Tag Archive | "postponing retirement"

Invest More Conservatively After Retirement

Prior to retirement, you’ll probably want to take a little more risk in your investments to maximize your return, but you may want to invest more conservatively after retirement.

Invest more conservatively after retirement to protect your assets and financial security.

Invest more conservatively after retirement

Since you want to have as much money as possible saved when you retire, higher risk investments — with the associated higher returns — make good sense. Even if the market goes south, you’ll still have several years of employment to carry you through until the market rebounds. You might also consider working a few extra years to save even more.

The single biggest difference is that you have a lot more flexibility during your career when it comes to retirement planning. For example, if you have the bulk of your retirement accounts in stocks and the market tanks, you’ve got plenty of options for rebuilding the value of those accounts.

With years of work still ahead of you, you can simply sit back and wait for the market to rebound and eventually climb to higher ground. Or you can pump up the amount you contribute to your retirement accounts, which will hasten the recovery of your balances.

After you’ve retired, it’s a vastly different scenario.

Unlike during your career when you’re still putting money into your 401(k), IRA or other accounts, you’ll be pulling money out of your nest egg once you retire. And that creates a very different dynamic.

Specifically, the combination of investment losses from a market downturn, plus withdrawals from your account for retirement living expenses creates a double-whammy effect that can decimate the value of your portfolio and dramatically increase your chances of outliving your dough.

As a result, the same market meltdown that may be very unsettling during your career can be absolutely devastating after you’ve retired, perhaps even forcing you to radically scale back your standard of living to avoid running through your money too soon.

There is no single “right” answer to how you should invest — before or after retirement. But, because of your reduced earning power it’s wise to invest more conservatively after retirement.

Click here to read more about why you should invest more conservatively after retirement.

Posted in Creating a Personalized Retirement Plan, Planning for Your Retirement, Retirement Investment Options, Retirement Plan Challenges, Saving for RetirementComments (0)

Increase Your Retirement Savings

The secret to a financially secure retirement is simple: save enough money. But, as with most truisms, it’s much easier said than done. What’s a hard-working American to do? Here are some tips to help you increase your retirement savings.

Plan to work longer to help increase your retirement savings.

Increase your retirement savings

All of the following suggestions are much like “save enough money” — simple to understand, but sometimes very hard to do. If you’re successful however, you’ll have gone a long way toward ensuring a financially secure retirement.

  1. Make retirement saving a priority. If you want to increase the chances that you will stick to any course of action, you need to make it a priority.
  2. Figure out how much you need to save. According to the Employee Benefit Research Institute, more than half of Americans haven’t even calculated how much money they need to save for a comfortable retirement.
  3. Look at your current expenses. Now that you know how much money you should be putting toward retirement, it’s time to find that money…. Honestly look at where your money is going. Look for the waste. Stop spending money on things you don’t need (and probably don’t want), and put that money toward your retirement.
  4. Find ways to make more money. After cutting expenses, you still might not be hitting your mark. If this is the case, look for ways to make more money.
  5. Increase your automatic investment. Your best option for making sure that your retirement contributions increase is to automate your efforts.

And, one of my favorites:

Postpone retirement, or don’t retire at all (at least not in the conventional sense). Stay active. Find a part-time — or even a full-time — job doing something you really enjoy. Remember, you’re not working to replace your full-employment income, but to supplement your retirement savings.

Increase your retirement savings now and plan to supplement those savings after you “retire” and you’ll make that money go a lot further.

Click here to learn more about how you can increase your retirement savings.

Posted in Creating a Personalized Retirement Plan, Planning for Your Retirement, Retirement Plan Challenges, Saving for RetirementComments (0)

Working Longer May Not Save Your Retirement

Working longer is a frequently-sited strategy for ensuring a financially secure retirement and it offers many benefits such as more years of employment to save and maximizing your Social Security benefits. But just working longer may not save your retirement.

Working longer may not save your retirement, but it may help make your  golden years more fun, interesting — and rewarding.

Working longer may not save your retirement

There are many other factors that come into play when you consider postponing your retirement. How much you’re earning now is critical.

As you might expect, projections for the lowest pre-retirement income quartile are the most sobering. This group would need to defer retirement to age 84 before 90 percent of them would have even a 50 percent probability of achieving comparable pre-retirement living standards.

You’ll have to really love what you do to make working until you’re 84 seem attractive. The future looks brighter for those earning more, but not much.

The results improve with income levels, but even among those in the highest income quartile, 90 percent have only a 50 percent chance of having enough to retire by 70.

Even if you’re relatively young and plan to work longer, the projections are still grim.

When broken out by age, the news isn’t much better: For one-third of households in which the people were between ages 30 and 59 as of 2007, working until age 70 won’t provide adequate income in retirement.

One way to look at this and make the picture seem a little brighter is to broaden your definition of “work.” Even if you hate your current job and want to get out of it as soon as possible, your skills and experience may have many applications that will allow you to work less, generate income to offset your retirement expenses, and actually enjoy what you’re doing.

Working longer may not save your retirement, but it may help make your  golden years more fun, interesting — and rewarding.

Click here to learn why working longer may not save your retirement.

Posted in Planning for Your Retirement, Retirement Plan Challenges, Saving for Retirement, The EconomyComments (0)

Start Now To Get The Most From Social Security

Social Security may be the primary source of retirement income for many of us, so it’s important to start now to get the most from Social Security.

Start now to get the most from Social Security.

Start now to get the most from Social Security

The payment amount you’ll receive when you start receiving Social Security depends on many factors. Here are some things you can do to boost your payout when retirement time rolls around.

  1. Work for at least 35 years.
  2. Earn more.
  3. Work until your full retirement age.
  4. Delay claiming until age 70.
  5. Claim spousal payments.
  6. Claim twice.
  7. Include family.
  8. Don’t earn too much in retirement.
  9. Minimize Social Security taxes.
  10. Maximize survivor’s benefits.
  11. Make sure your work counts.

Some of these — like working for at least 35 years — require forethought and planning. You should start now to get the most from Social Security.

Click here to learn how you can get the most from Social Security.

Posted in Creating a Personalized Retirement Plan, Planning for Your Retirement, Social SecurityComments (0)

More Than Ever, You Need a Retirement Plan

Retirement prospects don’t look good for many of us, and that’s why, more than ever you need a retirement plan.

More than ever, you need a retirement plan.

More than ever, you need a retirement plan

A recent poll conducted by The Guardian Life Small Business Research Institute provides some hard data to support the sinking feeling many of us have about retirement — especially small business owners.

  • Fewer than 10 percent foresee as feasible, a traditional retirement in which individuals stop working in their mid-60s for a life of leisure
  • Two-thirds do not have a written retirement plan, and most of them are not sure if they will create one.
  • More than eight in 10 have started to save for retirement, but only half have consulted a financial advisor.
  • While the minority will have pensions, real estate and the sale of their business to fall back on, most will rely on their investments, Social Security and individual retirement accounts (IRAs).
It’s never too late to turn the situation around. Here are the basic steps you need to take to get back on — or stay on — the path to a secure retirement.
  1. Have a Plan.
  2. Understand Risk.
  3. Understand Your Retirement Investments.
  4. Save for More than Retirement.
  5. Be Realistic.

Finally, don’t panic. Analyze your situation and don’t be afraid to make the hard decisions. For most of us, retirement will be quite unlike we’ve imagined, but that doesn’t mean we’ll be miserable, especially if you recognize that more than ever, you need a retirement plan.

Click here to learn more about strategies for your retirement.

Posted in Creating a Personalized Retirement Plan, Planning for Your Retirement, Retirement Plan Challenges, Saving for RetirementComments (0)

Postponing Retirement – It’s Worse Than We Thought

If you’re like most Americans nearing retirement age, the future does not look promising. Millions of us who expected to enjoy our “golden years” in security are staring down the barrel of a financial gun. But, if you thought it was just the average working stiff that would never be able to retire, you’re wrong. When the rich are postponing retirement — it’s worse than we thought.

Postponing retirement — it’s worse than we thought

According to a recent survey conducted by Bank of America’s Merrill Edge:

Even with investment accounts having recovered much of their lost ground, so-called “mass affluent” people with between $50,000 and $250,000 to invest don’t think they have enough to retire when they had originally planned to. Of those surveyed, 56% said that they expect to retire later now than they thought a year ago, with only 7% expecting to retire earlier. That’s a big shift even from a couple of years ago, when only 42% were revising their retirement age upward.

And we all share many of the same concerns.

The things that wealthier Americans are worrying about mirror the concerns of the overall population. Affordable health care remains the primary concern, as costs continue to move higher. With other surveys estimating that the typical retiree will spend $240,000 on health care over the course of his or her retirement for out-of-pocket costs, that concern is quite justified. Few have the financial resources necessary to fund potential health care needs as well as other basic necessities, let alone the lifestyle they’d prefer to lead after they leave their careers for good.

Is it hopeless? I don’t think so, but it will take a lot of work — and a shift in our expectations — if we want to enjoy retirement.

From a personal finance standpoint, the good news is that Americans of means aren’t content to sit idly by and hope for the best. Rather, they’re taking steps to boost their personal accountability by managing their investments more actively.

Don’t sit idly by and hope for the best. Take steps to boost your personal accountability and manage your investments more actively. We may have to postpone retirement — but it doesn’t have to be worse than we thought!

Click here to read more about postponing retirement.

Posted in Creating a Personalized Retirement Plan, Planning for Your Retirement, Retirement Plan Challenges, Saving for RetirementComments (0)

You Can Salvage Your Retirement Plan

Even as our economy flounders out of the “Great Recession” and staggers toward the “fiscal cliff,” you can salvage your retirement plan.

You can salvage your retirement plan

The same principles of saving and investing that have worked in the past still apply today, in spite of what many “professionals” are saying. The first step is to build and execute your plan based on these four criteria:

  1. How much you currently have saved and can add to your savings each month.
  2. What long-run rate of return you’re aiming to receive.
  3. How much money you need to live each year and how bad inflation will be.
  4. When you plan to retire and how long you expect to live.

You may have little or no control over some of these factors, but others, you do.

You can decide that you don’t need quite as big a home in retirement as you did while raising a family. You can choose to work a few more years. Alternatively, you can choose to sock a bit more away or try to reach for higher returns.

Don’t base your decisions on what you wish had happened, how much money you’d like to have, or where you want to live. Work with the facts, please.

The first step in rebuilding your retirement is to figure out where you are now. As painful as it might be, open your plan statement and take a good, hard look at the numbers you see. That’s your starting line for your future.

After that, it’s a question of balancing your priorities:

  • Your time.
  • Your risk tolerance.
  • The amount you can realistically invest.
  • What sort of retirement lifestyle you want.

Take the time to face the facts – however bad they may be – make the necessary choices – however painful they may be – and you can salvage your retirement plan.

Click here to read more about how you can salvage your retirement plan.

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Why You Shouldn’t Retire

Yesterday, I wrote You May Never Be Able to Retire. Frankly, it was a little depressing, although it hinted at hope for a brighter retirement than many of us envision when we look at the money we have saved. There are some very good reasons why you shouldn’t retire.

Why you shouldn’t retire

The first thing we ought to do is put retirement into an historical context, because for most of history, no one retired.

Retirement first became a household idea in 1889 when German Chancellor Otto von Bismarck introduced the world’s first social security system.

Retirement as a norm in the U.S. began in 1935 with the introduction of Social Security. As part of the legislation, 65 was established as the retirement age. At that time, men could expect to live to 60, so the government figured few people would live long enough to even qualify for benefits. But those reaching 65 at that time could could expect to live another 12 years on average. Still, it was clearly never intended to fund a  retirement of two decades or longer. Hence, the introduction of the 401(k).

This, very quickly, brings us to the present and the 401(k) plans that have been praised — by some so-called professionals — as the salvation of our retirement; if we could just manage to put a little more of our hard-earned money into them.

Every day, we’re sold a bill of goods by the wealth management industry.We’re told that if we’re good little savers for the next 40 years, we won’t end up living in a box somewhere. Assets under management in the U.S. in 2009 totaled $31.4 trillion. Based on a 1% annual fee (it’s likely much higher), wealth managers generate $314 billion in revenue each year from those assets.

It appears that much of our savings is going towards providing fund managers with their own cushy retirement. Is that really the best use of our money?

Why shouldn’t you retire?

Laura Vanderkam is the author of several books about money and has written for many national publications including USA Today, CBS MoneyWatch and The Wall Street Journal. She asks:

“Rather than calculating how many lattes we must forgo to live off interest at age 65, why not put that same mental energy into figuring out what kind of work we wouldn’t want to retire from?”

This is important. You may not like the work you’re doing now, but what kind of work would you like to do that would keep you active, challenged and involved for as long as you choose to do it?

A second point, and equally important, is that every $10,000 you’re able to earn working in your senior years amounts to $250,000 you don’t need in savings. Someone who’s worked a physically demanding job their entire career might have to use their brainpower instead of brawn to earn the extra income. Uncomfortable as it might seem, this type of personal growth will keep you healthier longer, reducing your medical costs as you get older.

By simply deciding to keep working into your 80s, you help yourself in four ways: less savings required, personal development, mental stimulation and lower healthcare costs. It’s not what the retirement industry wants you to hear, but it’s so true. Do as much as you can for as long as you can.

Start now to think about what you’d like to do and how you can make money at it for as long as you want. You’ll be glad you did and will better understand why you shouldn’t retire.

Click here to read more about why you shouldn’t 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 EconomyComments (0)

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