s important to understand the implications by having the reduced benefit so early on in your life.

Widows and Social Security Benefits

If your spouse passes away, you’re eligible for the spousal benefit from the age of 60.

If you begin receiving social security benefits before your spouse passes away, you will continue receiving whichever benefit is greater – your own social security benefit or the spousal benefit – but you can’t get both at the same time.

Advantages for Married Couples and Social Security Benefits

If you’re a married couple and can’t afford to postpone receiving your social security benefits, you can use a strategy to help maximize the amount of social security benefits you receive over the long term. 

The technique is called the “62/70 Strategy”, and it makes use of the social security spousal benefits.

The spouse who earned less over their lifetime will file for social security benefits at 62 while the higher-earning spouse delays his or her benefits until the age of 70 when the maximum benefit will be received. 

The higher-earning spouse’s benefit will continue to grow.  If one of you should pass away, the smaller social security benefit will die off as well – leaving the survivor with the higher paying benefit. 

When the higher-earning spouse reaches the age of 70, you drop the social security spousal benefits and start collecting the larger benefit of the higher earning spouse.

How to Claim Social Security on a Divorced Spouse

While the above scenarios are relevant to married couples and widowers, you may be wondering how spousal benefits work after a divorce has occurred. 
Here’s a quick overview.

Do You Qualify for Social Security Benefits under Your Ex-Spouse?

Eligibility requirements for collecting your Ex-spouse’s benefits include the following:

  • You must be age 62 or older.
  • You must have been lawfully married to your spouse for a minimum of ten years.
  • You must be divorced for a minimum of two years.
  • You cannot collect if you are remarried.
  • Your Social Security benefits must be less than your spouse’s.
  • You will collect 50% of your spouse’s entitled benefit.
  • If your spouse has remarried you can still collect.
  • Even if your ex-spouse is not yet collecting you can still collect the benefit as long as you meet all of the requirements.

What If Your Ex-Spouse is Deceased?

If your ex-husband or wife is no longer living you can still collect on their benefits as long as you meet all of the above-stated requirements with a few minor differences.

The main difference is that you will be entitled to collect 100% of your ex-spouse’s benefit if he/she is deceased. You will also be able to start collecting earlier at age 60.

Mike Piper from ObliviousInvestor.com who writes a ton on Social Security (Ex. Social Security for Married Couples) adds, “but if you do claim at age 60, the amount you receive will be reduced.”

Special Circumstances to Consider

There are some special circumstances that you may need to consider. First, if you have been married and divorced more than once you can choose which ex spouse you want to collect on.

As long as you meet all requirements on multiple ex-spouses, you will receive your social security benefit based on the highest collector.

Next, if your benefit is higher than your ex-spouse’s benefit you can delay collecting on your Social Security and collect on theirs instead.

This can be very advantageous allowing your benefit to grow and pay out at a higher amount down the road.

Delaying your benefit by just a few years can make a big difference. At any time you can make the switch to collecting on your benefit rather than your ex spouses’.

Everything Else About Social Security for Divorced Spouse

Finally, if you are planning to collect on your ex spouse’s Social Security benefits here are some other things you will need to know.

  • To apply for the benefit, you will need to supply both a marriage license and divorce decree.
  • You can apply on line, by phone or in person at your local Social Security Office.
  • If you continue to work while collecting on your spouse’s benefits their earning limits will apply to you.
  • If you are collecting a pension the amount of your benefit may be lower.
  • Collecting on your ex spouse’s Social Security will not cost your ex any money or alter what they are entitled to collect.
  • If you did remarry but your new marriage has ended either due to your spouse’s death, a divorce or an annulment you are entitled to collect on your ex’s benefits. You can apply and collect benefits any time after your marriage has ended as long as you meet all other requirements.

To get some exact calculations on your social security benefits when divorced, I would suggest that you contact your local social security office. That way there’s no question on how much your entitled to.

Need Social Security Assistance?

If you’re having a tough time trying to understand your Social Security benefits, your best resources are to visit www.ssa.gov or call your local Social Security office. 

I had an instance where I had a question on Social Security benefits and wasn’t sure who to call. 

Knowing nowhere else to turn, I called our local office and got to someone right away. They were able to answer my question immediately – and it was a fairly complicated question.  

Kudos to them!

Source: goodfinancialcents.com

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If you work for a company that has a pension, should you be worried?
What protections do you have?
Will all the money you have been paying into your retirement just be gone?
Recently, American Airlines filed for Chapter 11 bankruptcy leaving many wondering “What happens to their pension?“.
Whether you’re an employee of theirs or any other company that offers a pension, here’s what you need to know.

Insurance On Your Pension Plan

Fortunately, it is not as bad as most people think…maybe.  There are safeguards in the United States to prevent you from losing your pension plan.
In the United States, every defined-benefit retirement plan is insured, at least to a point.  Most will receive all or at least most of their company pension even if your company goes bankrupt.  However, in some cases,  it may not be every penny you expected.
(Also, be sure to check out my article on, Should I Roll My Pension Into an IRA for some options on your pension plan.)

What Happens When a Company Goes Bankrupt?

When a company goes bankrupt they have two choices. They can reorganize and try to stay in business by reducing costs and attracting new investors, or they can liquidate. 
The pension plan is usually terminated in reorganization and always terminated in liquidation.
So, then what happens? A federal insurance agency called the Pension Benefit Guaranty Corporation (pbgc.gov) takes over the pension payments.
Here’s some information on the PBCG taken from their site:

The PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in over 29,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by investment returns.

Only employees with the largest pensions actually take a hit. The Pension Benefit Guaranty Corporation maximum annual payment, which rises with inflation, is $54,000 this year for workers who retire at age 65. 
As with any insurer, the PBGC has some restrictions. For example, it prorates recent pension increases.
However, in all, 84 percent of retirees get their full pension even after bankruptcy.

A Few Rare Cases Under Reorganization

In a few rare cases of a company bankruptcy reorganization, the employer maintains his/her pension plan. That normally only happens for one of three reasons.

  1. The benefit is low
  2. Employee turnover is high
  3. The pension plan is new

 

Avoiding Bankruptcy is Better For The Company

In most cases, however, it is always better for the company to avoid bankruptcy altogether. In December of last year, Congress gave some help in this direction by relaxing the 2006 Pension Protection Act’s strict rules governing pension funding. 
As counter-intuitive as it may seem, this is one move that endangered workers should embrace.
As a result of this move, according to Dallas Salisbury, president of the non-partisan Employee Benefit Research Institute, “Given the economic downturn, employees are better off than if the company was forced to make a large pension contribution. It’s better to stay in business than make a pension contribution.”

American Airlines Pension

In American Airline’s case, they are filing for Chapter 11 bankruptcy protection. In this case, the PBGC may need to step in and assist with their pension obligations.
The Pension Benefit Guaranty Corp., created to protect private retirement benefits, may be unable to cover the loss because Congress has limited the size of pensions it can pay, Director Josh Gotbaum said in a statement.

“Unfortunately, when the agency assumed airline plans in the past, many people’s pensions were cut, in some cases dramatically,” Gotbaum said in the statement. The PBGC will encourage American to “fix its financial problems” and keep its pensions intact, he said.

In the meantime, AMR employees seem to be protected. But a quick look at the numbers doesn’t seem too reassuring.
Recent numbers show that they have about $8.3 billion in assets to cover the $18.5 billion in pension liabilities. If AMR has no choice and has to terminate the plan, that would leave the PBGC on the hook for a cool $17 billion.
Chump change for the PBGC, right?  Don’t be so sure…
 

Strength of the Pension Benefit Guaranty Corporation

Just like the FDIC, the financial strength of the PBGC hardly ever gets questioned. Unfortunately, these are unique times and it seems that no entity is out of harm’s way. 
Lowering interest rates and rising corporate defaults has led to a $33.5 billion deficit in the first quarter of 2009 for the PBGC.  This is the largest deficit for the 35-year-old agency which is an increase from the $11 billion deficit ending fiscal year 2008. 
Acting director Vince Snowbarger says,

“The PBGC has sufficient funds to meet its benefit obligations for many years because benefits are paid monthly over the lifetimes of beneficiaries, not as lump sums. Nevertheless, over the long term, the deficit must be addressed.”

The Deficit Continues

For 2011, the PBGC just encountered it’s largest deficit while insuring 1 out of every 7 Americans. The Pension Benefit Guaranty Corp. was quoted as saying it ran a $26 billion imbalance for the budget year that ended Sept. 30.
Their pension obligations rose by $4.5 billion as they currently insure over 44 million Americans. Does it make you nervous? It would make me.

How Does This Affect You?

If your company files for bankruptcy or you fear that it will, I would contact the PBGC and talk to them directly. 
Be sure to visit their website frequently and check for updates. You are basically in their hands and you have limited choices.
If you have the option, consider rolling your pension into an IRA to get it out of your company’s hands. I’ve had many clients do this so that they never had to worry about this.
Be sure to consult a financial planner and/or tax advisor before implementing this step.

Source: goodfinancialcents.com

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Last Updated: April 14, 2021 BY Michelle Schroeder-Gardner – 7 Comments

Disclosure: This post may contain affiliate links, meaning I get a commission if you decide to make a purchase through my links, at no cost to you. Please read my disclosure for more info.

The following post is sponsored by TIAA. 

There are five things that I never want to run out of. These include:

  • Travel and adventure – I always want to be able to RV, sail, hike, and ride bikes. I love being able to explore, do new things, and see what this amazing planet has.
  • Delicious food – Who doesn’t love food?
  • Dogs to pet – This one is another no-brainer.
  • Time with family and friends – This sparks joy, of course!
  • Retirement income

And, today, I want to talk more about retirement. This is a personal finance blog after all!

Retirement is so important.

For me, I am all about saving for retirement, and my husband and I save a significant percentage of our income each month due to this.

Retirement to me means that I never have to run out of travel and adventure, or any of the other wonderful areas of my life from my list above!

Saving for retirement now is important for many reasons.

However, according to a survey done by GoBankingRates, 42% of Americans have less than $10,000 in savings and included in that 42%, 14% have nothing saved for retirement.

But, the survey found this is changing, and I think you can start saving for retirement too.

One way to prepare for retirement is with products that can provide guaranteed annuity income for life.

According to TIAA’s 2019 Lifetime Income Survey, 69% of working Americans say that having an income during retirement that is guaranteed to be paid for as long as they live as the most important goal for their retirement plan.

AND, 88% of people who own an annuity with guaranteed lifetime income say it positively impacts their confidence about being financially secure.

I know that many of us worry about running out of retirement savings, and the future can be a weird thing to think about (it’s so far away, right?!).

I’m sure that we can all relate to the experience of running out of gas, having our cell phones die, running out of toilet paper, and the list goes on, but with products that can provide guaranteed income for life you can be sure that you won’t run out of income in retirement.

Due to this, you may want to think about making guaranteed income part of your retirement plan.

TIAA provides products that provide guaranteed lifetime retirement income. To find out if you are eligible and learn more, visit TIAA.org/NeverRunOut. If eligible, you can use the Personal Pension Calculator to estimate your monthly lifetime income.

 

Who is TIAA?

TIAA is a leading financial services provider for those in the nonprofit, academic, research, medical, and governmental fields, with over 15,000 institutions and 5 million individuals served.

They are a different kind of financial services company, helping people in these fields meet their financial goals through their global and diversified financial services. TIAA continues the legacy built by Andrew Carnegie, who helped create TIAA in 1918 to ensure teachers could actually retire.

What does it mean to you to not run out of money for retirement?

Annuities issued by Teachers Insurance and Annuity Association of America (TIAA), New York, NY.

Any guarantees under annuities issued by TIAA are subject to TIAA’s claims-paying ability.

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Source: makingsenseofcents.com

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Are you wondering about how much you’re going to need saved for when you retire?

It’s a common question that a lot of people have, young and old. Some of the more common variations that I get on this question are, What is the amount of income that I’m going to need in retirement? or, How do I figure out what my retirement income needs are going to be?

It’s a tough question, but the toughest part about answering it is that there is no clear cut answer.  There is no universal formula, some general mathematical rule of thumb,  or some magic number that you need.

Your retirement income needed all depends on your unique situation.


And that is what makes financial planning an ongoing process.  It’s not just a one time, quick, snap-shot solution where, “Okay, bam!  This is how much money you’re going to need and you’re all good.” Here are a couple of the different items that you need to consider when you’re trying to figure out what your retirement income needs are going to be.

Pay Your Bills

First and foremost, you have to figure out what are your needs are, meaning how much do you need each month to pay the bills? How much do you need to take care of your health insurance or if you still have a house payment, if you still have debt, if you want to do vacations? It all comes down to trying to identify that. That’s tough for a lot of people, because a lot of us do not budget. A lot of us don’t have a good sense of knowing exactly where our money is going each month. If you don’t have a good handle on your budget, then trying to identify your income need is almost impossible.

How do you do it? You can try to shoot from the hip, which a lot of my clients try to do. But I make them go home, sit down and start looking at where all their money is going per month. What are the things that they have to have each month to buy? Without doing that inventory, without doing that research into their own lives, it makes it tremendously difficult to try to figure out what their retirement-income needs are going to be. That is the first step and, I assure you it’s probably the hardest because a lot of people don’t do it. They just don’t take the time to figure that out.

Show Me What You’re Working With

The second step is that you have to figure out what you’ve got to work with:

  • How much have you saved?
  • How much do you have in your 401K?
  • How close are you to receiving social security?
  • Do you have any pensions?

All those factors come into play when trying to identify what your retirement-income needs are going to be. For example, I have clients who actually go back and figure out what their income need is as far as paying the monthly bills and having a little extra to play and do the things that they want to do, so that gives us a sense of where we need to be. Then we take a look at what they’ve got.

Have they retired early?

I have some clients who retire at 55, 58, 60 so there is a little bit more pressure on their retirement assets, their 401Ks, their pensions to be able to get them that retirement income. We don’t have social security to lean on, so that requires a little bit more creativity. I have other clients who retire after social security age. Some take early retirement at 62, or some continue to work until they are 65 (or 66). When we have that extra paycheck coming in per month, that gives us a little more freedom and flexibility to try to decipher what the income might be.

That’s why it’s so tough. It’s not a clear cut answer. You hear a lot of general rule of thumb where whatever 70%-80% of your current income in your working years is how much you’re going to need in your retirement years. Sometimes that is the case, but sometimes it’s not. Going back to the income needs, what about health insurance? Is that something that you’re going to have, or are you already on Medicare so it’s not that much of an issue? There are a lot of factors like that that come into play.

Let’s Be Real

The other thing is just being realistic as far as your spending expectations. I have some clients who come to me, and we do all this planning to where we’ve got everything lined up. We’ve identified their needs. We have all their retirement information together, so we’ve identified how much they are going to be drawing out per month. Then a few months into it, they get a little spend happy, and they start wanting to buy things, buy “toys”, do this, take trips.

All of a sudden, they are causing a strain on their retirement portfolio, so we have to have a come-to-Jesus meeting and I address the issue,

“Hey, this was the plan when we first started, now why are we deviating? Why are we all of a sudden buying things that initially weren’t on our plan?”

You just have to be very conscious of that. I don’t want my clients to think they can’t spend their money. It is their money. They worked their whole life to have that, but you have to be careful. You have to be cautious and just be very aware of how much you’re spending and how fast you’re spending it.

One of the most important components of creating a retirement plan is having an accurate evaluation of yourself and just knowing your habits, and how things may be as soon as retirement comes.

Retirement: The Early Years

Going back to that rule of thumb as far as the 70%-80%, typically what I’ve seen is this: In the first couple years of retirement, it’s like the kid who has been stuck in class all day long and it’s sunny outside. They’ve been looking at the playground. They can see the sun. They see the jungle gyms. They’re ready to be set loose, and they want to go play and be free.

That’s what it’s like for many of my retiree clients: once they hit retirement, they’re like that kid who’s been set free. They’re out on recess. They get to play, get to do these things they’ve been waiting to do for so long. They’re ready to go. They’re ready to play and have fun, so those first couple of years they’ll spend a little bit more doing the trips that they want to do, buying the toys that they’ve put off for so many years. Now they feel that they’re entitled to do that, and they are, so let them do it.

Then as they get older, as maybe health conditions don’t allow them to do the travel as they did when they first retired, they’ll tend to spend a lot less than they did in their first years. Whereas the first couple of years maybe you do fall in that rule of thumb of spending the 70%-80% of your working-years’ income, but after a certain point you don’t travel as much because you’ve done everything you wanted to do and are just content to stay around home spending time with the grandkids and just doing a lot of staycations where you’re just enjoying that time with your family. Thus, you’re not spending nearly as much, and it kind of balances out.

Get Your Best Retirement Income Possible

Those are some of the steps that you need to do in the beginning as far as first, identify what you’re actually going to need per month to live off of, to spend, to do the things that you have to do just to get by. Then, you’re going to need to identify what you’ve got to work with, with your 401K and your savings and pensions and when social security is going to play in. Then finally, you just have to know yourself and know your spending habits and how that’s going to affect your income in your retirement years.

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Can I Retire at 30 With $1 Million? – SmartAsset

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Retirement is a massive financial undertaking. But it’s also more flexible than many people believe. At different stages in life, it’s really possible to retire earlier than you might realize. However, retiring at age 30 with $1 million comes with a lot of leg work and a bit of luck. It’s not impossible, but a lot of things have to go right for you. We’ll discuss what to consider.

A financial advisor can help you put a financial plan together for your retirement needs and goals.

Your Retirement Income With $1 Million

The $1 million is a common benchmark for FIRE advocates, which means “Financial Independence, Retire Early.” The basic philosophy is this: Maximize every penny of earnings early in life. Save hard, spend little and invest wisely. Then, ideally sometime before age 40, have enough cash to retire for good.

The trouble is that $1 million does not actually generate that much secure income in retirement, at least not before you can supplement it with Social Security. The rule of thumb used by most financial professionals is that you should expect a 4% drawdown each year.

This means that for a sustainable retirement, you should budget to live on about 4% of your total retirement portfolio. For a retiree with a $1 million portfolio, this comes to $40,000 per year.

We can also adjust up from 4%, given that it is admittedly very conservative. So you can hit that number holding nothing but bonds and getting no returns beyond simple coupon payments. So take a number like 6%. This gives you an annual income of $60,000.

Now, that’s not nothing. According to the Census Bureau, it’s less than the median income of $70,700. But not by that much. The problem is that you need to live on that money for a long time.

Costs of Retirement In Your 30s

When the New York Times wrote on this subject, they profiled a man who retired at 43 on his $1.2 million savings. The man’s wife still worked, supplementing the household’s budget significantly. Even still, the article wrote, the couple lived a life, “Rich on time but short on luxuries: Groceries are bought at Costco, car and home repairs are done by him.”

This is the problem with retirement in your 30s. The odds are that it leads to a lot of sitting around asking, “Now what?”

3 Tasks to Solve

First, you will have to account for all the basic expenses of life: Housing, food, utilities and more all add up.

If you have collected $1 million at age 30, the odds are good that you live in or around a city, where the higher-paying jobs are located. For example, if you live in Washington D.C., rent alone can consume almost an entire $40,000 income. And if you move, that will mean leaving your friends and connections, as well as an entire lifestyle that you have presumably come to enjoy.

Second, there are the employment-related expenses of life. Mostly this means finding your own health insurance. At age 30, you might be able to get away with a cheaper high-deductible plan, but as you age into your 40s and 50s that will be increasingly less of an option.

Third, there are situational costs. If you have children, they will need their own care and feeding. According to SmartAsset’s 2023 study, raising a child can cost up to $30,000 annually in the U.S. And as your parents’ age, they might need care both personal and financial.

And unexpected expenses crop up on a regular basis. Home and auto repairs aren’t always do-it-yourself (DIY) projects, for example. If your car throws a rod or (to cite this writer’s experience) a four-story elm dies in your backyard, that’s thousands of dollars directly from your own pocket.

What to Look Out for at Age 30

At age 30, you have a lot of time and responsibilities ahead of you. Every retiree needs to plan for the unexpected. But when you’re a young adult, far more people will count on you and you will have far fewer resources.

Medicare and Social Security won’t kick in for several years. And Medicaid won’t help someone who is voluntarily unemployed. Family members will look to you for support, property will need tending and many of life’s biggest expenses may still be on their way.

To put it another way, you’re not a kid anymore and there is no backup plan. For the next 30 or 40 years, you are the backup plan. By retiring this early with this budget, you are planning to face that with virtually no room for error.

The FIRE Lifestyle

There is a very good reason that early retirement has caught fire (or FIRE) in recent years. Work for millennials and, as they age in, Generation Z, is worse than it was for past generations. Employers expect ever-longer hours and make ever-broader demands.

For Baby Boomers and Generation X, it can seem bizarre to plan on leaving the workforce by age 40. In large part, though, that’s because theirs was a generation that still got to clock out at 5 and only worked on the weekdays.

“The rule books our parents have given us is advice that’s perfect for 1970,” wrote the New York Times in one representative quote. “We have to throw out that rule book and write a new one.”

Current generations were brought up in an era where every job has been migrated to salaries to avoid overtime pay. And most days end well after 5:00 p.m. This is a working world of smartphones, seven-hour half-days and “just real quick” Saturday assignments. It’s easy to understand why so many young workers want to opt-out.

Considering the Alternatives

Consider the other side of that lifestyle carefully, because you may not be buying yourself the freedom that you think. You will have freedom from burning out on work culture and the stress that comes from expecting work e-mails at all hours of the day. But you may not have the freedom to for very long.

In other words, you may not have the freedom to live the kind of lifestyle that you want to enjoy. If you have a home, you may not be able to afford anything else. On a $40,000 – $60,000 per year budget, there probably won’t be much left for travel, dining and other luxuries.

Your plan might be Netflix and dinner for a long period of time, for example. If, as many young retirees do, you choose to travel, then those temporary travels may become more permanent than you’d think.

Bottom Line

Is it possible to retire at 30 with $1 million? Yes. But the odds are it’s likely that it will do more harm than good. If you have $1 million at age 30, you’re doing beyond great. If you keep this money in a series of solid, comfortable investments, then you almost certainly can retire early. The truth is, you probably can target retiring at age 40 or 45. Give this account another 10 years or so to ride. And let compound growth increase over time.

Retirement Planning Tips

  • A financial advisor can help you prepare for an early retirement. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Want to see how much your 401(k) will be worth when you retire? Use SmartAsset’s free calculator.

Photo credit: ©iStock.com/Delmaine Donson, ©iStock.com/Delmaine Donson, ©iStock.com/SDI Productions

Eric Reed
Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.

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Save more, spend smarter, and make your money go further

Finances are often talked about like some enigma that can’t be cracked unless you’re an accountant, investor, or a CFO. In fact, according to a study from Statista, only 25% of respondents said they considered themselves to be very financially literate, while 4% said they were not financially literate at all.

But the stigma around financial expertise has got to go! By using your resources and taking charge of your own financial standing, you can make a difference in your own life and even inform friends and family who are struggling to manage their own finances.

One of the best ways to glean financial knowledge is to read about it. From financial news and our #RealMoneyTalk series, to the best finance books of all time, there are plenty of opportunities to learn more about your money. Whether you’re looking to boost your budgeting skills, try your hand at investing, or want to learn how to save for retirement, you’re in the right place.

In this post, we’re discussing the 16 best financial books of all time. From books by spunky financial advisor Suze Orman to finance books specifically for millennials, there’s something in here for anyone who wants to strengthen their financial prowess.

Looking for a quick book recommendation? Use the links below to skip ahead, or read end to end to get the most out of our comprehensive list of the best finance books of all time.

Best financial books by category

To help you find the right book for your financial needs, we’ve broken this list down into 7 categories, with some of the best book selections in each.

Best financial books for all readers

Whether you’re just opening your first credit card or you’re trying to figure out how to start a budget, there’s a lot to learn in the finance world. But pick up the most recent issue of the Wall Street Journal as a finance novice, and you might feel a little lost, to say the least.

Before you dive into market trends and economic policy, it’s a good idea to establish some foundational knowledge first. Our list of the best financial books of all time in the general category include titles that encourage changing your perspective on money, to a book that gives a cynical yet informative run-down of the top financial terms consumers need to know.

Nudge: Improving Decisions About Health, Wealth, and Happiness

In addition to providing advice on finances and wealth, Nobel Prize winning author, Richard H. Thaler tells readers how they can shift their decision-making skills in all facets of life including health and happiness.

Thaler and co-author Cass R. Sunstein include rich behavioral data to look at how humans make decisions and how they can improve their “choice architecture” to avoid investment mistakes, unhealthy habits, and even relationship faux pas. If you’re in search of a new perspective to help you better manage your finances and related decisions, Nudge could be just the push you need to take hold of your personal finances and start meeting your financial goals.

The Power of Habit: Why We Do What We Do in Life and Business

If you’ve tried budgeting before and you just can’t get it to stick, it could be time to take a closer look at your habits. In his New York Times bestselling book, author Charles Duhigg examines how people create habits and how we can change them.

Duhigg backs his methodology in The Power of Habit with scientific research and anecdotes that readers can apply to their own lives, whether it’s changing financial habits or learning how to be more productive in work and in life.

The Devil’s Financial Dictionary

One of the biggest roadblocks in financial literacy can be connected to the complexity of the financial jargon and processes we see on the news and in blogs. But in the name of readability, author Jason Zweig brings these convoluted terms back to earth with witty definitions that Wall Street executives and financial amateurs alike can appreciate.

If you’ve ever felt like the finance world is too pompous or complex for your liking, you’re certainly not alone. The Devil’s Financial Dictionary demystifies everything from Wall Street lingo to general terms you can apply to your everyday life.

Best financial books for retirement

Preparing for retirement is an exciting time. You’ve worked much of your life building your career and saving up money, and now it’s time to start catching sunsets instead of chasing deadlines. But as you’re preparing for your sunset years, a lot of questions tend to arise.

How much money should I have in my 401k? Can I really afford to retire? When can I access the money in my retirement fund?

Sound familiar? You’re not alone—a lot of new and upcoming retirees have experienced the same woes as they plan for life after work. But the good news is, some of the most successful finance experts and authors in the world have taken to this topic to provide consumers with the answers they need as they approach retirement.

With that said, here are some of the top finance books for retirement planning:

You’ve Earned It, Don’t Lose It

You probably recognize her spunky personality and hard-hitting financial advice from the Oprah Show and Dr. Oz, but applying her advice directly to your personal finances is a revelation all on its own. In her book You’ve Earned It, Don’t Lose It, author and financial advisor Suze Orman discusses exactly what consumers need to know as they’re prepping their finances for their upcoming retirement.

From choosing trusts vs. wills  to maximizing retirement income, Orman’s national bestseller is nothing short of a complete guide to retirement planning.

How to Retire with Enough Money: And How to Know What Enough Is

Ever wondered how much money you need to retire or how much longer you’ll have to work to get there? In her book, How to Retire with Enough Money: And How to Know What Enough Is, retirement planning specialist Teresa Ghilarducci levels with upcoming retirees to tell them how much is enough and how to make your retirement savings grow all in a quick 144-page read.

Ghilarducci also discusses the external factors that might impact your retirement, including politics and the healthcare systems we currently have in place. If you’re looking for a way to ramp up your retirement savings, even if you’re still in college, this book is among the best financial books of all time…at least in our book.

Best financial books for millennials

If you’re a millennial in 2019, you’re likely in a more complicated financial position than people your age in past generations. Perhaps you’re a recent college grad trying to navigate the workforce on your own and you haven’t quite found a balance between entry level experience and a livable wage. Or, maybe you’ve reached the most exciting moment of your financial history thus far and you’re ready to meet another financial milestone such as buying a house or starting to invest in the stock market.

No matter where you’re at with your finances at the moment, it’s an exciting time to learn more about your money. If you’re looking for knowledge and advice specifically designed for millennials, check out these finance books.

Broke Millennial

Ever heard of #GYFLT? Author and personal finance expert Erin Lowry developed the hashtag to send millennials an important message: “get your financial life together!”. Whether you’ve started saving money or you’re living paycheck-to-paycheck , Lowry’s Broke Millennial book series acts as a guide as you prepare to tackle financial milestones such as getting married, buying a house, having kids, or trying your hand at investing.

So far, Lowry has two books in the Broke Millennial lineup: Broke Millennial: Strop Scraping By and Get Your Financial Life Together and Broke Millennial: A Beginner’s Guide to Leveling Up Your Money. Did we mention she’s also a contributor to our blog? Click here to read more from Erin Lowry.

Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence

Many of us need a step-by-step guide to help us get our habits in order—whether it’s revamping your personal finances or getting back on your fitness game. With their book Your Money or Your Life, authors Vicki Robin, Joe Dominguez, and Mr. Money Mustache team up to give readers 9 simple steps to help them shift how they deal with money to make progress toward financial independence.

If you want to learn the basics of managing money, figure out how to fund your dreams, and start taking control of your financial future, this book comes highly recommended as one of our favorite personal finance books for millennials.

Millennial Money: How Young Investors Can Build a Fortune

If you’ve been considering investing your money, congratulations! That’s a huge step to take in your financial future, and it’s an exciting time to learn about how the finance world really works, first-hand. In his guide, Millennial Money, author Patrick O’Shaughnessy discusses how young people can cash-in on the global stock market to make up for potentially limited access to pension plans and Social Security.

O’Shaughnessy recommends investing early to reap the most reward and provides a basic strategy to help you develop your stock portfolio.

Best financial books for women

From career paths and finances to family structures, women in the 21st century lead very different lifestyles now than they ever have in the past. But along with their triumphs and new opportunities, women today may find themselves facing unique challenges when it comes to managing their own money.

Whether you’re looking for help learning how to balance your family life or financial life, or you’re looking to take over the investment world, there are plenty of empowering finance books for women to boost their financial knowledge.

Here are some of the best finance books for women:

You Are a Badass® at Making Money: Master the Mindset of Wealth

You may have heard some buzz about author Jen Sincero’s premiere novel, You Are a Badass® , also informally known as the young person’s guide to self-worth and stability. Well, the first edition was so successful that Sincero has since released two other books in the series: You Are a Badass®  Every Day and You Are a Badass® at Making Money.

In each of her books, Jen Sincero offers empowering advice to readers, along with real strategies to make your personal goals actually happen. In You Are a Badass® at Making Money, Sincero uses humorous personal experiences as the backbone of her monetary manifesto, while teaching readers to:

  • Find out what’s holding them back from making money
  • Generate wealth according to their own standards, rather than societal norms
  • Curate their own financial future instead of waiting for things to happen

If you’re in search of a modern take on money that’s relatable instead of intimidating, look no further than this one.

Smart Mom, Rich Mom

Finding a healthy financial balance can be tough when you’re raising a family…or getting ready to start one. From diapers to diplomas, having kids can end up taking a toll on your finances if you’re not armed with the right resources to keep things in check.

In her book, Smart Mom, Rich Mom, Kimberly Palmer explores different ways women can shape their financial future while raising a family. Palmer covers everything from career growth to creating budgets to help ease the stress on moms juggling household and financial responsibilities. If you’re curious about how you can prepare your budget for kids, or want to know how to repair your current financial situation, this book could be just the financial read you need.

Best financial books for budgeting

Budgeting can be one of the trickiest things to master when it comes to achieving financial wellness, but as you probably know, budgeting is an important skill to learn. Whether you’re wondering why you need a budget in the first place or where to begin, these budget-specific books are here to help.

How to Manage Your Money When You Don’t Have Any

One of the most frustrating roadblocks to saving money is feeling like you don’t even have enough money to cover your bills, let alone save. According to the U.S. Census Bureau, approximately 12.3% of Americans were living in poverty in 2017. With that statistic in mind, it’s easy to see that financial challenges are widespread across the country.

If you’ve ever been in a scenario where you’re scraping by to pay your bills but you want to save money, Erik Wecks’ How to Manage Your Money When You Don’t Have Any could give you the insight and inspiration you need to optimize your financial situation. Wecks speaks from his personal experience struggling to make ends meet in order to give context and provide readers with suggestions that might work for them, too.

The Financial Diet

Feeling lost at the thought of crunching numbers or developing a budget? Author Chelsea Fagan’s been there. In her book/life guide, The Financial Diet, Fagan gives millennials and Gen Zers the tools to take over their finances and build a better future. From budgeting to investing and slimming down spending, Fagan’s got your finance questions answered.

Best financial books for entrepreneurs

Are you planning your next business venture or world takeover as you’re reading this? You might want to take a moment to learn from the experts first. In these finance books for entrepreneurs, you can learn from their mistakes, find out how to optimize your business plan, and discover new strategies to boost your business.

You Are a Mogul

Entrepreneur Tiffany Pham has had to adapt to life fast—and she’s done more than just adapt. From attending business school at Harvard to founding her own company, Pham’s had a lot of experience building her empire from the ground up. In her book You Are a Mogul, Pham tells readers all about how she got to where she is and how they too can make their own entrepreneurial dreams come to fruition.

Whether you’re looking for guidance in identifying your passions or want to know how to “Crush it in Corporate Life,” You Are a Mogul includes the resources and real-life advice you need to jumpstart your career.

Good to Great: Why Some Companies Make the Leap and Others Don’t

Have you ever wondered what really differentiates two competing companies when it comes to success? They entered the market at the same time and both have strong branding, but why is one so much more successful than the other?

In his book Good to Great: Why Some Companies Make the Leap and Others Don’t, author Jim Collins analyzes what makes a company go from good to great, and why some companies are able to achieve success despite their mediocre reputation. Collins focuses on 4 key findings to support his theory:

  • Leadership structure
  • The Hedgehog Concept
  • Discipline
  • The Flywheel and the Doom Loop

If you’re thinking about starting your own business or what to optimize your current structure, consider using Collins’ book as your guide toward entrepreneurial success.

Best financial books for investors

Navigating the stock market as a beginner is no simple task. To help you learn the ropes, investment experts such as Warren Buffet and Burton G. Malkiel are spilling their secrets in these financial books for new and seasoned investors.

The Essays of Warren Buffet

As one of the most successful businessmen of all time, chairman and CEO of Berkshire Hathaway, Warren Buffet, is one of the most influential figures in the investment world. Lawrence A. Cunningham’s curation of Warren Buffet’s essays include topics from wealth management to investment strategy.

If you’ve considered investing in the stock market but you’re not sure where to start, The Essays of Warren Buffet could be the introductory guide you need to take the leap.

A Random Walk Down Wall Street

Jumping into the investment world can be intimidating, to say the least. But having a lay of the land, working knowledge of the terminology, and some insight on investment strategy, you could be cashing-in on Wall Street in no time.

In his investment guide, A Random Walk Down Wall Street, Burton G. Malkiel educates readers on a variety of investment topics that can easily be applied to the modern marketplace, thanks to updated editions. Malkiel covers just about everything consumers need to know about successful investing—from 401ks  to digital currency trends.

More ways to learn about finance

In addition to reading some of the best financial books of all time, there are plenty of other resources out there to help you diversify and expand upon your financial knowledge. Try incorporating some of these strategies to become a self-taught financial expert:

  • Speak to a financial advisor
  • Learn more about your credit score by getting a free credit report
  • Listen to finance-related podcasts
  • Read financial news and blogs
  • Participate in conversations about finances with family and friends
  • Practice managing your personal finances by using a budgeting app
  • Take a class online or at a local college
  • Watch our #RealMoneyTalk series

Key takeaways: Best Finance Books of All Time

The financial world can often seem intimidating, but if you just take a little time to learn about it, you may find that you’ll have a better hold on your own financial standing. Use this list as a guide to help you learn more about how money works in general and as it applies to your personal finances.

Have any financial book recommendations of your own? Let us know in the comment section below!

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