Archive | October, 2012

Afraid to Invest for Retirement

After the last ten years, it’s hard to know which end is up when it comes to planning for retirement. Many of us, confused, depressed and without a nest egg, find that we are afraid to invest for retirement.

Afraid to invest for retirement

And it gets worse. Many of us are also trying to plan and save for our children’s college and other major expenses we know are coming. Here’s an example:

Tom, 41, and Gianna, 37, have dreams of a solid financial future. But the couple, parents of a 6-year-old, are at the point where they’re not sure what to do next.

“How do I make my money earn more for me without taking excessive risk? We are frozen in indecision,” Tom says. “I fear that we are not contributing enough (for college savings).”

They’re also concerned about whether or not they have enough life insurance.

Kim Viscuso, a certified financial planner with Stonegate Wealth Management says,“Many Americans feel that they are frozen in indecision even if they are fortunate enough to have good jobs,” Viscuso said. “They may feel grateful to have a good job but they are not sure how much savings is enough. They want to know where to invest their savings so it can earn more without taking excessive risk.”

There is no easy solution. Investing, like anything else, requires a commitment of time and energy even to learn the basics. And if you want to feel confident enough to discuss your retirement needs with a financial professional, or even tackle the challenge of retirement planning yourself, the more you know, the better prepared you’ll be. One thing’s for sure, though. If you want to be prepared for retirement, you can’t be afraid to invest for retirement.

Click here to learn more about planning for your retirement

Posted in Creating a Personalized Retirement Plan, Planning for Your Retirement, Retirement Investment Options, Retirement Plan Challenges0 Comments

Frightening Facts About Retirement Savings

If you’re concerned about having enough money for retirement, you should be. Although it’s recovering, the US economy is still a mess and world events could easily trigger another recession.

It’s tempting to bury your head in the sand and hope for the best. Don’t do it. Frightening facts about retirement savings should motivate you to accelerate your retirement plans.

Frightening facts about retirement savings

Here are just a few sobering facts that may cause you to reevaluate what you’re doing to plan for retirement.

  • A 65-year-old couple retiring in 2012 is estimated to need $240,000 to cover medical expenses throughout retirement.
  • Just 14% of American workers are very confident they will have enough money to live comfortably in retirement.
  • Only 16% of American workers are very confident that their investments will grow in value.
  • For a low earner retiring at 62 — Social Security replaces 40% of pre-retirement earnings. This is unlikely to provide for a comfortable retirement.
  • Nearly 75% of retirees have not saved enough and said they would save more if they could do it all over again.
  • More than one-third of all households end up with no employee-sponsored retirement plan at all during their entire work lives and others, who move in and out of coverage, end up with inadequate 401(k) balances.
  • 60% of workers report that their total household savings and investments, excluding the value of their home and any defined benefit pension, is less than $25,000.

There is no doubt the financial situation is serious. For many of us there’s simply little or no time left to plan and invest for our “golden years.” We have to make do with what we have. Frightening facts about retirement savings should be a wake up call for all of us to do what we can — now.

Click here to read more frightening facts about retirement savings.

Posted in Planning for Your Retirement, Retirement Plan Challenges, The Economy0 Comments

Generate Retirement Income With Immediate Annuities

Planning for an uncertain economic future has become a passion for many people, especially those nearing retirement. One way to take some of the guesswork out of your planning is to generate retirement income with immediate annuities.

Generate retirement income with immediate annuities

Buying an immediate annuity is something like creating a pension plan for yourself. Here — very briefly — is how it works. When you purchase an annuity, you turn over part (or all) of your retirement savings to an insurance company and in return, you receive a monthly payment for the rest of your life. It certainly takes the guesswork out of retirement investing!

You can buy an immediate annuity where the monthly income is fixed at a specific dollar amount or, if you want to spend more, your income can be increased at a fixed annual rate, say three percent, or can be adjusted for inflation. An inflation-adjusted annuity neatly takes care of two significant risks that you face in retirement — the risk of inflation and the risk of outliving your retirement savings.

You can also protect your spouse or partner with a joint and survivor annuity, which pays a monthly income as long as either one of you is alive.

The downside — and there always is one — is that once you’ve made the decision, you’re usually stuck; with most companies, the decision is irrevocable. “Once you give control of your money to the insurance company, usually you can’t change your mind and get your money back or access your savings.”

An immediate annuity can often provide a higher monthly “paycheck” than other options. As you consider the best way to prepare for your retirement, you may want to generate retirement income with monthly annuities.

Click here to read more about how to generate retirement income with monthly annuities.

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Reduce Your Debt Before You Retire

Unlike their parents, many Baby Boomers are going into retirement carrying a large amount of debt, often as a consequence of attempting to maintain an unrealistically high standard of living. Although it’s a common attitude, it’s not a wise one. It’ much better for you — as much as possible — to reduce your debt before you retire.

Reduce Your Debt Before You Retire

Retiring with minimal or no debt is one of the most effective ways to make your retirement savings go further. Minimizing or eliminating debt repayment in retirement reduces interest costs and immediately increases cash flow. Likewise, downsizing to a smaller home or apartment is a great way to reduce mortgage costs and utility bills.

Use the years leading up to retirement to your advantage. There’s a growing trend of retiring baby boomers staying in debt in order to maintain their current lifestyles. However, paying off debt and boosting contributions to savings will help you to continue enjoying your current lifestyle better than paying a creditor each month for the privilege. While emergencies do happen, careful planning and saving is still the best way to stay out retirement debt-trap.

It’s far more prudent to cut back now to a lifestyle that will be sustainable in retirement than to find yourself in a position where you’re paying a creditor every month for the privilege of living comfortably.

Click here to read more about the importance of starting now to reduce your debt before you retire.


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Retirement Plan Challenges for Women

Most of us have been hit hard by the Great Recession in some way, seeing high unemployment, limited job opportunities, declining home values and the loss of billions of dollars in our retirement plans. Overall, though, women have it much worse than men. Retirement plan challenges for women loom large.

Retirement Plan Challenges for Women

There are several reasons for this disparity:

  • Income Gap – Many women are still underpaid compared to their male counterparts.
  • Unemployment – While men were hit harder by rising unemployment, they are recovering more quickly as well, with may jobs that are traditionally “woman-oriented” – like teachers, nurses, etc. – still suffering higher unemployment than other sectors of the economy.
  • Retirement Savings Plans – More women than men are single parents and struggle to make ends meet, leaving little or nothing for retirement savings.
  • Health Insurance – Statistically, women live longer than men, requiring more money to pay for insurance over their lifespans.

It can be a very difficult situation and women are right to be concerned.

“Many older women are frightened,” says Heidi Hartmann, president of the Institute for Women’s Policy Research. “They just never thought that they could be in their 50s or early 60s and not have a job. They have seen their savings, their home value and their retirement all decline because they’ve had to use it to live. And they don’t know how to rebuild it.”

Retirement Plan Challenges for Women, in many cases, are much greater than they are for men, although all of us are faced with daunting obstacles.

Click here to read Retirement gender gap: Older women face a host of financial challenges, written by Christine Dugas for USA Today

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Postponing Retirement Has Become a Reality for Many

Over the last few years, many Americans, especially low- and middle-income workers, have watched their retirement dreams vanish like dew in the hot morning sun. Home values have plummeted and many retirement funds have lost fifty percent of their value — or more, meaning postponing retirement has become a reality for many.

While we do seem to be coming out of the “Great Recession” — corporate profits are up, housing prices seem to have bottomed out in most areas, and the economy is slowly adding new jobs — it will be quite a while before we’re back to where we were. And that’s bad news, especially for those in the 55 to 64 age bracket, many of whom will now have to work to 70 and beyond to meet their needs.

Retirement Roadblocks Mount for Many

Denise McColister, of Dallas, had hoped to retire at 62.

“At 45, I felt really secure,” the Dallas resident, now 55, recalled. Back then, her husband made good money, and their house was paid for.

Then he became disabled and their house, which they had borrowed against, plummeted in value. Now, instead of padding her financial cushion, she’s working a part-time call center job while hoping for a better position. There’s no retirement in sight.

“I’ll probably be working until I’m called home,” she said.

Working until 70 to maximize your Social Security benefits, which max out at that age, is one option. Downsizing now, to reduce expenses and maximize contributions to your retirement plan is another.

Unfortunately, there are no easy answers. We’ll be recovering from this devastating financial meltdown for a long time to come and postponing retirement has become a reality for many.

Click here to read Retirement Roadblocks Mount for Many posted by Evan Bedard on October 1, 2012 in Latest Financial News

Posted in Planning for Your Retirement, The Economy0 Comments

Learn About Retirement Planning from Pro Athletes

We all do it: Watch pro sports and wonder what it would be like to make that kind of money, do something you love, and then retire with a cushy lifestyle.

Turns out, retiring from a career as a professional athlete may not be as wonderful as we think it is. There are many pitfalls and there’s lots we can learn about retirement planning from pro athletes.

Retirement Plans for Pro Athletes and What You Can Learn From Them

First Steps

According to Andre Mirkine, president of the Sports Financial Advisors Association, “They’re (the athletes) not going to be able to put away in qualified retirement plans enough money to live on.”

Sound familiar? You’re not alone. Many – perhaps most – of us are in a similar position. We just don’t have adequate funds or time to fully fund our retirement. By the way, “qualified plans” refers to retirement options with tax advantages.

Step one. Figure out where to put the money you are able to save so it will do you the most good. There are lots of options which we’ll discuss in more detail in future posts.

Step two. Remember: if it sounds too good to be true, it probably is.

“Sometimes, former athletes run out of retirement savings chasing after wild investment deals,” says Pete D’Arruda, a financial planner who frequently advises athletes.  Enough said?

Step three. What do professional athletes’ options include that you should look for as you plan for your retirement?

  • Pension Plans. If you can find a company that still offers pension plans, you’re lucky. Incredibly lucky. Most have switched over to 401(k) plans, which benefit the company, but can really stick it to the employees. Major League Baseball pensions “are reputed to be among the most generous in sports.” Players receive full pension benefits after 10 years of service time and can be eligible for $200,000 a year for life at age 62. If you’re young enough and you have the skills, the MLB is the way to go.
  • Health Care Coverage. It’s tough to find health care coverage that carries over into retirement, but this can be a huge financial benefit as you age. For example, MLB members with at least four years of service can continue their health care coverage and pay only 60% of the cost of their chosen plan.
  • 401(k) Plans. This is the most common retirement plan currently being offered. The NFL offers players a 401(k)-type plan called the NFL Player Second Career Savings Plan. It provides an employer match of up to $2 for every $1 contributed by the player. Employer matches are the “goose that lays the golden egg” of 401(k) plans, both your contribution and your employer’s – and the profits from the investments – are tax deferred, the more your employer contributes the better off you are. But it’s not all roses, click here to learn how you may be getting burned by your company and the government.
  • Union Leverage. Players’ strikes. Management lockouts. As a fan, unions can be a pain in the neck. As an employee, however, many of the benefits we enjoy today are the result of union bargaining. In 1885, a group of nine players formed the Brotherhood of Professional Base Ball Players – and you know what they can do today, if they choose to. So, if there’s a union where you work, joining could be a good idea.

There are no shortcuts to retirement security, not even for professional athletes. But there are options that can ensure you get on – and stay on – the right path for a secure retirement and much we can learn about retirement planning from pro athletes.

Click here to read the article Go long: Retirement plans for pro athletes by Sonya Stinson |


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