When Can You Take Money Out Of Your Retirement Plan?

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

One of the most common questions people have about their retirement plans is when they are eligible to take money out - it is their money after all, so it shouldn't matter how they use it, right? Not always! Although yes, retirement savings are there for us to use, retirement plans are designed to provide income during retirement, and for the most part, retirement only.

However, distributions may be available under certain circumstances - these are defined as "hardship distributions." More information about hardship distributions is available below.

What circumstances are considered hardships for 401(k) plans?
According to the IRS, distributions from 401(k) plans can be made if there is an immediate and heavy financial need. While eligibility may differ based on plan terms, the following expenses will typically count for a hardship withdrawal:

• Certain medical expenses
• Expenses related to the purchase of a principal residence
• Tuition or other related educational expenses
• Payments needed to prevent eviction or foreclosure on a principal residence
• Funeral expenses
• Expenses required to repair damage to a principal residence

Keep in mind, though, that if other resources are available to meet current financial needs, a distribution may not be permitted. 

How much can be taken out as part of a hardship withdrawal?

Hardship withdrawals are not meant to exceed the amount of expenses that need to be covered. Put simply, that means you cannot ask for extra if you're looking to make some other recreational purchases down the road.

Are there consequences for taking money out of a 401(k) plan early?
Hardship distributions may be subject to additional taxes, but unlike loans, these distributions do not have to be paid back to the plan. That said, taking a hardship distribution will ultimately reduce the plan's account balance. Additionally, after a hardship distribution of elective contributions, one is not allowed to make elective contributions and employee contributions to the plan and other employer sponsored plans for a minimum of 6 months after the hardship distribution is received.

But what about other retirement plans, such as IRAs, 403(b) or 457(b) plans? For details, check out the IRS' hardship distribution guidelines.

Still have questions about hardship distributions and when you are permitted to take money out of your retirement plan before retirement age? Email info@americaninvestmentplanners.com to start speaking with one of our experienced retirement planners.

Frequently Asked Questions About Retirement

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

Although most, if not all of us, know what retirement is and probably a thing or two about saving for it, we also know that there are a lot of questions about it that go unanswered simply because people are afraid to ask. But by not asking questions, we're ultimately hurting ourselves and making the process of retiring much more difficult.

As your trusted financial planner, today, we're here to provide some of the answers to frequently asked questions about retirement so that you can better prepare.

Q: How much money needs to be saved for retirement?
A: Since the answer to this question will differ from person to person, unfortunately we cannot provide a concrete amount. However, what we can say is that it all depends on the long-term goals you have for yourself as well as how much you will need to cover your monthly expenses - this can all be figured out by sitting down with a financial planner such as ourselves.

Q: What type of retirement savings plan should be chosen?
A: There are several great savings plan options that can be used to help you prepare for retirement, and similar to the previous question, the answer may depend on your personal and financial goals. If your employer offers a 401(k) plan, you should absolutely contribute - especially if they offer an employer match. Aside from employer sponsored plans though, don't forget that there are also IRA accounts that you can set up for yourself. Again, the best method for you can be determined by sitting down with an experienced financial and retirement planner.

Q: How much can be contributed to a 401(k) plan per year?
A: In 2016, employees who utilize a 401(k) plan can contribute up to $18,000.00. For those employees who are 50 years of age or older and making catch-up contributions, these are limited to a total of $6,000.00. As these may change over time, though, make sure that you reference the IRS for updates or connect with your financial planner.

Q: What is the full retirement age?
A: Full retirement age is currently 66, with 67 being the age when retirees can receive their full benefits.

Q: At what age can Social Security benefits be received?
A: You are eligible to start getting Social Security retirement benefits at age 62, however, doing so will reduce your benefits by as much as 30 percent below what you would get if you waited until full retirement age, according to the Social Security website. You can claim your full retirement benefits if you wait until full retirement age, or you can claim an increased benefit if you wait until you turn 70.

It doesn't matter if you're a millennial just starting out in the workforce or an experienced employee - everyone needs to know about retirement so that your final years of work aren't spent stressing over how things are about to change.

Here at American Investment Planners LLC, our advisors have an extensive background in retirement planning and know the answers to any questions you may have, so let us help! To make an appointment with one of our retirement planners, please call (516) 932-5130 or email info@americaninvestmentplanners.com today.

How To Help Loved Ones Adjust To Retirement

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

No matter how old we get and how many life experiences we go through, change is never really "easy." That said, it's helpful for adult children and other family members who have loved ones about to enter retirement to start discussing it with them and get them used to the idea. But talking about retirement isn't the only thing that should be done to help our friends and family start to feel more comfortable about their golden years - here are four other things you can do:

Work on their budget. Seeing how income will change can be overwhelming for soon-to-be retirees, so work on their new budget with them and talk things out - it may just help them become more comfortable with this particular change. 

Be encouraging. If your loved one will be moving into a retirement community or leaving their home and downsizing into something more affordable, be encouraging about the move and let them know that everything is going to work out just fine - it's always hard for people to leave the home they know and love!

Keep them busy. One of the biggest things that retirees have to get used to is having a lot of spare time on their hands, so make them a list of things that can be done to stay busy - for example, volunteering for their favorite charity, exercising or taking a class to learn something new. 

Plan to visit often. Especially if you know someone who has moved into a new home or retirement community, set up a schedule with them for when you can visit. It's not unusual for new retirees to feel a sense of loneliness during their first few weeks or months of their new life, so it's always helpful for them to see a familiar face.

Although most people can't wait until the day when they can finally stop working, in the back of their minds, they're probably a bit uneasy about how their life is going to change - but that's what you as their loved one is there for! A few of words of encouragement and help getting situated can truly go a long way.

Aside from what you can do to help your family and friends with retirement, the team here at American Investment Planners LLC is also available to help where financial planning is concerned! If you or someone you know has questions about their financial state and how things are going to change during retirement, contact us at (516) 932-5130 or email info@americaninvestmentplanners.com to set up an appointment with one of our advisors.

Five Retirement Myths Debunked

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

Between word of mouth and the internet, it's safe to say that you've probably heard a thing or two about retirement that doesn't exactly line up with the reality that is this time of your life. And, unless you find out the real truth long before it's time to leave the office for good, you could be in for a pretty big surprise when things start working out differently than you had hoped. Since you're here reading this though, you're in good shape - today, we're debunking five of the most common retirement myths.

Myth: There's nothing easier than retirement.
Fact: Yes, your day to day will likely be less stressful during retirement than when you were heading into work, but it's not going to be so easy right away. First and foremost, you'll need to adjust to life where your time is used differently, and of course there's going to be some getting used to where your retirement budget is concerned.

Myth: You have to move during retirement.
Fact: While a lot of people play around with the idea of renting or buying something new once they retire, you certainly don't have to. If you live up north and want to head south to enjoy all that the warm states have to offer, go for it, but don't feel like you have to pack up and sell your home just because your retired friends did or plan to in the future.

Myth: Social Security is all you need to support yourself.
Fact: What you receive from Social Security will absolutely help you cover your monthly and yearly expenses, but don't overlook the fact that your Social Security income may be lower than what you used to receive weekly or bi-weekly from your employer. That said, it's imperative that you have a retirement savings account set up as early on in your career as you can so that you can begin contributing years and years in advance.

Myth: Retirement planning isn't all that important.
Fact: Believing that retirement planning isn't important is one of the biggest mistakes you can make. If you want to be set up to be financial stable later in life, you absolutely must create a retirement plan and stick to it as the years go by. For anyone who just entered the workforce, meeting with a financial planner about retirement should be the first thing on your to-do list. Similarly, if you've been in the workforce for quite some time but have yet to set up a retirement savings account, you too need to meet with a financial planner as soon as possible.

Myth: You have all the say in terms of when you'll retire.
Fact: Although many do have the final say in when they're going to retire, it's important to realize that a lot of people are also forced to retire early or wind up retiring late due to external circumstances. The lesson here? Expect the unexpected and prepare for it, as you never know when life will make your decision for you.

Since myths like these are pretty easy to get caught up in, we encourage you to have a financial advisor that you can trust to answer any questions and set the facts straight. Here at American Investment Planners LLC, our retirement planners can do just that! Our retirement planners can help you develop a strategy that carries you through the retirement phase, and they would also be happy to answer any questions you have about the retirement planning process or retirement itself.

To schedule an appointment with one of our advisors and learn more, please email info@americaninvestmentplanners.com or call (516) 932-5130 today.

Why Does Financial Planning Matter?

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

Did you know that one-third of Americans have NO retirement savings? It's true, according to a GoBankingRates survey, and that wasn't the only shocking result that came from their study - 23% of Americans have less than $10,000 saved too. 

In order to be financially stable in retirement, as well as every other aspect of your life, it is extremely important to have a strategic financial plan in place. While some used to be, and possibly still are, under the impression that financial planning is only necessary for those who have a large sum of money to look after, the truth is that it's important for everyone regardless of income and current financial state. Here's some insight as to why:

Financial planning helps you define your goals.
It's common knowledge that we should all be saving for retirement, but that's just a general idea. What goals do YOU have specifically when it comes to things such as retirement, estate planning, even college savings for you or your children? When you sit down with a financial planner, you can start to more clearly define your goals and figure out what needs to be done to achieve them.

Financial planning can make you aware of current mistakes.
All too often people make financial mistakes that they aren't aware of, and in the long run, they can really hurt their long and short term goals. When working with a financial planner, they can provide some information about how your current actions are hurting or helping your financial state, and if you are making some mistakes, you can learn how to fix them!

Financial planning can help you become more comfortable.
It's not unusual to feel stressed about money - at some point, we all do. But with the help of a financial planner, you can start to feel much more comfortable about your current spending habits and saving habits as you develop a plan that will gear you towards success.

Now the question is, when should you start? Here's the answer: the earlier, the better! Financial planning doesn't just help with retirement planning and estate planning, it can also help prepare you for college, buying a home and the birth of a new child! 

If you're ready to sit down with a financial planner and start creating a positive future for yourself, contact the team here at American Investment Planners LLC at (516) 932-5130. More information about our financial planning services is also available by emailing info@americaninvestmentplanners.com today.

Five Signs That Tell You It's Time To Retire

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

While there is a universally accepted retirement age to guide you in knowing when it's time for you to stop working, everyone has the chance to make their own decision and figure out if they should retire early, right on time, or a bit late. But what factors should be considered to find the answer? Below, we've put together a list of five signs that will confirm that the time is right:

1. Your finances are in order. Since your retirement income will probably be different than what you receive while you work, you'll need to make sure that you can afford to retire before making any other plans. If your major debts are paid off, such as your mortgage or car loan, and you don't have too much outstanding debt to care for after that, you're probably in good shape!
2. Your children's finances are in order. It's no surprise that children are expensive, and if yours are still relying on you to help cover certain payments (such as student loans), you may want to consider sticking it out in the workforce for the next few years. However, if your children are financially independent and no longer look at you as a source of income, it will be easier to retire as all of your savings will just be for you!
3. You have health insurance. If you're approaching age 65, you'll need to make sure you are all signed up for Medicare so that your coverage starts as soon as possible. However, if you aren't eligible for Medicare yet, you'll need to have another source of health insurance that you can trust. Considering that medical expenses are quite costly, it's important that you have health insurance lined up so that your retirement savings don't get eaten up.
4. You've tested a retirement budget. To really tell if you're ready to retire, create your post-retirement budget and try to live off of it for about six months. If you struggle to stick to the budget you implemented, keep practicing while you still have some extra cash flow from your current employer until you finally feel like you can work with what may be a lower retirement income.
5. You feel ready. One of the biggest deciding factors in determining whether you are ready to retire is how you feel about it. If emotionally you feel like you need to keep working, do so. Retirement is certainly something that you'll need to get used to, so it's extremely important that you trust your gut and listen to what your heart is telling you.

Since almost every sign has to do with your financial state, the best thing you can do for yourself to be able to retire when you want to is to sit down with a financial advisor and create a retirement plan. Here at American Investment Planners LLC, we're staffed with many experienced retirement planners  and can help you develop a strategy that leads you to feeling financially secure after you've stopped working. To set up an appointment with a member of our team or for more information, please email info@americaninvestmentplanners.com today.

Buying vs. Renting in Retirement

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

For a lot of retirees, one of the biggest decisions they face in the years leading up to retirement has to do with where they'll live down the line - will they stay in their same house or look for something new? While some decide that staying put is the best decision, there are a ton of others who find that leaving their current location is the best move to make financially, but that opens the door for a new question - should they rent or should they buy?

If you're currently asking yourself the same question about renting vs. buying, the information below should help you as you start to make a decision.

Buying

Generally speaking, CNN Money explains that financially, it usually makes more sense to buy and own a home rather than rent. If your goal is to have a home that you can leave as inheritance, the same is true for you during retirement - according to Trulia, some of the cheapest cities in the U.S to buy during retirement (as compared to renting) include:

• The Villages, Florida
• Naples, Florida
• Venice, Florida
• Delray Beach, Florida
• Deerfield Beach, Florida

Renting

If leaving inheritance isn't as important to you, renting may just prove to be your best bet - Trulia explains, "if retired households don't care about the equity in their home at the end of their life, renting a home is the better option in 98 of the 100 cities with the most retirees." Knowing this, if you're just looking for a place to live during retirement and don't have someone to pass your home to upon your passing, renting may be your best decision financially in the long run.

At the end of the day, the biggest factor in deciding whether you'll rent or buy comes down to what you want to do after you've passed, so be sure to carefully consider your plans! 

At American Investment Planners LLC, we've helped tons of families with the retirement planning process, so we know what questions should be asked and what factors should be considered when it comes to figuring out if you should rent or buy during retirement - let us help you next! To make an appointment with one of our retirement planners, please send an email to info@americaninvestmentplanners.com or give us a call at (516) 932-5130 today.