Retirement Planning - The Do's and Don'ts for the Changing Environment
Posted by First Security Financial on Januray 24, 2012
Company pensions are more difficult to come by than ever before. It's hard to pinpoint exactly why this has occurred, be it an economic downturn, corporate greed, or a combination of both. But the fact remains, many companies no longer offer the security they once did.
Now that the rules have changed, it's up to you to make sure you're well taken care of in your old age. And with the right mindset and a few important Do's and Do Not's, retirement planning can still result in a positive outlook.
Do Not Wait Until Tomorrow
As a little girl once said, the sun will come out tomorrow. But if you procrastinate your retirement planning, you might instead find your future full of dark skies. Regardless of your age, if you haven't begun saving for your retirement, you can't afford to put it off any longer. Even if it's only a small amount to begin with, this initial investment into your future will get the ball rolling.
Do Utilize Retirement Accounts
Retirement accounts can be your saving grace. If a company doesn't offer their own pension, it's highly likely that they take part in the 401K plan and will match any contributions you make.
If you're a business owner or freelance worker, consider other retirement planning options. There are CD's, IRA's, and several other options to help you save.
Do Not Jump From Job to Job
For most people, a fast food job right out of high school isn't a serious endeavor. It's just a job to give you a little extra spending cash and pay your rent. During this period of your life, it's not a big deal to have a few different jobs as you stretch your legs and try to figure it all out.
As you grow older, however, you need to decide what your life path will be and find a job that you'll want to stick with. If something better comes along, you should definitely consider it. Just make sure it fits with logical retirement planning.
Do Design a Timetable
A timetable can be a lifesaver when it comes to retirement planning.
Every year of your life, you should be saving all those spare pennies. Factor in a budget that allows you to contribute to various options, whether it's CD's, IRA's, bonds, stocks, or a 401K plan. During this time, any change in employment should be weighed with a list of pros and cons.
In your 20's and 30's, you need to set up a retirement fund of some kind. You should also think about purchasing a home so that once you retire, your mortgage and housing costs will be controlled.
During your 40's, you really need to hit your stride. Manage your retirement funds and take a close look at your personal assets. Contact the Social Security Administration and ask that they provide you with documentation to allow you to check their accuracy. Now is also the time to begin drafting a will.
Once you reach your 50's, it's time to revise your expense projections and take a more analytical look at your retirement income. Continue to check your Social Security for accuracy. If you're one of the lucky few with a company pension, run those numbers as well. And if it's feasible, move some of your funds into investments with less risk.
When you've made it to your 60's, you'll want to prepare your Social Security documents. Also, you need to decide whether you plan to retire earlier, or maybe even later, than expected. Consider the pluses and minuses of each.
Personal Pensions - How to Create Your Own Pension
Posted by First Security Financial on Januray 19, 2012
In today's economy, nothing should be left to chance. The job you have today might not take care of you once you've reached retirement age like your father's company did and his grandfather's before him. In their prime years, it was common for a company to offer a pension designed to take care of its long-term employees well into their old age.
Not so much anymore. Nowadays, less companies are offering pensions. But since it's doubtful that people will stop retiring anytime soon, they need an alternative to ensure financial security in the future. To achieve this, many are warming up to the idea of creating a personal pension.
So ... What is a Personal Pension?
Just as the name suggests, it is a pension that you set up yourself, using your own funds. The process is quite simple:
- Step One: Contact a retirement specialist who deals with personal pensions, who will assist you through the process.
- Step Two: Based on your goals, decisions will be made as to the amount and frequency of the payments.
- Step Three: You make the payments according to the agreed upon schedule.
- Step Four: Once you reach retirement age, a check will be sent to you each month. The best part is, these checks will continue for the rest of your life and in some cases increase to fight inflation.
Yes, it's that easy. And if you've already reached retirement age, you can still set up a personal pension.
What Kind of Benefits Should I Expect?
Glad you asked. The benefits are plentiful:
- As noted above, you will be sent a payment once a month for the remainder of your life once you have reached retirement age. That's guaranteed income for as long as you live.
- Unfortunately, no one can predict the future. One element of the plan is to name a beneficiary, in case of your untimely death. That way, whatever payments are owed to you won't go to waste.
- To help with inflation, a number of personal pension plans include an option to increase the amount of payments on an annual basis to fight inflation.
How Often are Payments Made?
Payments can be made using a variety of schedules:
- Each month, an amount is electronically transferred from your bank account.
- If you decide to make one payment a year, a bill will be sent to you one month before it's due.
- If you can afford it, you may want to deposit one lump sum into the pension account.
- In addition to your regularly scheduled payments, you are entitled to deposit funds whenever you would like. Same goes for those family members and friends who want to assist you with your retirement.
Who Should Consider a Personal Pension?
If you are interested in having an income throughout your retirement years, that will be there as long as you live, and has the ability to fight inflation, you should contact us to get started.
Post Retirement Issues
Posted by First Security Financial on Januray 12, 2012
It was once only an intangible dream. But now fiction has become a reality and you've finally reached retirement. All those years of saving and waiting are over, and now you can begin to live the rest of your life.
Even so, the inevitable question arises: What now? For many, retirement is only the beginning. There are a number of post retirement issues that must be considered.
Income Just Isn't What It Used to Be
There's a good chance that you're not going to have as much income during your retirement as you did before. The key is planning out what your expenses are and living within your means. Take a look at your retirement strategies and make sure that you have a solution for income that will also fight inflation. You may not be able take those extended vacations to exotic lands that you dreamed about or even justify the high cost of that swanky golf resort you've been keeping your eye on, but it will mean that you have a comfortable retirement.
Change in Retirement Equals Change in Marriage
Even those couples who love and adore each other must adjust to the fact that at least one, and eventually both, will be around the house all day long. This period of adjustment can sometimes cause a strain on a marriage.
On the flip side, though, now is the time when you can go on that extended vacation you've been dreaming about. Perhaps you can even rent an RV for the summer and tour the country, experiencing those sites and events that you couldn't enjoy while employed. With a little teamwork, you can make the adjustment together.
Stay Active
No busy job to go to every day, no boss telling you what you can and can't do, no more worry about taking a sick day. Sounds wonderful, but there are times when you just won't know what to do with yourself.
- Start a small business out of your home doing what you love.
- Volunteer at a local community center or children's hospital where you can help enrich people's lives.
- Take up a hobby that you've been putting off for years.
Keep Working After Retirement
It is becoming quite normal for a person to continue working past retirement age. Typically, there are three reasons for this:
- More Income -- Some people realize that they either haven't saved enough or simply want to stretch out their nest egg longer than they had originally anticipated. Or maybe they simply want a little extra spending money and would like to avoid dipping into their savings.
- Health Reasons -- In order for a person to continue being in tiptop shape in their later years, they must remain active, both in mind and body. Recent studies have shown that retirees who continue to work or volunteer are healthier than their counterparts.
- Career Change -- While some might see retirement as the beginning of the end, others treat it as an entirely new beginning. Since their days of the "rat race" are most likely over, there is less risk in doing what you've always wanted to do.
10 Steps to Negotiating the Bridge to Retirement
Posted by First Security Financial on Januray 12, 2012
Only one more year to go and you enter the world of retirement. Better yet, you'll retire with a full pension and can live out the rest of your days without a financial worry in the world.
But today is different. Today is the day when your boss calls you into the office and informs you that your services are no longer needed. Nothing personal. It's just business, he says. It's simply time for you and your company to part ways. As you leave his office and clean out your desk, you realize you're saying goodbye to your pension and medical benefits.
Some people in this scenario would simply give up. They'd pick up whatever pride they have left and call it quits. But there's an alternative called a "bridge to retirement." This godsend can mean the difference between prosperity and poverty. What this bridge does is help you retain your retirement benefits, and to help you prepare for such an event, here are ten steps you can take:
- Make an Appeal -- This step is quite simple. Write a polite letter to the executive in charge and ask that a bridge to retirement be utilized due to your longstanding employment with the company. Calmly explain what this decision will do to your future.
- Maintain an Electronic Trail -- E-mail is, by far, the best way to document everything. It is extremely difficult to completely erase this electronic trail. Save every piece of e-mail that may be important to your future plans for retirement.
- Check For Errors in Calculation -- Make sure you sit down and manually check and double check all of your figures to ensure accuracy of your time with the company and what you are entitled to receive in the way of benefits.
- Know Your Retirement Threshold -- Pension plans aren't all the same and neither are their retirement thresholds. Before proceeding with any plans, make sure you know your plan's details in this regard.
- Pre-Existing Bridge -- Often, a pension will already contain verbiage that refers to bridging retirement. They may use different words, and if you're unsure of what to look for, ask a professional.
- Inquire About Prior Implementation -- It is common for a company to provide a bridge of retirement for their executives who have been released from the company in the past. If this is the case, it's very possible they'll do the same for you.
- Request a Cash Payout -- In order to avoid future, a company may be willing to pay you and amount equal to what your retirement package would have been worth.
- Document Promises -- In order to keep good employees, a company will often make promises to ensure that their long-term employees feel safe and taken care of once they reach retirement. If such promises have been made to you, get them documented.
- Negotiate Your Departure -- In many cases, such as when a company lays off an entire department, the time of departure is flexible. They may be able to keep you on for a while longer in the same position or, based on your seniority, give you the option to switch departments. Either of these may extend your employment past the aforementioned retirement threshold.
- Ask Yourself If You Are Being Targeted -- It may sound like a sad state of affairs, but the fact that companies have been known to release employees who are nearing retirement age in order to save money is absolutely true. Of course, this is highly illegal, so if you believe you might have been targeted, consider obtaining legal counsel who can make inquiries on your behalf.
