Top 5 U.S. cities to retire in

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In terms of tax laws, cost of living and affordable quality healthcare, several U.S. cities and states stand out as being retirement-friendly. Other factors such as low levels of property crime, commuting and climate add to the benefits or retiring in some of these places. Although these are all important variables to consider when seeking a place to retire, it's also a good idea to review personal retirement goals with a financial professional in order to optimize financial aspects of retirement decision making.

1. Charleston, SC

Located in an area known for its tax friendliness and relatively low cost of living, Charleston offers warmer winters and numerous cultural charms for a multitude of retirees. Affordable access to beautiful public beaches and parks also make Charleston a great place to retire. According to Trulia real estate listing services, South Carolina properties rank in the middle tier in terms of average national costs.

2.  Louisville, KY

Home of the Kentucky Derby at Churchill Downs, Louisville is listed in Kiplinger's most tax-friendly states for retirees. It is also in the sixth least costly state to live in per the Missouri Economic Research & Information Center (MERIC). And while healthcare is not as affordable in Louisville as in other places, neighboring Indiana just a few miles away does score higher in the Commonwealth Fund healthcare rankings. Real estate in Kentucky is also more affordable than many other places in the country per the Trulia real estate heat map, and state crime rates are lower than average according to U.S. Census data.

3. Pittsburgh, PA

Pittsburgh offers some considerable financial benefits to retirees, many of which can be transposed to the whole state. Pittsburgh ranks among the five best U.S. cities for commuting and top 25 for retiring by Forbes, and the state is considered among the most tax-friendly to retirees by Kiplinger. Pennsylvania also scores higher in healthcare quality per the Commonwealth Fund, and low in cost of living per MERIC. Additionally, despite having relatively high inner-city crime rates, Pittsburgh has safe suburbs per Neighborhood Scout.

4. Oklahoma City, OK

Oklahoma places first among U.S. states with the lowest cost of living  which lowers retirement expenses for those living around Oklahoma City. Moreover, in addition to having affordable real estate prices, Oklahoma is also considered to have some of the best municipal and state taxes for retirees in the country per Kiplinger. U.S. News reports Oklahoma City to have comprehensive healthcare coverage, and retirement here may benefit those retirees seeking to live with a demographically younger population.

5. Honolulu, HI

Although Honolulu is among the U.S. states with the highest cost of living, it's rated among the top 10 safest cities to live in with populations above 500,000 by the Morgan Quitno Press State & City Ranking publications. This, nearby deflation of real estate purchase prices and its reasonable climate can offset some of those costs with lower property insurance premiums, heating and cooling costs. Additionally, U.S. News ranks Honolulu  among the best cities for public transportation. Honolulu is also ranked within the top 10 states for overall healthcare services by the Commonwealth Fund.

Advantages of Bi-Weekly Paychecks

Being able to see more earned income sooner is usually advantageous to seeing income later. Although biweekly literally means twice per week, the term is often used to refer to every two weeks. Several benefits exist to receiving bi-weekly paychecks, and those advantages can save money, reduce potential scheduling conflicts and even earn more money.

• 26 checks per year

Since bi-weekly is not twice a month, but every two weeks, there are 26 paychecks a year on this type of schedule. This means for two months of the year, three paychecks will be given to people getting paid on a bi-weekly basis. For example, if a year beings on January 1, by July the first day of the most recent pay cycle falls on July 1st, making the 2nd on July 15, and the third on July 29. The pattern repeats again with three biweekly paychecks in December.

• Available funds

Although paychecks all amounts to the same income total, it can be helpful to have a continual cash flow. In other words, an advantage of bi-weekly paychecks is a stream of income that is more frequent allows one to have more personal financial liquidity. Moreover, insufficient funds can cause checks to bounce, or overdraft fees to be triggered causing more cost than benefit.  

• Bill paying

With more liquidity, bill paying is often better facilitated making another advantage of bi-weekly paychecks.  Since bills may become due on separate dates throughout a calendar month, receiving bi-weekly paychecks can help ensure there is a new money installment to pay those bills with varied due dates. Although sometimes some loan bills can be rescheduled with a bank, this process generally cannot be repeated. The advantage of biweekly paychecks is that alternative solutions like this are less needed.

• Budgeting

Since budgeting involves managing money in such a way that bills are paid on time, and that money is allocated optimally, having a bi-weekly paycheck can also be beneficial to a budget. For example, without bi-weekly pay checks, everything is left to either the beginning or end of the month. This can create a greater workload for which time management also becomes essential. With bi-weekly paychecks, time for budgeting can also be spread out.

• Yield

An additional advantage of bi-weekly paychecks is more time for money to compound. For example, $100 placed in an account earning four percent compounded continuously on the 14th of January, and repeated every four weeks throughout the year has two extra weeks of compounding per month. Moreover, the yield earned on those deposits will be higher than it would be had the same amount of money from a monthly paycheck been placed in the exact same financial instrument.

Passive Income and Why It Is Important

Passive income is not necessarily money that is not worked for as the financial colloquialism would have it. The reason being the U.S. Internal Revenue Service's definition of passive income(1) is also used by accountants nation wide. For income to be passive by IRS standards it a) has involved significant material participation and b) is received from a business in which the recipient of said income was not directly involved via material participation.

• Formal definition of passive income

Definitive attributes of passive income are that it comes from 1) rental income and 2) business income as defined by the IRS. This definition of passive income is also shared by State Departments of Revenue and many accountants. Moreover, for tax purposes, what many believe to be passive income is not. For example, royalties on literature, capital gains and dividends all seem like passive income but fail the 'material participation test' (2) because of what they are not, rather than what they are. In other words, passive income must not be excluded from the eligible types of income to qualify.

• Passive income as financial colloquialism

The term passive income can also be defined as a financial colloquialism. In other words, just because the IRS defines passive income in one way doesn't mean this is the only meaning of the term. The IRS definition of passive income is designed to prevent tax fraud from phony deductible 'passive losses', and not because it seeks a monopoly on what passive income is.

To illustrate what the financially colloquial meaning of what passive income is, consider an affiliate marketing campaign where income is received from traffic volume. In such cases, that income may be referred to as 'passive' even though it is not passive income by more formal use of the term. So, just as many everyday English words have dual meaning, and so too can financial terms. Thus, understanding what passive income is can be thought of in multiple contexts.

• Passive income and residual income

Passive income may also be confused or interchanged with residual income. Residual income, like passive income, has multiple meanings. For example, in the mortgage industry, residual income is money left over after having paid off debt.(2) However, in accounting, Residual Income (RI) is something entirely different; specifically income after the subtraction of Return on Assets (ROA) as a percentage of total operating assets.(4) Furthermore, in business marketing, residual income may be thought of as meaning the same thing as the colloquial financial version of passive income

Summary

Passive income has a strict definition from a business and tax-planning standpoint, and this is the definition of passive income that should be understood. However, in understanding what passive income is, it is also useful to realize it is used to describe income that is not worked for in a current time period such as "income earned while sleeping". Even though work may have been done during the day, the income may not be earned until night time hence the affiliation with the word 'passive' and 'residual'.

Sources:
1. http://bit.ly/9pA7ZY (Internal Revenue Service)
2. http://bit.ly/aqvVSM(Investopedia)
3. http://bit.ly/9y14wb (Money Central Glossary)
4. http://bit.ly/9L9zo2 (All Business Glossary)