Read my latest article, published in the Miami Herald, about how the emotions of divorce can throw us off track now and when planning for the future. Don’t let it ruin your renaissance!
Only you can prevent poverty
May 21, 2008 at 8:07 pm (401(k), Retirement income, Retirement plans)
Today, retirees say they expect retirement income will be 40% Social Security and 22% self-directed retirement plans, along with a few other sources thrown in to make 100%. But future retirees say they will only count on 14% of their retirement income from Social Security to maintain their standard of living, according to research by the Employee Benefits Research Institute. The most? Those self-directed plans, mostly IRAs and 401(k) plans, will account for 48% of retirement income.
This is further proof we should plan beyond Social Security in order to enjoy the best part of our lives. Contributing consistently, even in tough markets, is the closes way we can build up our confidence that the money will be there in retirement.
25% of 45-64-year-olds steal from retirement
May 15, 2008 at 3:37 pm (401(k), Retirement income, Retirement plans)
The sluggish economy has forced 25% of those 45 and older to take money out of their retirement accounts to get by now, according to AARP, which did a phone survey of 1,002 older Americans.
Another 27% said they have postponed plans to retire due to the recent economic downturn.
The numbers could be translated to say 1 in 4 people are going to have a lower standard of living in retirement. Taking money out of 401(k)s and IRAs now weakens the tax-deferred or tax-free growth needed to fund retirement activities that come with the “renaissance.” Often, the decision is short-sighted and made without regard to the future. For example, has spending been cut or are those withdrawals being taken to maintain past spending levels? Working with a financial planner can often prevent the invasion and instead build a better financial future.
401(k): Social Security of the future
May 8, 2008 at 12:12 pm (401(k))
401(k)s have become the dominant program for retirement savings for workers, Paul Schott Stevens, president of the Investment Company Institute, said this week. Because of that, government and private employers need to improve the system to get more employees saving for their retirement as pensions disappear.
“More and more American workers will embrace the opportunity to save for their retirement,” he said, adding that the Pension Protection Act of 2006 makes it easy for employers to automatically enroll employees into 401(k) plans.
What used to be a government obligation is transforming into an employer moral obligation to help employees save for retirement. About 56 percent of employers don’t offer plans and about 30 percent of workers that have access to one don’t use it. Those numbers need to change for the better of society in the future.
By offering 401(k)s, business owners can also greatly improve their chances of building a wealthy retirement. Working with an advisor at Rainsberger Wealth Advisors, an employer can help develop a program that meets both employer and employee goals and make uncertain futures more certain.
Planning can ease retirement worries
May 7, 2008 at 2:49 pm (Lifestyle)
Worries about maintaing standards of living in retirement stretch to even those with high net worths, according to the recent Phoenix Wealth Survey by The Phoenix Companies, a provider of life insurance, annuities and investments for high-net-worth consumers.
Forty percent of high-net-worth individuals worry their assets will be depleted too quickly or they won’t be able to live comfortably on their retirement income, compared with 36 percent last year. Inflation fears, as well as investment performance worries, are stoking those concerns. Half say they are worried that inflation will erode the value of their income (up significantly from 42 percent in 2007), and 39 percent fear diminished assets due to poor investment performance, an increase of six percentage points.
Healthcare expenses, including long-term care costs, are also a major concern.
Fortunately, proper planning and investment strategies exist to allay these fears for those working with a wealth advisor.
401(k) to Roth IRA: You can do it!
May 5, 2008 at 7:28 pm (401(k), Roth IRA)
A reader writes that her “advisors” told her she could not convert her 401(k) from a previous employer straight into a Roth IRA. That was the case last year, but starting Jan. 1 it’s now possible, thanks to the Pension Protection Act.
Doing so, you have to pay the taxes on the 401(k) balance (just like a regular full withdrawal). And since your adjusted gross income must be under $100,000 to be eligible for a Roth IRA, and that 401(k) balance will show up as income, make sure your year’s adjusted gross income will be under $100,000 before doing so.
Otherwise, roll the 401(k) into a tradtional IRA and convert a little at a time into a Roth IRA… enough to keep you under the $100,000 limit.
Can you afford a nursing home?
May 1, 2008 at 4:20 pm (Health care)
Private nursing home room costs are up to $76,460 this year, up 2% from the 2007 average, according to Genworth Financial, a provider of long-term care insurance.
Changes in care costs they found in their survey:
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Semiprivate nursing home: up 4%, to $68,408
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An hour of care from a non-skilled home health aide: steady at $19
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Hourly cost of care by a skilled, Medicare-certified provider: up 18%, to $38.
These numbers point to the importance of planning for health care costs in retirement and making sure you are saving enough to meet them or to pay premiums for long-term care.
