6/15/2012 1:47 PM ET|
7 threats to your retirement
Being prepared to enjoy your retirement years means considering some questions and issues long before you leave the workforce.
Saving for our retirement seems to become more challenging by the day. Longer life expectancies, fewer traditional pensions and volatile investment markets are the most obvious challenges. Beyond that, here are seven other threats to your retirement:
1. Even if you have a traditional pension plan, those benefits can change. Your employer can't take away benefits you've already earned, but benefits going forward can be reduced. Traditional pension plans have experienced losses during the market decline, which will require additional contributions from companies. Companies might reduce benefits for newer employees and/or freeze plan benefits for existing workers. In the latter case, you would cease to accrue further pension benefits. Keep an eye on your pension plan so you know if your employer makes changes.
2. Switching jobs can affect your retirement benefits. If you have a traditional pension plan, don't change jobs without considering the impact on your pension benefits. Many plans have a five-year time frame for vesting into a benefit. The same applies to 401k plans with matching employer contributions. You may find staying at your job a while longer will significantly increase your benefits.
3. Don't forget about pension benefits from previous employers. Many employees leave a company without realizing they are entitled to pension benefits. Before changing jobs, check with your employer to find out what benefits you are entitled to. Then keep track of the company so you can claim benefits when you retire.
4. Early retirement can significantly reduce your retirement benefits. Sure, it sounds great to retire before age 65 with company pension benefits. But don't look only at how much you'll receive when you retire early. Also consider what you would receive if you wait until normal retirement age. Retiring early can dramatically lower your monthly pension benefit for several reasons: You don't have as many years of service, salary increases you would have earned aren't considered, and those extra years of benefits cause a large actuarial deduction in benefit calculations.
5. You may not be able to count on health insurance benefits after retirement. Due to rapidly increasing costs for health insurance, many companies are either phasing out health insurance benefits for retirees or increasing retirees' share of the cost. While Medicare is still available once you turn age 65, those benefits don't cover all medical costs. Whether you can count on health insurance benefits is often a significant factor in deciding whether you can retire before age 65.
6. Social Security benefits are changing. Normal retirement age is gradually increasing from age 65 to age 67, a change affecting anyone born during or later than 1938. You can still receive reduced benefits at age 62, but the permanent reduction in benefits is increasing from 20% to 30%. These changes are meant to encourage you to retire later.
7. A lump-sum distribution may not be your best option. Some traditional pension plans allow lump-sum distributions instead of monthly pension benefits. Use that option with care. While the amount of money might seem large, are you sure you can invest it and earn more than the monthly pension option?
Planning for retirement was never easy. Make sure you have a financial plan in place and that you have considered all of your options before deciding when to retire.
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The BIGGEST threat to your retirement is YOURSELF!
Plan hard and long and know and accept your limitations.
Just be sure you have done your homework and will be living in an area that is COST APPLICABLE to the standards your money will have.
Ok for me( a 58 year old- 3 years laid off unable to get another job- and hanging on to age 62 for retirement)? Yep I did not LEAVE the workforce-IT LEFT me.
1- Retire To Buffalo NY(ok not for all-I get it)- Its cheap and a beautiful house can be bought and paid in full for $125K with scary low taxes and living in a nice area with nice people.
2- Key here- HAVE ZERO DEBT!
You want to live the life you and your wife deserve?
Forget about all these "retirement jewels" places to retire etc.... Go back to the Rust belt cities of Detroit-Cleveland and Buffalo.
After all look how one of its original "Rustees" Pittsburgh has come into play as a great place to retire according to many experts these last 2 years?
Pick your place that is down and needs a comeback- buy low- keep majority of your savings- and have a great life and most of all:
The definition of the word entitlement has been modified over the past few years by politicians and media, I'm middle aged and earlier in my life if you we're "entitled" to something it was because you "earned" whatever that something was.
Recently we're led to believe by politicians and media that an entitlement is something we have not earned?
Well, Obama said we had to eat our peas!
But the global organizations that still plot out our lives, our elites in DC, keep making regulations, sticking their nose everywhere, controlling and spending our money........have they started to eat their peas?
From what I can read from these comments, we are a totally divided nation. No retirement, Obama's fault. No, No, it's Bush's fault. No, it is the rich who run Wall Street. No it is the banks. No, it is those people who run up debts and don't pay it back. It is the public employees fault. It is the illegal immigrants fault. Blah, blah, blah.
I have no clue how to fix things, and neither do either party, because nothing has really changed since 1968 when I first was old enough to follow politics. I guess were all in the same sinking boat.
These changes are meant to "encourage" you to retire later. (italics mine)
If there is one thing about our government that I hate, and I mean HATE with every fiber of my being beyond all measure, it's the never ending quest of our government to control our behavior with our own money that it forces it's citizens to hand over to them, under threat of jail.
I understand the need for taxes. I have no problem paying taxes to run an efficient, constitutionally authorized government. But that is not what I'm talking about, or the point, so for those that would whine about "you just don't want to pay any taxes"....you're wrong, so I'm going to slap that argument to the gutter right now.
The issue is not the taxes, it's the intent to control behavior through taxes. There is a huge difference. One is to legitimately use the resources of the people to fund the government in the way it was intended. The other is to manipulate people to act in a way the government deems appropriate.
Things will never change until enough people rise up and say STOP!! But unfortunately, there are way too many that believe in the concept of government confiscation of your wealth for a supposed "greater good", of which those people also conveniently reserve the right to define exactly what that greater good is supposed to be.... and then apply it to you by force.
#4 #6 total BS!! take your ssi as soon as you can get it, you will have more REAL money in your pocket sooner and its YOUR money to begin with. if you crunch the numbers what you get when your 62 for four years as opposed to what you get when you wait to 66 the money wont match till you reach 78! wanna bet on livin that long? besides get your money now so inflation will not have a chance to eat it away.
and cash in all the 401k's cause the govt is drooling over a plan to aquire the 401k money. they will present it to you that in order to protect you from the thieving wall streeters a certain percentage of all 401's will have to be in T bills. and whats safer than the US govt T bonds? well china has finally started to refuse to buy our T bonds because they now know we have neither the means or intention of ever redeeming them.
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