Retiring from the workforce provides opportunities you may have been unable to take advantage of during your working years, including discovering new passions and devoting more time to the people you love.
(Family Features) Retiring from the workforce provides opportunities you may have been unable to take advantage of during your working years, including discovering new passions and devoting more time to the people you love.
Even though your income might be lower than when you were working full-time, being free of financial burdens like credit card debt or a mortgage may provide extra disposable income that allows you to explore hobbies, develop new skills or focus on spending time living life to the fullest.
In fact, if you’re over the age of 62, own a home and have equity in it, you can extend your retirement runway by borrowing against that equity. A home equity conversion mortgage, like those available from Guaranteed Rate, a leader in mortgage lending and digital financial services with more than 850 branches across the United States, can flip the roles of lender and borrower. Homeowners can remain on their property and generate income, provided they own at least 60% of their home’s equity and it is FHA eligible.
“These mortgages fit a very specialized segment of the marketplace, but for those seeking financial flexibility, they can be a game-changer,” said Jim Hettinger, executive vice president of operations, Guaranteed Rate. “Equity build-up over time is one of the most compelling reasons to purchase a home. These loans give long-time homeowners a way to enjoy the benefits of that equity in their retirement years – all while retaining ownership and continuing to live in the house they call home.”
While this type of loan shares many similarities with home equity loans, the requirements generally allow for more flexible terms for homeowners, who remain responsible for property taxes, home insurance and home maintenance. Over time, the loan balance increases with the understanding the mortgage will one day be paid off, usually by selling the home, providing the homeowner more flexibility and comfort during retirement. Meanwhile, homeowners receive money from their homes in the form of a lump sum payment or line of credit without making monthly mortgage payments.
Consider these ways to take advantage of a home equity conversion mortgage and get the most out of your retirement.
Travel With minimal limitations on vacation time in retirement, it’s possible to get out and explore both domestically and internationally. With the flexibility to take extended leave, retirees can even enjoy trips dedicated to a specific hobby or pastime, such as golfing, shopping, biking, attending sporting events, appreciating the arts and more. You could also consider purchasing a boat or motorhome to take your exploration to the next level.
Pick Up a New Hobby With more time now available, it’s possible to expand on hobbies you enjoyed while working or pick up an entirely new pursuit altogether. The possibilities are nearly endless, but some options to consider include gardening, dancing, reading, baking, hiking, collecting antiques, restoring furniture, golfing, bird watching, sculpting or wine or beer making, among others.
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Learn a New Skill Devoting time to pick up a new skill can help keep your mind and body sharp. Whether through formal classes or watching videos online to learn, speaking a new language, playing a musical instrument or cooking a new cuisine are popular options for enhancing your skills later in life.
To find more ideas to live better in retirement, or access the free education guide, visit rate.com.
Benefits of a Home Equity Conversion Mortgage (HECM) HECMs can provide peace of mind during retirement if you’re worried about making ends meet. Using the equity you’ve already put into your home opens up new sources of income while letting you stay in your own home. Consider these additional benefits:
Offers flexibility in drawing and repaying borrowed funds
No pressure to make a payment, even if interest rates increase
Untouched funds in your line of credit grow tax-free over time
Any remaining equity at maturity can be released to borrower or heirs
The line of credit stays the same, even if the home’s market value drops
Money spent on conventional mortgage payments can go to other needs
Photos courtesy of Getty Images
This is not a commitment to lend. The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and hazard insurance. The borrower must maintain the home. If the borrower does not meet these loan obligations, then the loan will need to be repaid. Otherwise, the loan must be repaid when the last borrower passes away or sells the home. Prices, guidelines and minimum requirements are subject to change without notice. Some products may not be available in all states. Subject to review of credit and/or collateral; not all applicants will qualify for financing. It is important to make an informed decision when selecting and using a loan product; make sure to compare loan types when making a financing decision. This material has not been reviewed, approved or issued by HUD, FHA or any government agency. Guaranteed Rate, Inc. is not affiliated with or acting on behalf of or at the direction of HUD, FHA or any other government agency. To find a Reverse Mortgage counselor near you, search the HECM Counselor Roster at https://entp.hud.gov/idapp/html/hecm_agency_look.cfm or call (800) 569-4287.
Simply put, a 401(k) is an employer-sponsored retirement savings plan in which employees contribute a portion of their compensation on a tax-deferred basis.
The employee is eligible at any age to contribute to a 401(k) plan and has the option to pay into these plans throughout their employment. Many employers match some or all of an employee’s contributions, making the plan even more attractive.
What about withdrawals?
Under Internal Revenue Service rules, someone with a 401(k) is required to start making monetary withdrawals from their plan when they reach age 73. Some people start withdrawing at an earlier age.
Someone with a 401(k) can withdraw funds from the plan early, and at any time. But the money amounts withdrawn will typically be deemed taxable income. In addition, those age 59 and a half and under will likely face a 10% penalty on the withdrawal, unless the employer’s plan allows for hardship distributions, early withdrawals or loans from your plan account.
The IRS has specific rules for these early withdrawals; if you find yourself in this situation, you should get help from a tax professional.
All withdrawals starting at age 73, which tax professionals call “RMDs,” are then taxable in retirement – presumably at a lower tax rate than the employee was subject to while employed and working. So these withdrawals starting at age 73 can be a very tax-efficient way of financial planning, including personal income tax planning, for later in life, especially in one’s retirement years.
Again, it’s important to get help from a tax professional to make sure you meet the IRS’ RMD dollar withdrawal requirements once you start withdrawing.
In calendar-year 2025, the most that an employee can contribute to a tax-deferred 401(k) plan annually is US$23,500, including the employer’s match. “Super catch-up contributions are allowed for employees over the age of 50 to their employer’s 401(k) plan each year indexed to inflation. In 2025, super catch-up contributions allow individuals age 50 and older to contribute an additional $7,500 beyond the standard limit, bringing their total annual contribution to $31,000. For those turning age 60, 61, 62 or 63 in 2025, the SECURE Act 2.0 allows a higher catch-up contribution limit of $11,250, resulting in a total allowable contribution of $34,750 in 2025.
When and why did 401(k)s become popular?
Before 1978, retirement savings options were limited.
In 1935, Congress created the Social Security Retirement Plan. This was followed by the Employee Retirement Income Security Act of 1974, which created individual retirement accounts, or IRAs, as a way for employees to save tax-deferred money for their retirement.
401(k) plans became popular with the passage of the Revenue Act of 1978 by Congress.
Congress saw 401(k) plans at that time as an alternative way to supplement Social Security benefits that all eligible Americans are entitled to receive upon retirement. In 1981, the IRS issued new rules and regulations allowing employees to fund their 401(k)s through payroll deductions. This significantly increased the number of employees contributing to their employers’ 401(k) plans.
As of September 2024, Americans held $8.9 trillion in 401(k) plans, according to the Investment Company Institute. A study published by the Pension Rights Center toward the end of 2023 using data provided by the Bureau of Labor Statistics concluded that 56% of all workers – including private sector and state and local government workers – participate in a workplace retirement plan. That equates to 145 million full- and part-time workers.
How are 401(k) plans affected by market rises and falls?
Contributions to a 401(k) are typically invested in a variety of financial instruments, including in the stock market.
Most 401(k) plans offer investment options with varying levels of risk, allowing employees to choose based on their personal comfort levels and financial goals.
Employers typically outsource the management of these 401(k) plans to third parties. Some of the largest companies managing 401(k) funds on behalf of employers and employees include Fidelity Investments, T. Rowe Price and Charles Schwab, to name just a few.
Because many of these investments are tied to the stock market, 401(k) balances can rise or fall with market fluctuations.
401(k) plans are a financial lifeline for many American retirees.Halfpoint Images/Getty Images
Should I be worried about the stock market tanking my 401(k)?
It depends on when you started making contributions, when you plan to retire and when you expect to start making withdrawals.
Employees with 401(k) accounts should only be worried about falling stocks if they need the money right now – either for retirement living expenses or for other emergency reasons. If you don’t need to take money out soon, there’s usually no reason to panic. History has shown that markets can rebound quickly; short-term drops often don’t signal long-term trends.
Over time, the stock market has experienced many periods of falling stock prices: the bursting of the internet bubble of 2000; the period after the events of 9/11; and the U.S. and global banking crisis of 2007-2010, to name but three.
But overall, over time, stock market returns have averaged 9% from 1994 to 2024, and this includes the periods of falling stock prices mentioned above.
So even if you are a baby boomer heading for retirement and your 401(k) has taken a hit in recent weeks, don’t panic. Bear in mind the truism that stock markets can always go down as well as up.
History suggests that in the long run, depending upon your plans and timing for retirement, working together with a trusted financial adviser strategically with regard to your 401(k) retirement savings is a good approach, especially during periods like we have seen in recent weeks in the stock market.
This article is for informational purposes and does not constitute financial advice. Consult with a qualified financial adviser before making financial decisions.Dr. Ronald Premuroso, Accounting Instructor, Western Governors University School of Business
This article is republished from The Conversation under a Creative Commons license. Read the original article.
(Family Features) Financial literacy is a critical skill that helps set the foundation for a stable and prosperous future. By understanding the basics of money management, teens can make informed decisions and avoid common financial pitfalls.
According to the annual Teens and Personal Finance survey, a study of teens ages 13-18 conducted by Wakefield Research on behalf of Junior Achievement and MissionSquare Retirement’s Foundation, 45% of high schoolers took a personal finance or financial literacy class at school. This is up from 31% in 2024, indicating the nation’s youth are interested in building a strong financial foundation. What’s more, of the students who took their school’s curriculum, 64% found it extremely or very helpful, yet despite this increase, data reveals knowledge gaps remain. In fact, 42% of teens surveyed are terrified they won’t have enough money to cover their future needs and goals.
“There is so much for teens to absorb when learning about finances and planning for their future, they often struggle to envision what lies ahead,” said Andre Robinson, president and CEO of MissionSquare Retirement. “Offering engaging programs that can boost financial knowledge and decision-making skills can only help to inspire young individuals to build a strong foundation of lifelong financial resilience.”
Consider discussing these economic topics with your teen to help make a positive impact on students’ financial readiness and get them ready for financial decisions they’ll face in adulthood.
Mastering Saving and Budgeting
A good starting point for teens is to create a simple budget that tracks income and expenses. Because only 36% of teens surveyed save a part for their futures when they receive money, this can help them understand where money is going and identify areas they may be able to save for the future. This is particularly important considering 68% of teens agree that saving for retirement is something they can think about later in life.
Understanding Credit
Credit is a powerful tool but can also be a source of financial trouble if not managed properly. It’s essential to understand how financial behaviors, like paying bills on time and keeping credit card balances low, impact their credit scores. A higher FICO score, which 80% of teens surveyed had never heard of or did not fully understand, can lead to better interest rates and more favorable loan terms.
Managing Common Debt Pitfalls
According to the survey, 43% of teens believe an interest rate of 18% on debt is manageable and can be paid off over time. However, it’s important to understand the true cost of debt and how interest rates can accumulate over time and lead to significant financial strain. Establishing good debt management habits early, such as avoiding high-interest debt and paying off balances quickly, can lead to a healthier financial future.
Investing and Planning Ahead
According to the survey, teenagers’ most appealing investing strategies are savings accounts, side hustles and keeping cash at home, and only 13% invest a portion of their money. Encouraging teens to learn about different types of investments, such as stocks, bonds and mutual funds, can help them make informed decisions and begin to build long-term wealth.
For more information on how to help teens improve their financial knowledge, visit ja.org.
Photo courtesy of Shutterstock
SOURCE:Junior Achievement
(Family Features) For some, tax season represents the opportunity for a return and some much-needed relief for their bank accounts. Yet for others, it’s time to write a check to Uncle Sam. Ensure you’re up to date on all things 2025 taxes with this guidance from the Consumer Financial Protection Bureau and the IRS.
Tax Deadlines
If you’re unable to file before the traditional April 15 deadline, you do have a few options. Filing for an extension provides an extra six months until Oct. 15, however, if you believe you will owe taxes, you’re required to estimate how much you owe and pay that amount alongside your extension form.
Filing Your Taxes
Each person’s tax situation is unique, but there is an assortment of options when it comes time to file. Some people (an estimated 100 million) are eligible to file their returns for free, such as seniors, those who speak English as a second language, those with incomes of less than $60,000, servicemembers and more. Be sure to check your eligibility for services like IRS Volunteer Income Tax Assistance, AARP Foundation Tax-Aide, The Tax Counseling for the Elderly, MyFreeTaxes, GetYourRefund, IRS Free File, MilTax and more.
Accessing Your Refund
Electronically filing and choosing direct deposit is the fastest way to receive your refund. The IRS typically issues refunds within 21 days, but issuance of a paper check may take 4-6 weeks. Make sure to have your account and routing numbers ready when filing your return. One alternate solution is to have your refund issued to a prepaid card that accepts direct deposit, but there may be fees involved. Check with the card provider to determine any applicable fees.
Watch for Scams
The IRS will not contact you by email, text message or social media to request personal or financial information. Scammers may impersonate the IRS to convince you to share personal information through the mail, telephone, email and beyond.
Find more tax tips and information at irs.gov and visit eLivingtoday.com for additional financial advice.
Photo courtesy of Unsplash
SOURCE:eLivingtoday.com
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Dr. Ronald Premuroso, Accounting Instructor, Western Governors University School of Business
This article is republished from The Conversation under a Creative Commons license. Read the original article.
(Family Features) Financial literacy is a critical skill that helps set the foundation for a stable and prosperous future. By understanding the basics of money management, teens can make informed decisions and avoid common financial pitfalls.
According to the 
(Family Features) For some, tax season represents the opportunity for a return and some much-needed relief for their bank accounts. Yet for others, it’s time to write a check to Uncle Sam. Ensure you’re up to date on all things 2025 taxes with this guidance from the 
