QUESTIONS
WITH ANSWERS !
"I'm
Saving a Little Now & Then…"
So your retirement funds are limited and/or
non-existent. You may have had your 401(k) impacted by economic
downturn. Perhaps you are re-thinking what retirement means to
you and coming up with new definitions. Stock market losses in
the last several years may have changed it all for you, especially
if you had been investing for a long period of time and your portfolio
lacked diversification. Instead of the "magic 58" when
you planned on your world travels beginning, they may not start
until "golden 65."
The Retirement Confidence Survey has cited that
approximately 24% of today's retirees work part-time; however,
over 66% of today's employment force expects to be working part-time
after they retire. It is possible that we will not completely
stop working, but simply work less.
The American Savings Education Council (ASEC)
in Washington, D.C. says that only 25% of Americans are "very
confident" that they will have enough money to live comfortably
upon retiring. What is significant about their findings is that
they also report that 4 in 5 individuals who are asked if they're
saving for retirement will indicate that they are doing so.
Looks like we need to gain some confidence,
doesn't it! What do we need to start doing to gather some confidence?
Do not save money without calculating how
much you need to save! Know what your realistic goals are!
Financial planners often estimate that you will require 60% -
85% of your current gross income to maintain your current lifestyle
at retirement. This is a very broad-stroke generality, but is
based on projected costs of which you are now aware and your activity
planning for that period.
This is not easy to calculate as inflation and
lifespan expectancy must be considered; however, your very best
estimate is critical. The good news is that you will live longer
after "official" retirement than those who came before
you…up to 30 years or longer! Visit THE LEARNING CENTER'S
CALCULATORS
& TOOLS and use any of the 12 Calculators provided for
you there to crunch your retirement numbers!
"I'll Be Able to 'Get
By' on My Social Security"
With the passing of time, most likely based
on our grandparents "making do" upon retirement with
social security and perhaps pension income and very little more,
an erroneous belief has become accepted as fact. The original
purpose of social security retirement funds as well as any pension
plan was not to replace retirement savings, but
to enhance our own savings.
Did you know that if you will retire in
2022 or later that you will have to be 67 years of age to collect
full social security benefits? Today's workers represent 95% of
that "later retirement."
The Social Security Administration's Website
at http://www.ssa.gov
has retirement information you can't find anywhere else. On this
site, you can order your PEBES (Personal Earnings and Benefits
Summary) and find information on cost of living, welfare reform,
benefit programs and how to find your local Social Security office.
Your Social Security Statement will tell you how much your estimated
retirement benefit will be. Workers older than age 25 now receive
these statements automatically each year about three months before
their birthdays.
"Won't My Tax Bracket
Be Lower Then?"
Not necessarily. If you have a significant
amount of tax-deferred money, there is a chance that your tax
bracket will actually be higher, which may cost you a substantial
tax "hit" upon withdrawal…the reverse of what you
thought would happen! When your IRA or 401(k) finally "pays"
you, your "paycheck" may be less than anticipated.
You may wish to consider the Roth IRA as an
alternative, in which you have to bypass your tax deduction now,
but no taxes are owed if the account has been opened over five
years. The traditional IRA's mandatory age for withdrawal does
not apply to the Roth IRA. Consult your tax adviser what approach
may be right for you.
"I've Got Plenty of Time!"
"Tomorrow Never Comes" is a great
song, and a basic fallacy in retirement planning. Tomorrow does
come, and along with it many lost years where Time could have
been on your side. For example, saving $40.00 weekly @ 5% interest,
earns you $100,000.00 in 25 years! As small as this amount seems
at the time, the compounding law of simple interest does a fine
job! Calculate any other amount based on this principle and you
can customize your own plan by doing nothing more than cutting
back a bit in convenience spending during the week. Think about
it. If you can discipline yourself to save 3-5% of your gross
income on a regular basis, you'll be pleasantly surprised how
Time takes care of your savings' nest egg!
"I Don't Intend to Retire…"
Intentions can be good, but none of us can see
the unforseen circumstances the future holds for us. What about
possible future health concerns? Are you willing to continue gaining
the kind of skills which can translate into income in the future
once you leave your current "day job?" It is possible
that those of us who say this need to make serious allowances
for present short-sightedness. NEVER use your current good
health and ability to predict your future situation. In most cases,
it is a procrastination tactic to NOT do what you know
you should do for yourself and your family now.
There are individuals who truly would be bored
not working; however, working because you want to is one thing;
considering that there will be nothing which would bar your future
ability to work is an unfortunate fallacy…and not the ideal
plan for retirement.
"I Just Don't Have the
Money to Save"
You may or may not have heard of the National
Partners for Financial Empowerment, (NPFE); however, they have
done something for you! As an arm of the Treasury Department,
it is a coalition of federal, state, and local governments, businesses,
and consumer and community-based enterprises which came together
in April, 2001 to promote the understanding of the specifics of
personal finance, investing, saving, and credit/money management.
Check out these web addresses & take a look
at these helpful sites:
Although there are those who have referred
to this coalition as a "rescue campaign" for Americans
who are "financially illiterate," the fact is that the
savings of American families from 1995 to 1998 experienced only
a minimal increase, according to the Federal Reserve. As Americans
now have to shoulder the bulk of their retirement planning, this
coalition is an attempt to inspire Americans to create savings,
while offering advisory counsel at the local level.
E-MAIL: SeniorsManagement@1stopmortgage.net
