Retirement Strategies

5 Strategies for an Outstanding Retirement

5 Strategies for an Outstanding Retirement

You’ll likely spend approximately one-third of your life living out your retirement years so you want it to be a great experience.  Having no money or little income is not my idea of a pleasant experience.  Here are five strategies to help boost your retirement income:

  1. Trifecta Investing Strategy. If you fall into the twenty, thirty or forty-year-old age group, this strategy is for you.  When most people think of saving for retirement, 401ks and IRAs typically come to mind because of the income tax deduction you receive for your contribution.  It’s true that qualified retirement plans are one of the very best ways to accumulate wealth, not only because of the tax deduction, but also because your money grows tax free until you withdraw money during retirement.  And that’s when the problem begins.  If your entire retirement is built around qualified retirement plans, you significantly limit flexibility regarding income tax planning.  A better strategy is to accumulate money in different types of retirement ‘buckets’.  If, in addition to your qualified retirement bucket where withdrawals are taxed as ordinary income, you also had money invested in a personal investment (after tax) bucket, during retirement, you get to choose which bucket to draw from in a given tax year.  Depending on the cost basis of the securities in this bucket, withdrawals may be non-taxable, subject to the lower long-term capital gains rates or potentially a loss that can be used to offset ordinary income.  Even better is to add a third bucket, the Roth IRA.  Here, withdrawals are tax-free.  We have one client where we’ve avoided paying virtually any income taxes for more than ten years!
  2. Downsize your home. One of the best ways to improve your retirement income is to move into a smaller less expensive home.  Our number one goal is to have the client downsize so as to eliminate any mortgages while choosing a lower maintenance home, allowing them to win twice by eliminating mortgage payments and reducing expenses.  Even better is if they can downsize and retrieve some equity from their old home that can be used to add to their personal investment bucket.
  3. Home bonus strategy. A reverse mortgage can be an excellent strategy for someone who would like to maximize retirement monthly cash flow.  With a reverse mortgage, the mortgage company guarantees you a monthly income for as long as you live in your home.  If the value of your home drops below the mortgage amount, they take that risk and neither you nor your heirs will owe the mortgage company money at the ultimate disposition of your home.  Note that there are other reverse mortgage options as well.
  4. Work longer; start a new career. Retirement is overrated!  If you can find something you love doing during retirement this is the best choice for a lot of people.  Understand that a little bit of money goes a long way for retirees.  What could you do that would be loads of fun and make you some money?
  5. Choose your Social Security strategy. Give serious thought to when you begin receiving Social Security benefits.  Generally, the poorer your health, the sooner you’ll want to begin taking your benefit.  For those folks with great health, delaying benefits until age seventy can significantly boost lifetime benefits, particularly if you have a spouse.  At the death of the higher-earning spouse, the lower-earning spouse steps in to the higher-earning spouse’s place to continue reaping those big payout benefits.

Ultimate Fitness Quest 2016Ultimate Fitness Quest status report:  OK, I had a set-back last week (week #2).  My goal is to lose 15 pounds of body fat in thirty days.  For week one, I lost 5.8 pounds.  Then last week, I gained 2.6 pounds!  And I thought I did everything right but obviously I didn’t.  It’s a good lesson in goal-setting.  The road to success in achieving goals is littered with potholes and roadblocks.  What defines you is how you handle the obstacles.  If you’d like to follow my fight to get back on track or you’d like to challenge yourself to lose a few pounds before summer, join me at or on Facebook.

Wealth Creation

How to Invest $100

How to Invest as little as $100

Think of someone you know who is rich.  How did they get there?  Well, one day they had a hundred dollars and decided not to spend it, but to invest it instead!  Over the decades I have spoken to hundreds of people who simply feel lost regarding how and where to invest.  They don’t know what to do so they do little or nothing.  Today, I’m going to eliminate that excuse!

How to invest $100 or more

The single most important step to investing is the first step…getting started!  And no, it doesn’t take a lot of money to set up an investment program.  Here are two simple alternatives:

  1. The Obama Plan– Recently, President Obama launched a new savings plan called MyRA. Under this plan, you can begin by investing as little as one dollar per month so there’s no excuse for not getting started.  The money goes into the Government Securities Fund which invests in government bonds and there is no risk of loss.  Interest rates change monthly but have averaged 3.2%.  Contributions are limited to $5,500 per year plus an additional $1,000 (catch-up) if you are age fifty or older this year. .  To qualify for the full $5,500 contribution, your income must be under $116,000 for single filers or $183,000 for joint filers. You can withdraw the money anytime but must pay taxes on the interest earned if withdrawn before age 59½.   Once the account reaches $15,000, you must roll it over to a Roth IRA.  For more information visit
  2. The Welch Plan– The Obama Plan offers an investment strategy that has no risks of loss but also pays only modest returns. Most people will need a higher rate of return in order to have a chance of meeting their retirement goals…which I’ll help you calculate in next week’s column.  This means taking on the inherent volatility of the stock market.  Seasoned stock market investors know that the market is impossible to predict in the short term but historically has earned seven to nine percent over the long term (ten years plus).  While there are a number of low-cost, no-load choices, a great choice is Charles Schwab’s One Source Funds.  A large number of these fund options allow you to invest as little as $100 initially plus add as little as $1 per month.  Two choices worth considering are Schwab’s S&P 500 Index fund (symbol: SWPPX; 5-year annualized returns: 10.5%) and their Dividend Equity Fund (symbol: SWDSX; 5-year annualized returns: 7.97%).  The S&P 500 Index fund invests in 500 of the largest companies in America while the Dividend Equity Fund focuses on the slice of the large U.S. companies that have a history of paying dividends.  This dividend-paying strategy generally makes them a more conservative choice.  If you invest in either of these funds, you should plan to remain invested for a minimum of seven to ten years.

My wife likes to use the phrase, “Bloom where you are planted!”  This phrase can be used in many contexts, but here it means start investing an amount of money that you can afford to invest even if it’s $1 per month!  Creating a habit of saving is vital to your ultimate success.

Clearly you should invest where your money has the greatest potential such as your company matching 401k plan, deductible IRAs or Roth IRAs.  Take a look at all of the places you could invest and then prioritize them in order of most powerful.  For example, if your company offers a 50% matching contribution on a portion of your own 401k contribution, start there.  Then, when you get a raise (or bonus), commit one-half of the amount to your retirement savings program.  That way, you receive a boost in spendable income while also stepping up funding for your retirement.  It’s a painless strategy.  Ok, no excuses for not starting your investment program!

Healthcare Planning for Retirment

Healthcare Planning for Retirement- The New Paradigm

Healthcare Planning for RetirmentHealthcare Planning for Retirement

A decade or so ago, there wasn’t a lot of discussion about how healthcare costs could ruin a perfectly good retirement planning strategy.  What has changed is the massive numbers of Baby Boomers headed for the retirement exits along with steeply rising healthcare costs.  In today’s world, projected healthcare costs during retirement deserves to be a line item in your planning…and a big item of focus.

Healthcare costs have risen sharply over the years, in part due to advances in medicine.  As a result, those eighty million Baby Boomers are living longer which adds financial pressure on virtually all financial systems including estimates that out-of-pocket costs for healthcare could exceed $250,000 during your retirement years. What are the best ways to fund this enormous expense item?

  • Play the statistics and self-fund. If you have minimal assets and income, you’ll quickly qualify for Medicaid which will fund 100% of nursing care costs.  If you have assets, ‘playing the statistics’ means calculating your potential out-of-pocket costs based on the average nursing home stay should you be unlucky enough to end up there.  Based on research by Boston College’s Center for Retirement Research, there is only a 27% chance that a man age sixty-five will need nursing home care.  If he does, the average stay is only ten months.  Assuming $200 per day costs, you’d only need about $60,000.  For a woman age sixty-five, the odds of ending up in a nursing home are 44% with the average stay being sixteen months.  Convert that to dollars and total costs would be about $100,000.  Of course, here you’re playing the averages…meaning half of the people stay longer and half shorter.  My own experience dealing with real cases is that most people opt to ‘stay at home’ versus going into a nursing home and this would likely cause costs to rise, perhaps sharply.
  • Fund expected costs with insurance. Traditionally many people have chosen to buy long-term care insurance as a way to fully or partially fund future in-home or nursing care.  The problem that I’ve seen is that the insurance companies significantly underestimated their future expense obligations and experienced heavy losses.  Many got out of the business while others have significantly raised premiums on their policyholders.  My own personal experience is that my carrier, Met Life, has raised premiums some 58% and has indicated they plan to continue raising premiums as state-by-state insurance commissioners will allow.  Premiums could become unaffordable.
  • Use new hybrid insurance products. In response to the fallout in the traditional long-term care insurance industry, insurance companies have developed new products that combine some element of a life insurance policy (often with a large lump-sum, up-front deposit) with a long-term care benefit.  There are a number of variations but generally if you never tap the policy for long-term care benefits, your beneficiaries receive life insurance death benefits.

The rising costs of healthcare presents a complex financial puzzle for retirees or those people planning their retirement.  I strongly recommend that you meet with your financial professional for assistance in navigating this financial minefield.

Ultimate Fitness Quest (UFQ) status report.  I set up the UFQ as a lesson in goal setting where I’ve challenged myself to lose fifteen pounds of body fat in thirty days.  For my first week weigh-in, I lost 5.8 pounds!  I’ve done this while eating healthy and exercising daily and have rarely experienced ‘raging’ hunger because I’m generally eating something every three to four hours.  If you’d like to lose a few pounds before summer, it’s not too late to join the Ultimate Fitness Quest 30-Day Challenge.  We’ll keep it open through May 31st, so get a couple of friends and join the two hundred-plus folks who are following the UFQ program.  We have lots of free resources to help you (approved food list, sample meals, etc.) along with expert advice from a nutritionist, physician, personal trainer and former Mr. America!  Follow friends and me at or on Facebook.

Ultimate Fitness Quest 2016

Anatomy of a Goal

Ultimate Fitness Quest 2016Anatomy of a Goal

My Personal ‘Ultimate Fitness Quest’:  I’ll Lose 15 Pounds in 30 Days!

We all hear successful people speak of the importance of having goals but most people either don’t have goals or the goals they do have are vague, not written down or not followed.  So I thought it would be fun and instructive for you to follow me and one of my goals.  I want to lose fifteen pounds of ‘body fat’ and do a ‘re-set’ of my nutrition and training program.  I also want to invite any of you who’d like to lose weight and get in shape to join me.  To help me (and you) I’ve put together a team of experts and on-line tools to make this all easier.  Visit to get started.

Tips for effective goals

Effective goals all have a number of important and key elements:

  • Begin with a compelling ‘Why?’ Answer the question, “Why is it important for me to achieve this goal?”  If you can come up with a great ‘Why’, the ‘How’ will be much easier!
  • Put it in writing. A goal not written is what I call a ‘dream’.  By taking the time to articulate what you want to achieve on paper, something magical happens that’s hard for me to explain.  It’s like you ‘plug-in’ to the universe around you and the universe then bends over backwards to help you.
  • Be specific. You want your goal to be very specific.  You’ll know if it’s specific by asking someone to read your goal and agree that they understand what you intend to accomplish.  I love ‘stretch’ goals…ones that will really challenge me, but at the same time, your goals need to be realistic.  By realistic, I mean something that can actually be accomplished by you.
  • Set a time boundary. Setting a time boundary for your goal is an important part of being specific.  You need to know your start and finish date.  My experience is that sometimes accomplishing a goal takes a bit longer than you estimated.  This is ok as long as you’re prepared to continue executing your plan until you succeed.
  • Go bite size. Break your goal down into ‘mini-goals’…pieces that are easy to accomplish one at a time.  Each day (or week), develop a short list of actions (mini-goals) you will take that will move you towards accomplishing your big goal on time.
  • Get leverage on yourself. We all need help along the way and I’ve found doing things with others is more fun that being a ‘lone ranger’.  Find someone or a small group who shares similar goals and have them join you as ‘accountability partners’.  You’ll find that there truly is strength in numbers.
  • Celebrate your success! Everybody loves a celebration and in this context it will provide encouragement.  Come up with some way of celebrating when you accomplish your goal.  It’s just as important to come up with ‘mini-celebrations’ for accomplishing some of your mini-goals.  This is a perfect opportunity to celebrate with your accountability partners.

Stewart’s Goal: “I will lose 15 pounds of body fat in 30 days beginning April 4th (ending May 3rd).”  My compelling ‘Why’ is that the pants for my suits have gotten a bit ‘tight’ and I really don’t want to buy five new suits!  Yes, I also want to look and feel better but I really don’t want to spend the money to purchase a new wardrobe.  This is what motivates me…you must find what motivates you.  My experts tell me that if I do everything correctly, I can lose a half-pound a day in a healthy way by eating right and exercising regularly.  I intend to follow their plan and hope you’ll consider joining me with a fitness quest of your own.

You’re invited to join me

How about it, are you interested in losing some weight before summer?  At the end of every day, I’ll post my daily results to the Private Group section of my Facebook page.  You can simply ‘do what I do’ or follow your own plan.  All the tools you need for the program are free and available at  In my column each week, I’ll report my progress.  Get two friends to join you and let’s have some fun together.

Financial Insights by Stewart Welch

Financial Insights

Financial Insights


Shopping CD Rates can mean BIG Bucks

Shopping CD Rates Can Mean BIG Bucks

Question: According to information on, investors can earn higher interest rates on their savings and money markets by banking on-line than they can earn at local banks. For example, Synchrony Bank pays 1.25% on a one-year CD. Is there any risk in doing this? G.H.
Answer: No, just be certain your bank is a member of the FDIC and that your account does not exceed the FDIC insurance limits, currently $250,000. If you have more than $250,000, there are still ways to get full insurance coverage by splitting the funds into accounts with different titling. For example, you could have one account titled in your name, one in your husband’s name and one titled jointly under both of your names…allowing you to up to $1,000,000 fully insured in a single bank. How much difference can ‘shopping rates’ make? A $100,000 one-year CD at your Internet bank would pay $1,250 in interest while a large Birmingham, Alabama bank would pay only $100!

IRA Gains & Losses

Question: If stock is sold in an IRA and there is a loss, why can’t that loss be taken off your taxes just like you have to report a gain doing the same thing? C.J.
Answer: Federal laws for the Traditional IRA do not allow losses to be taken from your income taxes. Think of a Traditional IRA as a contract that has a beginning, a middle, and an end. In the beginning, when you contribute to your IRA, you receive an income tax deduction. At the end, when you withdraw money from your IRA, those withdrawals are taxable as ordinary income. In the middle, if you sell a security for a loss, there is no tax deduction. Likewise, if you sell a security for a gain, that gain is not taxable.

janeb13 / Pixabay

Avoiding the Obamacare Penalty

Question: I work part time and have no health insurance. In 2014 I made under the threshold for paying the penalty. For 2015 I made more ($12,560.) which is over the threshold ($11,880). My question is can I open a regular IRA now and put in $1000 to get me under the penalty limit? I already have a Roth IRA. I am 55 years old. J.W.
Answer: “The Obamacare penalty is specific to size of family and is based on Modified Adjusted Gross Income. There are also several potential exemptions that you may qualify for that would allow you to avoid the penalty. Your best bet is to complete your tax return for 2015 to determine your actual MAGI, then you can determine how much to invest in a Traditional (deductible) IRA in order to avoid the penalty”, says Kimberly Reynolds, CFP, a partner at The Welch Group. As a reminder, you have until April 18th, 2016 to make your IRA contribution for calendar year 2015.

Gift Tax Limits for 2016

Question: Regarding the statement: “In any calendar year, you are allowed to give away up to $14,000 per person to as many people as you desire without triggering any gift taxes.” Does this mean you can give 10 people $14,000 each or that you can only give a total of $14,000 divided among the 10 people? S.T.
Answer: For 2016, you can give as many people as you wish $14,000 each. If you are married, you can join in the gifts and together give up to $28,000 to as many people as you choose.

Contingent Beneficiary

What is a Contingent Beneficiary?

Why Contingent Beneficiaries Matter

Question: I have named two family members as beneficiaries in equal shares on my portfolio. I was advised to also name contingent beneficiaries.

What is a Contingent Beneficiary?

Will you explain what a contingent beneficiary is and what might happen if none are named? Also, I have named a different family member as POD (Pay on Death) on my savings accounts. Should a contingent beneficiary be designated on them as well? G.H.

Answer: A contingent beneficiary (a person, trust or charity) would receive your assets if the primary beneficiary (your first choice) should die before you and you fail to make any changes. For example, assume you buy a life insurance policy. It’s common to name your spouse as the primary beneficiary of your life insurance and your child as the contingent beneficiary. If your spouse predeceased you and you died having not made any changes to your beneficiary designation, your child would automatically receive the life insurance proceeds. If you had no contingent beneficiary, the proceeds would transfer according to your will. If you did not have a will, the proceeds would transfer based on the state laws (called intestate) in which you reside.

Your beneficiary designations are very important and should be thought through very carefully since a mistake can have unintended consequences. In this reader’s case, certainly no contingent beneficiary is required as long as she is ok knowing that if one of them predeceases her all of the portfolio will go to the remaining beneficiary. Of course, she can change beneficiaries at any time.

Why Financial Education is Important

Why Financial Education is Important

And Why I created Get Rich on Purpose®

This Graphic from the NAFPA shares some alarming statistics. It is a great illustration of the reason that I decided to create Get Rich on Purpose®. I want to help as many people as I possibly can achieve Financial Freedom. As of now, only 5% of Americans ever reach Financial Freedom, even by retirement. Financial Freedom means your passive income exceeds your expenses. Passive income is income you receive without having to physically work for it.

Why Financial Planning Is Important

From Visually.