Retirement Financial Planning

When’s the Right Time to Retire?

admin — Wed, 18 Aug 2010 19:06:30 +0000

Think realistically about when you want to retire. How much longer can you see yourself working and is it worth it to perhaps cut back on expenses to enjoy the smaller things in life for longer? Choosing an age at which to retire is a personal choice and can vary by situation. Some people only want to work as long as they absolutely have to, which is completely understandable, particularly at an advanced age. Other folks out there may plan on retiring only after they reach certain career goals, either way it boils down to the right combination means, lifestyle expectations and personal preference.Bear in mind, retirement is a personal choice but you are not the only person it affects. First and foremost, retirement will drastically change your family dynamic. For those considering retirement with kids still living at home, retirement can be both a blessing and a curse. Of course, you would like to be able to have more free time to spend at home with your children before they grow up, move out or move on with their lives, but at the same time parents are pressured to afford their kids the same consistent level of comfort they’ve grown accustomed to. Does the chance to boost quality time outweigh the hit the family might take in quality of life? Would you be just as happy playing a round of miniature golf as you would taking your kids out on an actual 18 hole course?On the other hand, if you want to provide your family with opportunities others might not have, whether it be travel or higher education, it could be beneficial to work a few years past what you’d planned in your younger days. Make sure to talk over any major decision with your spouse as well. Many couples like to retire simultaneously, venturing into life after work hand in hand. Other relationships see one partner continue to work to support the family while the other takes advantages the benefits the retired life offers and assumes a domestic role.

What is a 401k?

admin — Wed, 18 Aug 2010 19:03:18 +0000

Have you ever received a hefty chunk of change and immediately spent it all as if your pockets were made with swiss cheese lining, only to later see something you really need and wish you still had the money left to purchase it? It’s a pretty common problem. Money management is a noble ideal but a troublesome practice for many otherwise responsible working adults. A 401k plan helps to encourage a wage earning individual to set aside some his or her annual earnings for either retirement or a rainy day in the future, prolonging financial gratification for a later date at which you’ll be even more appreciative. A 401k plan is essentially a means of income deferral, opting to receive payment decades after it was actually learned, forcing the recipient to budget responsibly. In a traditional 401k plan, a percentage of wages are paid directly to the 401k account which is managed by the employer. The savings are in turn invested into one of a selection of funds (at the discretion of the employee) made available in the employer’s 401k plan. These payments are called “contributions.” Some companies will offer to match employee contributions with an additional company funded payment as an employee benefit, in part to encourage good saving habits and ensure long term financial flexibility for its workers.Under a traditional 401k, savings are accumulated on a pre-tax basis, with taxation deferred on the money saved until the time it is withdrawn (typically retirement). As of 2006, employees now have more flexibility on this front, as the Roth 401k plan was introduced, providing middle ground solution between the traditional 401k and the Roth IRA plan, which is tax free at the time of withdrawal. Under a Roth 401k, employees can choose to contribute their funds on a post-tax level, meaning no lump tax deduction upon withdrawal, in addition to or entirely in place of a pre-tax level, as seen in a traditional 401ks.

Retirement Tips

admin — Wed, 18 Aug 2010 19:01:13 +0000

Retirement isn’t an “I woke up this morning and decided I was done” type decision. Retiring without your ducks in the row is really just a fancy way of saying “I quit.” In order to make sure you financial future is secure, years of planning should take prior to taking the first sip of champagne at your send-off. Here are some tips to make sure you get off to a good start and stay on the right track towards a fulfilling and comfortable post-employment period.

Set real dollar goals Retirement may mean no more work but that doesn’t mean you aren’t going to have to work to get there, so whip out the handy calculator, make a realistic assessment of your expenses and determine exactly how much money you will need to support your retirement plans. These figures will be drastically different for everybody, as it would obviously be significantly more expensive to retire to a seaside villa in the south of France compared to pond adjacent barn home in south Georgia, though both may be equally appealing to certain retirees.
Diversify your assets To steal an old phrase, don’t put all your eggs in one basket. You will be counting on your retirement money for literally the rest of your life. In the event something might happen, especially in fickle economic times, it is better to have money spread out over wide array of investments instead of heavily entrenched in one market were the bottom to fall out.
Seek help/counseling Professional financial advisors can walk you through complex concepts and money managing tactics otherwise foreign to common folk. Furthermore, an advisor can cater individual plans to your exact financial situation. Just because you put in all the elbow grease to earn the money doesn’t mean you automatically know how to make it last.

Preparing for Retirement Emotionally

admin — Wed, 18 Aug 2010 18:58:23 +0000

In the movies retirement is painted as a relaxing ride off into the sunset, but the reality is that for many retirees it can be a time of soul searching more stressful than even the rat race of the working world. Look no further than our famous sports stars, most recently Vikings quarterback Brett Favre, saying goodbye to a way of life you’ve become accustomed to can be a nerve wracking-change of direction. Retirement shouldn’t be seen as intimidating, but rather as a relaxing reward for years of hard work. In order to ensure that you enjoy a fulfilling, anxiety free transition to the post-employment world, anticipate these potential problems and know how to solve them should they arise.Feeling a Lack of Purpose – After years of building towards certain career goals, sitting around with seemingly nothing to do indefinitely isn’t as novel and enjoyable as it was when it was limited to just a week’s vacation. It can be tough to break from a set mindset and routine, programmed from the time you are young that being busy and at work directly equates to success and self worth. In order to address this problem, remember that not being employed doesn’t mean having not having a purpose. Retirement is a chance to finally go out and do all the things you put off because you were too busy in your younger years.Loss of friends, loneliness As much as people gripe about going into the office, in most corporate environments people are forced to interact with one another in a generally cordial manner, with many close friendships forged through business. Retirement can mean a lot of time to yourself and pose a threat to work-based relationships. This can be rectified in a variety of ways whether it’s simply using your time off to stay in touch and maintain those relationships or pursuing hobbies/ joining clubs that will enable you to meet a variety of fascinating new people.Retiring Prior to Realizing Career Goals Some retirees find themselves looking back over their career with a sense of disappointment that they never achieved the lofty aspirations they held as young men and women. It is important to look forward in life, seeing retirement as the beginning of a new chapter in life, not the sounding of the trumpets to close out your final act.

Common Problems Encountered in Retirement Planning

admin — Wed, 18 Aug 2010 18:53:27 +0000

Even savvy retirement planners can overlook or mismanage their money from time to time, bringing about the exact type of stress and labor retirement was designed to avoid. After all, no one can completely predict the future, although due diligence and research often leads or a more enlightened and realistic forecast. When contemplating your retirement plan and assessing where you are relative to your desired financial future, here are a few things to keep in mind that are constantly overlooked by retirees until it becomes an unavoidable inconvenience.Underestimating medical bills Right now you are quite possibly relatively young as compared to age you plan to retire. It would logically follow that as you get older, you will no longer have the same fit bill of health you might have at the current time. Even the difference between the annual medical bills of 60-year old vs. a 70-year old or 80-year old can vary dramatically, not to mention pricey long term care services/facilities. Don’t calculate how much maintaining your health will cost you based on today’s figures as it is sure to greatly increase in your future.Lack of Thorough Transaction Tracking Many people simply do not realize exactly how much they spend on a monthly basis as they do not record many of the minor day to day purchases, instead only accounting for larger items. Sometimes, planners are just careless or clumsy in their tracking efforts. There are a host of online services that will help track spending for you, however as older generations are less comfortable with internet technology, such options are often avoided. Incomplete accounting can lead to inflated estimates of how much disposable cash a retiree has available.Failure to Include Gifts to Children/Family Retirement planning is not limited to money you will need personally but should also include any people you plan to help or reward financially as well. No matter who spends the accumulated funds, once it’s withdrawn and spent there is no source of income to replenish the supply.