Your Retirement Plan

Your Retirement Planning Tool — A 10 Point Checklist

March 6, 2011 By imyoursu Leave a Comment

Article by Patrick Millerd

Retirement planning is a complex and challenging task requiring a retirement planning tool that matches the task. However these must not be so complex or “blackbox” that they are not fully understood.

Many, many people are totally unprepared and should realise that they will need some support and advice.

This retirement planning tool is a simple checklist. It makes you think about all the things you need to consider as you start down your path to a, hopefully, rewarding and successful retirement. Initially most people will not find this easy. Be warned there will be many temptations and hazards along the way.

As you start out remember that it’s not the plan that’s so important … it’s the planning. The thinking and understanding. Also as you develop your plan, write it down. In future you can review it, measure it and revise it.

1. Take full responsibility for your retirement plan … it is yours and yours only. Take personal and sole ownership. No-one else should do it for you as, anyway, you are going to have to eventually live it.

2. Think about what “retirement” really means to you. Be as clear as you can. Remember that you could be retired for 20 to 30 years, or even longer. Think back 20 or 30 years and recall all the changes that have taken place in your life. Retirement is not a one stage, short term event and there are many risks to be faced.

3.Although we are swamped by financial planning calculators and retirement planning software “plug and play” doesn’t work too well with something as complicated as retirement. Also hidden in their simplicity is many pitfalls with forecasts and assumptions.

4. Retire with a purpose. Carry on working either to earn money, to enjoy the social contact or to make a contribution. If you don’t need the money think about ways you can use your skills and talents to improve the society around you.

5. Do you feel that you must leave some legacy to your heirs? Are you prepared to degrade your lifestyle to make this happen?

6. What is your your planned retirement lifestyle? Will you have the means to do all those things you’ve always dreamed about?

7. Accept that the world is changing and will never be the same as it was in the past. Embrace the change, be flexible and adapt as things change around you. Wishful thinking should not be the basis for your retirement planning. “It is not the strongest of the species that survive, not the most intelligent, but the one most responsive to change” — Charles Darwin.

8. Retirement should be a new beginning and not the beginning of the end. Dump any baggage, open your eyes, resolve to take on the challenge with enthusiasm and excitement and not let any opportunities pass you by.

9. Health will deteriorate and costs of health care will increase. Consider that it may happen to me rather than it will never happen to me.

10. Once you have thought about the above issues you can then start working through your retirement financial planning. Be careful of advice by people who may have their own interests at heart … and you are merely a fee source for their own retirement plan! Try and recognise the difference between “expert advice” and what Nassim Taleb calls “experts… who are not experts.” Tax law and financial structuring is in the first category and all “future estimates (guesses)” in the second.

Be assured that this retirement planning tool will help you develop a complete plan. It will help you to balance your desires and aspirations with your resources. It will then up to you to make it happen and live your own successful retirement.

About the Author

Join Patrick Millerd a “nevertiree” in the life of a digital nomad. He’ll help you discover how retirement planning can put you on the path to a create the retirement lifestyle you desire at Successful-Retirement.com

www.make000sofdollarsnow.com helps people just like you to increase the value of your pension investment. The more money you invest in your pension plan the greater your retirement income will be. We show you how, for a few hours a week, you can greatly increase your retirement income by using some simple online tools.
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Filed Under: Your Retirement Plan Tagged With: Checklist, Planning, Point, Retirement, Tool

Things to Know About Your Retirement Plan

March 6, 2011 By imyoursu Leave a Comment

Article by Manuel Salvacion

Private employers offer retirement plans to its workers to enable them to have financial security in the future. To know what awaits you in retirement, you should first understand how your plan works and what benefits you will receive.

There are two common types of retirement plans that most employers offer:

* Defined benefit plan

It is retirement plan being funded by the employer, which promises you a specific monthly benefit at retirement. Benefits from this plan are calculated using factors such as age, salary, and the number of years you worked in the company.

* Defined contribution plan

It is a plan funded by you and your employer’s contributions to your individual account in the plan. In this kind of plan, you are responsible for choosing where to invest your contribution and decide on how much can be deducted from your paycheck. Your employer will add to your account by matching a certain percentage of your contribution. You will receive the balance of your account upon retirement, which will reflect gains or losses from the investment, the amount of contributions made, and any fees charged to your account.

How to participate and earn your retirement benefits

After knowing what kind of retirement plan your employer, is offering, you must know how to participate in it to start earning your retirement benefits.

* First, find out if you are within the group of employees covered by the employer’s retirement plan.

* Find out how to participate and contribute to your retirement plan after you start working in the company.

* Read the Summary Plan Description of your plan.

* Learn how to start earning benefits and how much your retirement benefits will be.

When do you start to receive your retirement benefits?

Under the law, you begin to receive your retirement benefits when you reach age 65 or the age your plan considers to be normal retirement age, or equivalent to 10 years of service.

However, in determining when you can receive benefits, three things must be considered:

* The start of receiving benefits from plans is provided for by the guidelines in the federal law.

* Plans can choose when to begin paying benefits as expressed in the plan documents.

* A claim for benefits must be filed to initiate payment of the benefits.

In filing for a benefits claim, the law requires all plans to have a written procedure in the Summary Plan Description. The document will also show a guide on how to file an appeal in case a claim is denied.

Some retirement plans offered by employers are governed by federal laws and guidelines in the Employee Retirement Income Security Act of 1975 (ERISA) and the Internal Revenue Code. On the other hand, the plan rules and regulations are contained in the Summary Plan Description.

If the plan failed to follow certain requirements of ERISA or claim is denied, you may seek the legal advice of a retirement benefits attorney. A retirement benefit attorney is an experienced lawyer who can best address your issue or concern.

Get to know more Social Security retirement benefit information by contacting a LA County social security retirement benefits attorney.

About the Author

Before becoming an online writer, Manuel worked as a journalist, a newspaper columnist, a scriptwriter, a fiction writer, a magazine editor, and a tutor. He acquired his legal background as a Senate legislative officer and later on, as a researcher and paralegal staff in various law offices. Someday he hoped to go back and devote more time to writing fiction, which is his first passion.

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What Are Your Retirement Planning Variables?

March 6, 2011 By imyoursu 1 Comment

Article by Paul Sutherland

Having a secure, fulfilling retirement is a primary goal for most of us. At some point in the future we will no longer receive a “paycheck” from an employer and will instead rely on the income from assets we have accumulated and saved, plus income benefits from defined benefit pensions, Social Security benefits, distributions from retirement savings plans such as 401(k)s, deferred compensation, sale of our business and other investments. For most people, the overriding and often primary directive of financial planning is simply “retirement planning.” However, planning for retirement is not a particularly easy process.

The retirement planning process involves using a retirement planning calculator and creating a road map toward your retirement goal and developing a plan to achieve that goal. The plan generally considers post-retirement budgeting, savings, tax management, debt management, pre-retirement budgeting and a host of other inputs all geared toward ensuring a quality retirement. However, planning for retirement takes time and judgment, because it involves many unknown variables. Among the top variables that may determine when retirement is feasible are lifestyle/family goals, longevity, future income tax rates, portfolio returns, the effect of inflation on expenses and future investment returns.

Let’s review the basics of these variables as they relate to your retirement plan.

Lifestyle Goals

Would you like to travel? Own one home or two? What is your retirement vision? These questions and others like them are necessary to help create a budget for your specific retirement needs.

Longevity

Attempting to gauge how long we’re going to live in retirement is a task that’s becoming more and more difficult. Medical advances have led to increased life spans and continue to increase the mortality age. This is best illustrated by the Social Security system. In its original design, participants in Social Security were expected to live only a few years after they have begun receiving benefits. People live longer now, and life spans are increasing each year. We believe it is wise to project a retirement plan that assumes you’ll live to age 100.

Future Tax Rates

Since we can only spend our “aftertax” income, it is imperative that we consider what tax rates our retirement income will be subject to. However, as government bodies at all levels change with each election, so do virtually all tax laws, including property tax, sales tax, state income tax and the granddaddy of them all, the federal income tax. Taxes such as property and sales taxes should be adjusted to account for cost of living increases. One thing is certain – taxes will exist in retirement.

Investment Returns

How much you can withdraw from your “nest egg” each year is perhaps the most critical variable to retirement projections. Like the other retirement variables, the annual return on your nest egg will not be linear. As we know, the investments most suited for providing long-term income security into retirement are going to fluctuate. Financial markets can have long periods of up and down investment return cycles. We need continual income and that is the key. That’s why we work toward constructing portfolios that can provide lifetime income security for our clients. Many retirees get caught up in “short-termism” and use CDs, shortterm bonds and fixed annuities as core holdings in their retirement portfolio. But this investment strategy is very risky. While inflation causes things to cost more, deflation can keep interest rates low for many years, requiring the need for retirees to invade their principal savings to meet their budget needs.

At FIM Group, we balance the long-term asset volatility with the more stable fixed investments to construct our clients’ portfolios. Our goal is to allow clients to live on the income generated from their diversified portfolio with a goal of providing income that can increase over time. That way clients won’t need to invade principal. Simply put, we call it living on the eggs (investment returns), not the chicken (principal).

Inflation

Loss of purchasing power caused by rising prices must be included in any retirement plan. It is safe to say that one dollar will buy less in the future. As you progress into retirement, you should factor in giving yourself a raise periodically to offset cost of living increases.

Family Constraints

Will you need to provide for or care for your parents and/or children in retirement? If so, how much will you help them? In summary, we are realistic about retirement planning and take retirement seriously. While the future is unknown, we do know that life will go on, some businesses will grow and pay great dividends, interest rates will fluctuate, politicians will fiddle with taxes, and inflation and deflation will fight it out. One thing, however, is certain: we will retire someday.

About the Author

The author has great knowledge about financial planning. He has offered financial planning to many people as well. He has written many articles on financial planning.