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Make Better Plans for Retirement

The week of October 25 was National Save for Retirement Week. Did you hear anything about it? I didn’t. Be that as it may, the upshot is that Americans are not financially prepared and we need to make better plans for retirement.

This [is] an educational campaign to raise public awareness about the importance of long-term retirement planning. The program, created by bipartisan congressional action, encourages Americans to utilize retirement savings and investment plan strategies. The week also encourages individuals to reflect on their current financial situations and their potential for a secure retirement.

Make better plans for retirement

There are no hard-and-fast rules we can follow to provide for a secure retirement, but here are some thoughts on the process and how things look for Americans.

1. How much money do we need to retire? There’s no real rule of thumb.

2. Half of Americans aren’t saving for retirement.

3. 80 is the new retirement age?

4. The majority of middle-class Americans aren’t confident about the stock market.

5. Women are less engaged in retirement planning.

6. More Americans have tapped retirement funds.

8. Forty percent of Americans fear lack of retirement funds.

No matter how you parse the data, a secure retirement for most Americans is becoming the new American Dream and many of us will never achieve it. The only way to do it is to make better plans for retirement.

Click here to watch a short video clip and read more about how to make better plans for retirement.

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Tips on Retirement Planning

In my research, I occasionally come across something unusual. Like this. I don’t recall ever having seen anything from the Gonzalez Inquirer – Serving Gonzalez County, Texas and the surrounding areas since 1853,  but here are some great tips on retirement planning:

Don’t think of your home as a retirement asset.

Whether you are a new homeowner or near retirement, you should not think about your home as a retirement asset, for these reasons:

  • A home is, first and foremost, a place to live, and you will always need a place to live.
  • Your home is an inherently un-diverse investment.
  • A home may be subject to debt, which means it is less valuable than it appears and could be an ongoing expense when living in retirement.
  • Relying on a home as retirement savings tends to discourage other saving.

Maximize Roth assets.

A Roth IRA or 401(k) can provide tax-free income, if you hold the account for five years and have attained age 59 1/2.  Roth IRAs also have the added benefit of being exempt from the tax rules requiring distributions starting at age 70 1/2 .

I have to take issue with this one because of the fees and expenses involved with mutual fund investments (like 401(k)s and IRAs). In addition, as baby boomers retire in larger and larger numbers, they’ll have to start taking distributions which will certainly put a heavy strain on the price of stocks, possibly driving prices down and decreasing the value of all our retirement investments.

Have a retirement income plan.

Some financial professionals suggest 80 percent of your pre-retirement income is a good retirement income goal. With this goal you can then compare your expected monthly retirement income from Social Security and any pension plan to your target monthly retirement income amount.

Plan for inflation and increasing health care costs.

Inflation and health care costs are twin traps that can erode the value of your retirement plan if you do not consider and plan for them

Maximize Social Security as insurance protection.

For most Americans the decision to defer Social Security payments as long as possible is an important action to ensure not outliving one’s assets. Social Security is typically a large source of retirement income, and its value is enhanced because it is government guaranteed and provides inflation-adjusted payments.

Here, we also have a potential problem and it’s another big one, once again thanks to baby boomers.

The longer we wait to retire, the greater our payments are projected to be — if the system is still solvent. And that’s a big “if” especially if all the other boomers decide to do the same thing and Congress continues to play chicken with entitlement programs.

Stress test your retirement plan.

For example, how would your retirement plan work if your investments grow at 3 percent a year instead of 8 percent? Stress testing your retirement plan could suggest you change your planning assumptions.

It would be fair to say that at few times in our history have futures of so many been so precarious. It would be well for all of us to consider our uncertain economy and take advantage of these tips on retirement planning.

Click here to read more on retirement planning from the Gonzalez Inquirer. I’m sure they’ll appreciate the traffic to their website.

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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 | Bankrate.com


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