Tag Archive | "medicare benefits"

Retirement Is A Dream For Most Americans

Pension plans are – for most of us – a thing of the past. 401(k) plans are a disaster. The Federal government is making nasty noises about cuts to Medicare and Social Security. Sometimes is seems like government and big business are conspiring so that retirement is a dream for most Americans.

Retirement is a dream for most Americans.

Retirement is a dream for most Americans

With pension plans a distant memory, most of us — if we have any retirement savings at all — have money in a 401(k). But there’s a big problem with that and it’s virtually ensuring that most Americans will never have enough to retire.

The fact is, that it’s easy to take money out of your 401(k). Sure, there’s a penalty and you have to pay taxes on the money you withdraw, but when you need it, you need it and your 401(k) is a handy stash.

A large and growing share of American workers are tapping their retirement savings accounts for nonretirement needs, raising broad questions about the effectiveness of one of the most important savings vehicles for old age.

More than one in four American workers with 401(k) and other retirement savings accounts use them to pay current expenses, new data show. The withdrawals, cash-outs, and loans drain nearly a quarter of the $293 billion that workers and employers deposit into the accounts each year, undermining already shaky retirement security for millions of Americans.

And now, as the Federal government attempts to get its fiscal house in order, we hear rumors of cuts to Medicare and Social Security.

With policy makers eyeing cuts to Social Security benefits and Medicare to rein in the soaring federal deficit, and traditional pensions in long decline, retirement savings experts say the drain from the accounts has dire implications for future retirees.

‘‘We’re going from bad to worse,’’ said Diane Oakley, executive director of the National Institute on Retirement Security. ‘‘Already, fewer private-sector workers have access to stable pension plans. And the savings in individual retirement savings accounts like 401(k) plans — which already are severely underfunded — continue to leak out at a high rate.’’

The fact is that the interests of working Americans have never been truly served — with very few exceptions — by big business or government and now it looks as though retirement is a dream for most Americans.

Click here to read more about why retirement is a dream for most Americans.

Posted in Creating a Personalized Retirement Plan, Planning for Your Retirement, Saving for Retirement, The EconomyComments (0)

Tips If You Plan To Retire in 2013

If this is the big year for you, congratulations! It’s been a long haul, but that’s all in the past and it’s time to relax and enjoy the golden years. To make sure you’re able to do so, here are some tips if you plan to retire in 2013.

Make your retirement more enjoyable with these tips if you plan to retire in 2013.

Tips if you plan to retire in 2013

Unfortunately, you can’t just walk out the door one last time and wave good-bye. You still have things to do.

1. Make sure you are vested in your retirement benefits.

2. Strategize about when to claim Social Security.

3. Sign up for Medicare on time.

4. Protect your savings.

5. Develop a plan for spending down your assets.

6. Don’t forget to take required minimum distributions.

7. Consider maintaining your connection to the workforce.

Sure, it’s the end of your working career, but it’s also the beginning and there are lots of options available. Make your retirement rewarding and follow these tips if you plan to retire in 2013.

Click here to read more about tips if you plan to retire in 2013.

Posted in Medicare, Planning for Your Retirement, Retirement Plan Challenges, Social SecurityComments (0)

Myths About Social Security and Retirement

Social Security has been a major issue among retirees for some time now — along with their children who are afraid Mom and Dad will move in with them. With all the hype, it’s sometimes hard to dig down to the truth behind the stories — and it appears that it’s mostly hype that’s fueling our anxiety. So, to help relieve some of that anxiety, here’s the truth regarding some of the myths about Social Security and retirement.

Myths about Social Security and retirement

Myth #1: Social Security funds are running dry, so you should collect as soon as possible.

The most recent government-issued report projects that Social Security will run out of funding by 2033. This is earlier than previously expected, but doesn’t necessarily mean Social Security will be gone in 20 years. It means system revenues won’t be capable of paying 100 percent of promised benefits under the law. The Social Security Administration estimates that benefits could be reduced by 22 percent at that point and may continue to decline if Congress doesn’t intervene.

Meanwhile, an increasing number of Americans are taking Social Security at the minimum age of 62, according to SmartMoney. But experts insist that it pays to wait. For each year you hold off on collecting Social Security after reaching full retirement age – which is typically age 66 for baby boomers – you’ll get an 8 percent increase in benefits. So waiting till 70 means about a third more income.

While it’s true that funds are decreasing, taking them early does mean less money. On the other hand, as more boomers retire — even if they wait until 70 — they will put an enormous strain on the system. Hopefully this has been taken into account when doing the projections.

If you have money in a 401(k), IRA or other retirement fund, you shouldn’t rely too much on that, either. Most of these plans invest in mutual funds — primarily stocks — and when thousands of boomers start to take their money out of the market at the same time — well, I won’t say a crash is inevitable, but you really should take a look at your retirement investments, make sure you understand what’s going on and that they’re performing the way you expect.

This leads us to the second myth.

Myth #2: You’ll be able to live comfortably on Social Security alone.

If you’re counting solely on Social Security to support you after retirement, you might find yourself in a difficult financial situation: The average Social Security payment to a retired worker is around $1,234 per month – slightly more than the Federal minimum for a month’s wages.

So unless you’re prepared to supplement Social Security with savings or a pension, be prepared for a challenge. Consider cost-cutting measures, like minimizing housing expenses, as well as earning extra income. You can work and claim Social Security benefits at the same time.

Myth #3: You’ll be eligible for Medicare as soon as you can collect Social Security.

I know. It’s not strictly about Social Security, but Americans are woefully delusional about how much their medical care will cost after they retire. Most guess about $50,000. The truth is, it’s more likely to be about $250,000.

Americans can’t earn Medicare benefits until age 65, but can collect Social Security as early as 62. Exception: If you collect Social Security Disability, you’ll get Medicare coverage automatically after two years.

The Social Security program was never meant to be the sole source of income for retirees. Unfortunately, that’s become the situation for many of us. You can plan for a secure retirement — including Medicare and Social Security benefits — as long as you understand the myths about Social Security and retirement.

Click here to read more about the myths about Social Security and retirement.

Posted in Medicare, Planning for Your Retirement, Retirement Plan Challenges, Social SecurityComments (0)

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