UK Plans Revived Pensions Commission to Tackle a Savings Crisis
The proposal announced by the Department for Work and Pensions on Monday comes almost 20 years after the original panel of experts — set up by then-Prime Minister Tony Blair to investigate the private savings regime in Britain — issued its final statement.
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Yahoo
11 minutes ago
- Yahoo
This Future Retiree Plans To Downsize His $1M Home To Cover Health Insurance — Is It A Smart Move?
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. As retirement approaches, one of the biggest unknowns many Americans face is how to pay for health insurance before Medicare kicks in at age 65. One future retiree recently shared his strategy online: sell his $1 million home, downsize to a smaller, less expensive property, and use the equity to bridge the gap until he qualifies for Medicare. It's a move some have considered — but is it a good idea? Trading Square Footage for Subsidies Posting to the r/retirement subreddit, the 60-year-old homeowner explained that he and his wife plan to retire in a few years. Their house is paid off and valued at around $1 million. With grown children and 3,000 square feet of space, they feel ready to downsize. The plan is to sell the current home and buy a $300,000 to $400,000 replacement. Don't Miss: Be part of the breakthrough that could replace plastic as we know it— $100k+ in investable assets? – no cost, no obligation. The equity from the sale would be used for living expenses, with a specific goal: keeping their Modified Adjusted Gross Income low enough to qualify for Affordable Care Act subsidies. This would help offset the cost of health insurance until they become eligible for Medicare at 65. Several Reddit users responded with encouragement — and caution. The Cost of Healthcare Before Medicare Healthcare expenses can be a major burden for early retirees. According to the Milliman 2024 Retiree Health Cost Index, someone retiring at 60 instead of 65 can expect to spend 56% to 89% more on healthcare over their lifetime, depending on the plan they choose. The earlier you retire, the more years you must cover before Medicare, often at a higher out-of-pocket cost. Some Reddit users suggested exploring the Consolidated Omnibus Budget Reconciliation Act, or COBRA. This program allows individuals to continue their employer's health insurance for up to 18 months. One retiree said it cost them $750 a month — cheaper than ACA options at the time. But for someone retiring at 60, COBRA wouldn't cover the full five-year gap. Trending: This AI-Powered Trading Platform Has 5,000+ Users, 27 Pending Patents, and a $43.97M Valuation — Risks of Relying on Home Equity Selling a home to unlock cash might offer flexibility — but it comes with trade-offs. Once the home is sold, that equity is no longer growing, and there's no guarantee the market will stay favorable if the retiree needs to sell quickly. Another consideration: capital gains tax. The Reddit poster said they bought the home for $490,000. If they sell it for $1 million, they'll be close to the $500,000 capital gains exemption for married couples. But with selling costs and home improvements factored in, they may still owe tax if the gain exceeds the limit. Reddit users also warned about downsizing regret. Some retirees have moved, only to later wish they had stayed in place — and found it difficult or expensive to reverse at the Bigger Picture While downsizing could reduce living costs, relying too heavily on that equity could be risky. With only 1–2 years of living expenses in a Roth IRA, the couple's ability to weather changes — like a drop in home values or rising insurance premiums — may be limited. That's why several commenters emphasized the importance of professional advice. As one noted, income, savings, and expenses are all different — and managing them requires careful planning. By exploring multiple options, testing assumptions, and working with a financial planner, future retirees like this one can build a plan that works — without putting their long-term stability at risk. Read Next: This Jeff Bezos-backed startup will allow you to . Image: Shutterstock This article This Future Retiree Plans To Downsize His $1M Home To Cover Health Insurance — Is It A Smart Move? originally appeared on
Yahoo
11 minutes ago
- Yahoo
I'm a Financial Advisor: 15 Retirement Mistakes That Could Cost You $100K or More
Retirement planning seems straightforward until you realize how many ways it can go wrong. Financial advisors see the same costly mistakes over and over again — errors that can easily cost retirees six figures or more. Find Out: Read Next: Here are the biggest retirement blunders that could derail your financial future. Pay close attention and save a bundle! The Foundation Killers These mistakes could really mess things up from the start. 1. Living Above Your Means 'If you spend more than you earn, your future retirement savings shrinks,' explained April Taylor, financial coach and founder of Jr. Moguls. This isn't just about fancy cars or expensive vacations. Instead, it's about consistently spending more than you bring in, which makes it impossible to save properly for retirement. Learn More: 2. Delaying Retirement Savings Taylor shared that 'time is your biggest asset — the earlier you start contributing to a retirement plan, the more opportunity you have for your money to grow.' She added that even small, consistent contributions can build into six figures over time. For self-employed individuals, this delay is particularly costly. Gina Stoddard, chief of staff at Broad Financial, said entrepreneurs who stall on starting retirement accounts 'can miss out on nearly $30,000-$150,000 a year depending on their income over the course of their career.' 3. Ignoring Inflation 'Inflation is inevitable, and rising costs must be factored into your retirement plan,' Taylor said. In other words, if your money isn't growing, it's losing value. That can be a real shocker when it's time to retire. The Diversification Disasters With these mistakes, if one thing goes wrong, they could really cost you. 4. Putting All Your Eggs in One Basket Stoddard warned about being 'overly concentrated in Wall Street products and traditional equities.' She explained that 'your savings can possibly undergo a dramatic dip if the stock market descends.' The potential cost of failing to diversify? 'Upwards of $100,000+,' she said. 5. Ignoring Alternative Investments 'Alternative investments are a proven method to achieve diversification, as their value typically works inversely to the public market,' Stoddard noted. She mentioned that self-directed retirement accounts can invest in real estate, precious metals, private businesses, creative pursuits and more. 6. Being Too Conservative Too Soon Retirement can have a 20- to 30-year time horizon, said Bethany Dever, vice president and relationship manager at Rockland Trust. She explained that 'moving too much of your assets to bonds or cash (80%-100%) too early in retirement in the hopes of protecting your nest egg can cause damage to your long-term goals due to underperformance.' Potential cost to a $1 million portfolio: $500,000 to $1.2 million in potential growth. The Tax and Legal Landmines Taxes and other legal matters can get more complicated in retirement, so you'll want to make sure to avoid these mistakes. 7. Forgetting To Update Beneficiaries 'I worked on a case where the ex-spouse received $250,000 from an IRA because the beneficiary designation had not been updated when the divorce occurred,' said Seann Malloy, founder and managing partner at Malloy Law Offices. He added that it's important to periodically revisit and ensure these designations remain 'in harmony' with your estate plan. 8. Underestimating Tax Impact on Withdrawals Malloy explained that clients often don't understand that drawing particularly large sums from tax-deferred plans can push them into higher tax brackets. He gave an example: 'A $100,000 withdrawal could incur $30,000 in taxes if it kicks your income into the 32% bracket.' 9. Violating IRA Rules Stoddard warned about prohibited transactions in self-directed IRAs, which 'could potentially trigger immediate taxation on the full amount within your IRA, plus withdrawal penalties.' She estimated this could result in a loss of about $50,000-$100,000 in taxes. The Social Security and Healthcare Missteps Social Security and healthcare are incredibly important in retirement, so make sure you have those ducks in a row. 10. Claiming Social Security Too Early Dever shared that claiming at age 62 instead of waiting for full retirement age can reduce monthly benefits by up to 30% permanently. She also pointed out that 'for every year you delay claiming Social Security past your FRA, you get an 8% increase to your benefit.' Potential cost: $100,000-$300,000 in lost lifetime benefits. 11. Underestimating Healthcare Costs Taylor warned that 'ailing to plan for healthcare in retirement can quickly drain your savings. Dever cited a Fidelity study showing that 'a 65-year-old couple retiring today will need $330,000 for healthcare expenses in retirement.' Potential cost: $300,000 The Withdrawal Catastrophes Retiring doesn't include just taking out your money whenever you want. There are good and bad ways to do that. 12. Cashing Out 401(k) Early Cashing out of your 401(k) early can be a costly mistake. 'Not only will you incur penalties and taxes now, but you'll also impact your future retirement by reducing the time your investments have to grow,' Taylor said. 13. Missing Required Minimum Distributions Both Stoddard and Dever emphasized the costly penalties for missing RMDs. 'If you miss the deadline to withdraw your RMDs, you could be fined with a 25% penalty of the missed allotted withdrawal amount,' Stoddard explained. This could range anywhere from $10,000-$50,000. 14. Withdrawing Too Much Too Soon Dever referenced the 4% rule, explaining that 'having a more than 4% distribution rate early on can cause a depletion of assets later in retirement.' Potential cost: Running out of money five to 10 years early. The Strategy Mistakes A retirement without a strategy is not the retirement you want. 15. Not Using a Financial Planner Heath Harris, founder of Compound Advisory, spoke about one of his clients who sold an HVAC business without tax planning. It was a mistake. 'Between federal capital gains, NIIT and state taxes, he paid close to $3 million straight to the IRS,' he said. With proper planning, Harris estimated they 'could've saved him about $1.7 million.' The moral of the story? It might be smart to seek expert help from, well, an expert. (This is especially true when dealing with large sums of money.) More From GOBankingRates 5 Cities You Need To Consider If You're Retiring in 2025 This article originally appeared on I'm a Financial Advisor: 15 Retirement Mistakes That Could Cost You $100K or More Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
14 minutes ago
- Bloomberg
Wise Turned to US as Some Investors Pushed Back on Dual Shares
Wise Plc's plan to shift its primary listing out of London gathered momentum after some existing shareholders rebuffed a proposal that would have allowed Chief Executive Officer Kristo Käärmann to keep his so-called golden shares for many more years, according to people familiar with the matter. In late 2024, Wise's board began consulting with shareholders on a plan that would allow the company to preserve in London the dual-class share structure that gives Käärmann de facto voting control in the company, the people said, asking not to be identified discussing non-public information.
