But there’s another thing to look out for that can have the same disastrous effect on your retirement plans - Uncle Sam.

Most of us do our retirement investing with the goal of accumulating as much money in our retirement savings account as possible. When we think about taxes and our retirement investments, we generally are thinking only about whether or not we should invest with “pre-tax” dollars, use “tax-free” investments and so forth. We figure that later, when we start drawing on our retirement investments, we’ll worry about the taxes then and that, somehow, it won’t be a big deal because we supposedly won’t be in as high a tax bracket.

The truth, though, is that, without properly planning our retirement investing planning, Uncle Sam could take as much as 90% of your retirement funds!

As an example, once you reach 70 1/2, you have to begin withdrawing required minimum distributions from your retirement plan. If you don’t, you’ll have to pay a 50% penalty tax on any part of the required minimum distribution that you don’t withdraw.

If you’re still working, however, you can delay beginning your required minimum distributions until you do retire. (There are two exceptions, however. If you own at least 5% of the company or if your plan is an IRA, you have to begin taking your required minimum distribution even if you’re still working.)
Also, be aware that the payments you receive from ordinary retirement funds are taxed at regular income tax rates upon withdrawal. There’s no special ‘retirement rate’.

These payments are added to your total annual income and then taxed at the rate that applies to your income tax bracket. So, if you received a salary or earned significant income from sources other than your retirement plan, your retirement plan distributions may actually put you in a higher tax bracket than when you were simply working.

Then there is the so-called Death Tax. That is the taxes on your retirement investments that will apply should you die. They could eat up a huge portion of what you intended to leave to your heirs. One common solution nowadays is to buy a life insurance policy that will offset the estate taxes that will be charged on your Individual Retirement Account or IRA.

For many people, your tax situation in retirement could actually be more complicated than it was while you were working. And, if you’re like most people, you haven’t even thought about it. So start thinking. Consult with a professional. It’s money well spent, and if you plan to leave any serious amount of money to your heirs, they will appreciate your thoughtfulness and the fact that more money will pass to them and less will go to Uncle Sam.

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One of the most important things we can do to stay healthy, as we get older, is to control our weight. Most of us know that, but most of us also fall victim to “middle-age creep”, as the pounds creep on a pound or two every year, after we reach middle age.

Now a recent study from the University of Pittsburgh says that walking can go a long way in helping to control that extra weight. Researchers studied 3 groups of people. The first group was given general guidelines for exercise, which included moderate daily activity for 30 minutes a day. The second group was told to be active for about 30 minutes a day, plus they were given weekly classes on the importance of exercising. The third group was told to exercise 45 to 60 minutes a day, and they were given behavior modifications classes.

All of the study participants were told to eat a healthy diet but not to restrict the number of calories they ate. About 75% of all the participants chose to use walking for their exercise.

The results after 18 months? Averaged over the 3 groups, 40% of the folks in the study gained weight, about 7 pounds on average. These were primarily those people who did not exercise regularly. 60% lost weight, once again about 7 pounds. These were exclusively those who engaged in physical activity for about 40 minutes 5 to 7 days a week. That’s a 14 pound difference between the two groups, almost all attributable to exercise, primarily walking.

In another study, researchers at the University of North Carolina analyzed data on about 5,000 young adults over 15 years. They found that those who walked at least 2 hours each week gained about 9 pounds less than those who did not.

The results of these two studies are very clear. Time spent walking, or any other aerobic physical activity, is a very good retirement investment. It’s also a good investment of our time before we retirement so that we can stay healthy going into the retirement years.

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However, there are many tax-free self-employed retirement plan options available nowadays. For example:

Simplified employee pensions (SEP) let you contribute…and deduct…up to 20% of your self-employment earnings (25% if you’re an employee of your own corporation), up to $44,000 a year.

Keogh plans are a lot more elaborate, and can be either profit sharing or defined benefit pension plans. Keogh’s also allow tax-free contributions up to $44,000 a year for the profit-sharing option. Defined pension plan contributions have to be determined by an actuary and depend on your income, your target benefit (which can be up to $175,000 a year!), the number of years until your retirement and the anticipated investment returns. Obviously Keogh’s are more expensive to administer than other options.

An individual 401(k) plan lets you contribute up to 100% of the first $15,000 of your annual self-employment earnings/income (up $20,000 if you’ll be 50+ by the end of the year). In addition, you can also contribute and deduct another 25% of your salary (if you’re an employee of your own corporation) or 20% of your self-employment income.

And…if you want to put aside a little bit more and are willing to pay taxes now, rather than later, there’s always the Roth IRA in addition to whatever tax-free or tax deferred plan you’ve decided on. You’ll have to pay taxes on your Roth contributions, but your earnings will be tax-free! And, yes, you’ll only be able to contribute up to $4,000 a year ($8,000 if you’re married or $5,000/$9,000 if you’re 50+), but a Roth allows you to add to your retirement investing, and you’ll be able to withdraw all that Roth money when you retire and won’t have to pay a cent in taxes.

Not preparing for retirement when you’re self-employed is like not planning to pay the bills for your business. Sure, you can do it. But why? Think of all the trouble you’ll make for yourself. And just like all the other things you know you need to do for your business, the key is to get started as soon as possible.

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Social life is an important aspect of Active Adult retirement community living and these retirement communities provide ample opportunities for that.  Indeed, people looking into Active Adult retirement communities tend to look at the lifestyle choices first and the housing second.

Active Adult retirement communities often have a minimum age restriction.  These age-restricted communities are often referred to as 55+ Active Adult, and at least one person in the family has to be 55.  Age-restricted retirement communities don’t allow children as residents even with a 55+ family member.  Other Active Adult communities are simply age-targeted with no age restrictions.  You need to be clear in your mind which type you would prefer.

While residents of Active Adult communities buy their homes…be they single family homes, apartments, townhouses, manufactured homes or whatever…they also must pay homeowners fees to use the clubhouse, swimming pool, golf course, or other shared resources.  These communities will have a Community Association with Conditions, Covenants and Restrictions (CC&Rs) as well as association fees to cover things such as maintenance, landscaping, security, activity fees and the like.  Be sure to read the fine print carefully as these charges could mount up significantly and wreak havoc with your retirement investment finances.

Another thing to be aware of when planning your retirement move is that Active Adult retirement communities are usually not equipped to provide health care or assisted living services.  While you may not plan on needing such services, your retirement investment planning should take that need into consideration.

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Is there some reason you can’t have a ‘retirement job’ like that?

Not really.

Admittedly, we can’t control everything. But we can usually control more than we actually do. One of the things we can control is the effort we put into making our dreams come true.

For example, I remember reading something once about the difference between dreaming of being an author and of being a writer. People who dream of being an author plan on writing once they have the time, but people who dream of being a writer actually write. They don’t wait for the time…they make it, and just wish they had more.

For many of us, retirement is a time where all our excuses hit a brick wall, particularly if those excuses are about starting our own business or otherwise working for ourselves. For many retirees, that brick wall stands there firm and strong even when we do finally have the time.

But retirement is actually a great time to take that final step. Sure, we may really need extra money, but we no longer have the excuse of not enough time. All we have to do is face the truth. The truth being that many of us are actually scared to death to take that final step.

Tomorrow we’ll talk about some of the excuses people give for not taking that last step, and what we can do to overcome those excuses.

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Many of us have dreaming of a certain job. Maybe we wanted to be a writer or a painter or take photos to sell at craft fairs. Waiting for retirement was a great excuse for not taking final step earlier. But what excuse do you have now?

“I have to get a part time job. We need the money to make ends meet.”

OK. So get the part time job. That still leaves you with a lot of extra time you didn’t have before. And your business could bring in more money, too. What’s your excuse now?

“I can’t afford it. I don’t have my former level of income any more.”

Yeah. What’s your point? You already knew that would happen. You knew it while you were working. What’s different now?

Face it. The only thing keeping many of you from finally trying is you.

There’s nothing wrong with wishful thinking. Of talking about doing something you know you’ll never do. Or, perhaps more important, admitting that you’ll never do it. Heck, I’ve recently talked with friends about my never-to-be-achieved dreams…and they’ve shared theirs with me, happy to know that it’s OK to finally admit to them.

But…fear shouldn’t keep you from trying to do something you’re perfectly capable of at least attempting.

There’s a big difference between knowing you’ll never really go skydiving, even though you’ve always thought it would be the coolest thing in the world to do, because you’re terrified of heights and have artificial knees…and not making the slightest effort to actually write the book you’ve always talked about writing. Or have you been too afraid to call anyone to offer your services as a private consultant, even though your experience is second to none? Maybe you figured that no one would really be interested in your silly little invention, even though it just might change the world. Now’s the time to find out.

The way to get your dream retirement job is to stop dreaming…and to take action. Taking that first step may be the hardest thing you’ve ever done…but it could very well be the most rewarding.

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One place you can start looking is at your old employer. Where I work, some of white-collar folks retire and register with the local temporary labor company. Yes, this company does provide warehouse workers and day laborers, but they have developed a very close working relationship with the large company where I work. Our company goes to them for skilled white-collar professionals to help out when we have the need.

It’s not unusual for someone to retire one week from our company and be back the next week as a “Kelly Boy” in the same department. Now of course our company’s rules prevent us from using these temporary employees to replace a permanent employee. Instead they are used in true temporary assignments of one to three months. This is fine with us, since these short-time assignments don’t threaten the full-timers, and it helps us out during crunch times.

If your pre-retirement employer is not a possibility for this, that doesn’t mean you don’t have skills that businesses will pay for. Or that your years of experience won’t be invaluable to them. However, retirees often can’t recognize those skills or be able to articulate them either on a resume or in an interview. Nor do they always know how to prepare themselves for that old bugaboo “we’re afraid you’re overqualified” and be able to handle it effortlessly in the job interview or earlier in their cover letter.

Fortunately there are many resources available to retirees looking for employment.

One resource is your state Department of Aging. The folks there can provide you with a list of services and contact information for appropriate employment resources in your area. If you are looking for work because you are a low-income retiree, there are additional resources available to you.

Another free government resource is your local One-Stop Workforce Center or whatever it’s called in your state. They can provide you with assistance in your job search.

Don’t overlook a temp agency, even if you don’t have the situation we have with my current employer. You may have discounted temp agencies in the past because you needed a full-time job, but not only do temp jobs often lead to permanent offers, but there’s nothing wrong with temp positions being your part time job.

Perhaps even more important, temp agencies (as well as One-Stop Workforce Centers) can work with you on updating your resume to reflect your strengths (not your age), help you practice your interview skills, and work on all those other intangibles that can make or break your retirement job search.

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Whatever the reason, more and more retirees have jobs…and more and more people expect to have jobs when they retire.

I know that a lot of retirees worry about their opportunities. After all, we’ve heard for years about age discrimination. And who really wants to be a Wal-Mart greeter?

Fortunately, the vast majority of retirees are looking for part time jobs, as that’s generally what they need to make a difference. And finding a part time job is a lot easier than hunting for a fulltime job when you’re older and not yet ready to retire.

Another good thing is that, as the population ages and more people retire, businesses are already finding that they still need new workers, but that demographics aren’t helping. If you have 3 people retire, but only 1 young worker to replace them…well, you do the math. As a result, the opportunities for older workers interested in working part time keep increasing.

Certainly, you may not be able to do the same job you did before you retired. But, so what? A growing number of businesses are becoming amendable to retirees reducing their hours to part time, by the way. Have you asked your employer about this possibility?

Tomorrow we’ll look at a couple of resources for finding jobs, full or part-time, after you retire.

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Now, granted, 42 is pretty young to be looking for a retirement job. But his situation does point out something many of us are going to be facing one of these days…when we retire, what are we going to do with all that free time?

I know, I know. You’re thinking you have all kinds of things to keep you busy. But do you truly have enough to last for 15 years? Or more?

If you’re one of the lucky ones, you have a passion that will, indeed, keep you busy. Something you’ve always loved to do which now fills up your time.

But the rest of us, unless we’ve always been couch potatoes, are going to need to do something or go stir crazy. Or, worse, die younger than we have to.

(And, yes, there are always going to be people who need to work after they retire because they need the money, but that’s an entirely different issue.)

The great thing about looking for a retirement job if you don’t need the money is…you don’t need the job because you need the money!

That opens up all kinds of possibilities. Oh, sure, you could volunteer somewhere. Volunteer opportunities are everywhere, but lots of us already do that. I’m talking about doing something new in our lives that we get paid for because what we do is worth getting paid for. After all, money has been a measure of how good we are or how much of a contribution we are making for most of our working lives, so it’s nice to know that we’re still worth something. Plus, working for free isn’t always what it’s cracked up to be.

But there are lots of jobs out there that could be just perfect for those of us who are retired from our previous jobs, but not retired from life. Even the Social Security laws are made so that we can continue to work and make a certain amount of money without affecting our benefits.

For example, seasonal jobs like park rangers are a great opportunity for retirees who don’t want to work all year round but love the outdoors. Or consider becoming a temp…taking work only when you feel like you want to work doing what you feel like doing. How about becoming a substitute teacher? You don’t need a degree in education to be a substitute teacher and to make a difference in young people’s lives.

Retirement doesn’t mean you have to putter around the house. Getting a new job can be a great way to spend your retirement!

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7. A home equity loan may be a better solution from your particular situation. Most states, with the notable exception of Texas, where I live, have made setting up a home equity line of credit simple. If you have enough equity in your house, and you have a good credit rating, you should consider a home equity loan. Unlike a loan from your retirement account, the interest you pay on a home equity loan is usually tax deductible.

8. There may also be special deals available that are better than a loan from your 401k account or a home equity loan. For example, at the time this is being written, several car companies are offering 0% financing for up to 60 months. If you qualify, this is a much better way to finance a new car that borrowing from your 401k account or using a home equity line of credit to buy a new car.

In conclusion, everyone’s situation is a little different. When you’re talking about $1,000’s of dollars and the impact of tax laws, it’s always best to get professional advice from an accountant or tax attorney. It may cost you $100 to $200 for a simple consultation, but it will be money well spent to find out what’s right for you and your situation.

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