Wednesday, February 25, 2009

Social Security

By Lindsay Chin

Social security was designed to provide security for individuals, to protect individuals from unforeseen catastrophes. It spreads the risks among members of a society so no one single family bears the burden. Social Security was created in 1935 to provide old age, survivors, and disability insurance benefits to workers and their family. Depending on an individual or his or her family contributed depends on the benefits that are paid to the individual. Social security is one of the three things to consider when planning for your retirement. Social security Opponents to social security have been striving to convince American workers that social security will not exist by the time they retire. And many people believe that social security is going broke and there will not be enough funds for the future. However that is not a truth. Social security can pay 100% of promised benefits until 2040 and any incoming revenues are enough to pay more than 70% of the benefits in the future. To be fair for future generations there the government would need to strengthen social security. Those who oppose can be considered alarmist, those who are hostile to the government and favor replacing all or part of the nation’s successful and essential programs with private investment accounts.

Ways to Plan For Your Future.

When planning for retirement it is important to plan ahead. This can be done in a few steps. If you plan ahead then there should be no reason for you to be in financial trouble for when the day comes where you finally decide to retire. It is very important that you diversify your investments. Never put all you money in one investment in case something was to happen. Look into all option whether it be municipal bonds or even government bonds but make sure that the yield on these bonds are not too farfetched and actually obtainable. A good way to plan for the stock market and a helpful way of deciding which stocks to put into your portfolio is by looking at the stocks dividends. Generally this will help you decide between which stocks are too risky and which stocks are really realistic for you. If you are someone that is not a believer in the stock market due to risk then a good game plan would be to look for alternatives in the investment field. Overall, though in order to be set for the future when you decide to retire, it is very important to start in the present and plan ahead.


Written By Lee Ruth

Tuesday, February 24, 2009

Retirement Ideas for Younger People

How many times have you heard that you should start saving for retirement as soon as possible? I know I’ve heard it tons of times, but that advice is no good if you don’t know where or how to start. Obviously, most people will have loans coming out of school, so it’s a good idea to pay those off first. That being said, T. Rowe Price recommends that anyone in their thirties save at least 10-15% of their annual salary. Another important idea is taking advantage of employers matching your savings. Most employers will match 50 cents per dollar on what you save, so it is important to use this to your benefit. Another important idea is risk. When you are younger, it might not be a bad idea to take a somewhat riskier approach that relies more on equity than on fixed income. As you get older, the opposite becomes more and more the recommended method. It is also a good idea to take advantage of a Roth IRA, especially if you have hit the limit on what your employer will match. This is a great way to protect against future tax rates because Roth IRAs are tax free, assuming you’re at least 59 ½ years old when you withdraw.

For more detailed information, look at these three articles

by Rob Wildhack

Monday, February 23, 2009

Will I Lose All My Retirement Savings?

Here's an article from CNN's Gerri Willis for people worried about losing their retirement money.

Stocks Friday plummeted on fears that the banks might be nationalized by the federal government. The move took the S&P 500 index to its lowest levels in nearly 11 years.
Are we going to lose all our money? And, how can I protect myself?
There have been losses in retirement accounts. The average 401(k) balance is nearly $50,000, which is enough to keep a couple going for a couple of years in retirement at best. 401(k) balances dropped 27% last year from $69,200 to $50,200 according to Fidelity.
The fears that the financial rescue attempts are doomed to fail is overblown.

Click here for full article
by Rob Wildhack

Planning for Retirement?

The following youtube video is of John Piper discussing retirement planning.  John Piper is a broadcaster familiar with financial topics such as retirement.  Listed below is the link to the video.

Created by: Joseph Owen

Saving for the Future

By Lindsay Chin

You salt away 10% of your pay into a retirement plan, but this "retirement" thing can feel pretty abstract. What will it be like? To judge by the pictures in personal-finance magazines (including Money), there will be a house by the water. And Adirondack chairs. And the occasional sea kayaking expedition.
Perhaps. But there will also be, well, an older person. An older person with your name and your Social Security number but maybe not so much of your hair. You'll have a lot in common with this later you but not everything. You'll have some different desires and different fears. And even where the present and the future you agree, that older person's feelings aren't that vivid to you now. It's easier and more enjoyable to think about sea kayaking. That's a bit of a problem for your financial planning.

Retirees Scaling back

By Angelo Orlando

RECENTLY, I WAS on line at my neighborhood deli when a front-page, above-the-fold headline in Newark's Star-Ledger nearly made me choke on my Coke: "The Lifestyles of the Retired and Destitute: Save More, Spend Less Now or That Could Be You, Study Warns."

The accompanying story detailed how middle-class Americans who are now entering retirement will have to cut their standard of living by 24 percent or risk outliving their financial assets, according to a new study by Ernst & Young. That report reaches even gloomier conclusions about workers seven years away from retirement, who can expect to reduce their standard of living by 37 percent.

Now, I don't mean to pick on The Star-Ledger, or The Washington Post, where the story originally ran, both of which typically do a fine job of reporting on issues related to seniors. But this story is a classic example of how the retirement planning industry gins up unnecessary anxiety among precisely the people it is supposed to serve and soothe. It turns out that U.S. households headed by persons between the ages of 55 and 64 spent an average of $44,037 on everything from utilities to doctor visits to jewelry in 2002, the last year for which data is available from the federal Consumer Expenditure Survey. Households headed by people aged 65 to 74 spent $32,003, or 27 percent less. Which means that as Americans transition into retirement, they are already chopping their expenses by a proportion that's within the range that many financial advisers so ominously predict will be required in the future.

5 New Investing Rules For Retirement

Many of the old rules for retirement investing no longer apply. Facing longer life spans, increasing healthcare costs, and a market in crisis, retirees will need more growth in their portfolios during the coming years and decades. At the same time, they need the assurance that a 37 percent market drop--as we saw in 2008--won't completely devastate their remaining nest egg. A growing number of financial planners are rethinking the conventional wisdom. (Remember the old adage that you should subtract your age from 100, and devote that percentage of your portfolio to stocks?) Here are five new rules to consider:

Separate your investments into different pots. Often, investors in retirement lump all of their money together, with which they pursue one strategy, says Eric Bailey, managing principal of Captrust Advisers in Tampa. His firm, which works with pensions, endowments, and high net-worth individuals, takes an approach ripped straight from the institutional investors' playbook. Clients' money is separated into three categories: Short-term funds reside in very low-risk investments, such as high-quality bonds; intermediate-term money goes in a balanced mix of stocks and bonds--such as a 50-50 or 60-40 split; and long-term investments starting with five-year time horizons are heavier on stocks. "This way, you can take advantage of a market sell-off with your long-term investments and you'll avoid needing to liquidate investments when stocks are down," Bailey says.


Written By Lee Ruth

Monday, February 16, 2009

A New Way to Retire

Here's a pretty interesting article about handling your 401(k) in today's current economy, specifically for people looking to retire within 20 years.

I've been getting a lot of emails in recent months from people who are anxious to "cut losses" in their 401(k) or other retirement accounts.
But as understandable as that sentiment may be, you don't want to focus just on recent losses in setting your investment strategy going forward.
That's not to say that you should ignore losses. You shouldn't (and probably can't anyway). Losses can reflect not just an overall market slide, but in some cases indicate a poor investment decision on your part, such as buying a fund without really understanding how it works or what its risks are.

Click here for the full article
by Rob Wildhack

Staying in the workforce

By Angelo Orlando

Here’s a sign of the times: Enrollment at the American Bartending School in New York City has shot up, and some of its new students are in their 50s, from retired social workers and laid-off investment bankers to fashion designers looking for extra income. More than ever, thanks to the ongoing economic downturn, planning for and living through retirement requires a second job or new career, even if that means learning how to mix a grasshopper.Older Americans actually have excellent long-term employment prospects, and since we could all use some good news, let’s look at that fact first. As boomers retire, millions of jobs are going vacant every year—more than younger workers can fill and more than companies can downsize out of existence—and many are being taken by boomers who don’t retire. Experts disagree about just how severe a labor shortage the country faces in the coming years, but these demographic facts are already keeping or pulling back a record number of older Americans into the work force. The labor force participation rate of workers aged 65 and older, after dropping for decades, began rising in the mid-1990s. The percentage of seniors working full-time started increasing around the same time and continues to climb. And from 2006 to 2016, the federal government projects that while the number of workers age 16 to 24 will drop, those age 55 to 64 will jump by more than a third—and those 65 and older will rocket more than 83 percent. As a July 2008 report by the Bureau of Labor Statistics puts it, “The graying of the American work force is only just beginning.”

The Weakening Economy and Retirement

By Lindsay Chin

The 2008 Bank of America Retirement Savings Survey, which reflects the mindset and behavior of approximately 1,000 people across the country, finds that six in ten (60%) Americans are spending less than they were three months ago as a result of the current economic climate. However, even with this decreased spending, more than half (51%) of the general public and 40 percent of affluent Americans are also saving less than they were three months ago - with approximately one in five citing that they're saving "much less."

The survey, conducted by Braun Research, sampled the general public and "affluent Americans," identified as individuals with investable assets between $100,000 and $3 million. Initial findings underscore how deeply troubled Americans are about their retirement savings and financial well-being, with close to one quarter (23%) of respondents indicating that the 'impact of economic turbulence on their retirement savings' is the financial issue that concerns them most.

Sunday, February 15, 2009

Planning For Retirement Could Set You Up For Life?

Most financial Web sites include a retirement calculator. You can plug in your age, how much you have in your portfolio now, how much you plan to save until retirement, and you'll get one nice and smooth portfolio projection. This is the straight-line model. You can also use a Monte Carlo simulation and get two nice and smooth portfolio projections.

But do they work? Is there anything better? My research, as outlined in the May, June, and July issues of Financial Planning, showed that there is. Here's how to make it clear to your clients that what they thought they knew was wrong.

Click to Read More!!

written by Lee Ruth

Ben Stein Talks of Retirement

Ben Stein, an economic commentator gives a general overview of Retirement.  He speaks of how to prepare for retirement, how to save toward retirement, and how much you should save to support yourself and family for the rest of your life.  He continues to discuss multiple strategies and options on how to invest your current money to ensure you have enough when it is time to retire.  This youtube video has II parts, which are both listed below if you are more interested and want to view the entire video.  
The links are posted below.

Created by: Joseph Owen

Wednesday, February 11, 2009

The Demise of Social Security?

The United State's social security system has many flaws, and the recent economic state does not help out the situation at all. The baby boomer generation will soon begin to collect the benefits of social security that they have been paying for their entire lives. The younger generations of America may not be so lucky. It is estimated that the social security trust fund will run out by 2041. This estimate, made in 2005, has been moved from 2042 as it was estimated in 2003. While 2041 does seem too close for comfort, the begginning of social security's demise may realistically be alot sooner. It is estimated that by 2017, the payroll taxes that the government collects from its citezens will no longer be able to pay for the output that the baby boomers will demand in benifits. This estimate, also made in 2005, was moved up one year from 2018 as it was estimated in 2003. It is apperent in these estimate changes that the social security problem that we are facing in America may come sooner than we may think.
There are a few different ways that may potentially help solve this problem. One solution would be to raise the payroll tax. If there is more money in the fund, than the system will stand on its feet for longer time. However, critics say that this may just be buying time and will not fix the system itself. Also, this may create havolk among the working community who will suffer from these tax raises. Another solution may be to raise the retirement age. This is an intuitive solution that also may buy the United States some time but may not actually solve the problem. One more potential solution would be to cut back on other government spending. This solution is more reasonable than the first two, but still has it's flaws. Reducing other spending programs will ultimately have a negative affect on the economy in a different way, and the current problem with social security is still not solved, but only put off. What the government really needs to do is to find some way to change the system to provide income to the elderly in a different way.


Plan for Retirement Home

By: Jeffrey Kam

Planning for retirement soon? I might be a good idea to start shopping for the house you want to retire in. Houses are lower than using in today’s market, property that are 20% below than usual, some places like Las Vegas, Naples, Fla. And Phoenix hot spots for retirement, houses have tumbled more than 30% since 2006 when those prices rise. Prices will remain constant during 2009 as some forecast reports. One of the issues that concern retirement buyers is will the house be what is worth in a decade, or more?

First, you have to understand the buying power, and the economy that affects you during this year. Fix any damages your current property or re-pay any debt with your extra cash. Understanding and re-evaluating your personal finance first, before purchasing a 2nd property. Find a new home isn’t hard here are some tips. Pick a location that has a good chance to sustain the current value or appreciate in a couple years. These places can be found near growing industry like technology, fuel expansions, new airports or health care. Start the negotiation with a lower price (10%) since most 2nd property owners’ faces financial trouble and will accept a lower price deals.

How to retire

By Amina Isakovic

What are the important resources to pull from when deciding to retire? According to the U.S. Social Security website, the three most important elements are your retirement portfolio, savings and investments, and social security benefits.

So where do you start if you’d like to receive your social security benefits. Well first off, you should take advantage of the government provided website and calculate what age fits your needs best to retire in. You can do this by going to their Retirement Planner . There you can see the percentage of your benefits that you will receive starting at the age that you were born and will retire.

Secondly, you need to get in contact with your financial advisor, or company financial advisor and see how many assets you have towards your retirement. You can’t rely merely on your social security benefits, this could become very risky. Will pensions and Social Security be enough? According to CNN, probably not. You should always start investing early in retirement, so that risky ventures can, in the end, become large financial assets that you can pull from. 401(k)’s and IRA’s are great ways to invest in your retirement.

True, we’re not there yet. We don’t have to even think about this. But at least know the laws and rules to retirement. If not, then pass it on to someone who is about to retire in today’s financial crisis.

Avoid the Myths of Retirement Saving

Post By: Dana Sunderlin

There are many things that people do not know about preparing for retirement, especially in terms of saving their money. There is an excess of information on retirement planning available to those who need it; however, amongst this information are myths and misinformation about saving your money.

There are three major retirement-savings myths floating around society today. The first is that you should “replace a certain percentage of your income in retirement.” People are typically told to replace around 74% of their income in retirement. This replacement rate winds up being much too high and was developed solely to promote sales of products, such as mutual funds. The second myth is that you should “hold a combination of stocks and bonds in your 401K.” Although it is not argued that a person’s financial assets should have diversity, it is not necessary for a 401K to be diversified. You should hold bonds in your retirement accounts and stocks in regular accounts to receive the best tax rewards. The third myth that people often come across is that “a broker can help you get higher returns.” It has been proven that around 80% of mutual funds managers underperform the market. You need to pay a high price for someone to manage your money, and it is a risky investment!

Since there are so many myths and so much false information available, the Retirement Savings Education Campaign was founded. It contains information for employees, small businesses, and employers about saving for retirement. It has separate sections of information depending on your employment status, and it has detailed information on investing and diversification. It’s definitely important to start saving early and to get the right mix of stocks, bond, and cash in your retirement portfolio. However, to do this, it is necessary to gather information that is not only useful, but 100% correct. Don’t fall for the myths of retirement saving!


Nontraditional Families Face a Greater Struggle

By: Steven Muller
Planning for retirement is not an easy task. There is a lot of anxiety that occurs because of the fear of not having enough money to live off of after working. A married couple has to carefully evaluate what can of lifestyle they want to live presently and in the future. Calculating the bills they will incur in the future is also an important step in deciding how much of a retirement fund to create. This worries are typical for the “traditional” family, but has a MetLife study has shown nontraditional families are much worse off.

These types of families include a single parent with kids or blended families where the parents have children from a previous relationship. According to the study nontraditional families are less likely to have a distinct retirement plan. This is the hardship that comes from only having one income to live off of and having a family dynamic that the focus is on blending the family together rather than their own financial stability. A lot of these families wish there were retirement tools that were specifically designed for their needs. There are currently few options that are out there.

Some tips to deal with these situations include communicating with your children about who will pay for college and other major expenses. The most important part of the retirement planning process is communicating with all the parties involve so there is a clear understanding of everyone’s goals. Knowing the about of risk that a nontraditional family, especially single parents, is incredibly important. One doesn’t want to put themselves in a situation where they can’t provide for there family in the present because of risk that was taken for retirement. Dealing with these hardships is a necessary evil that nontraditional families have to go through. However, with the right planning they can achieve their goal of retiring comfortably.

Baby Boomers Reinvent Retirement

By: Jeremy Radnor

In generations passed, retirement meant living out the final third of your life in leisure.  Retirees would play golf and go out with their friends, all while never even thinking about work.  However, the baby boomers intend to change all that.  As baby boomers grow nearer to retirement, the notion of retirement is about to change completely.

Merrill Lynch recently conducted a survey of their baby boomers and their findings were extremely interesting.  Traditionally, since the creation of social security, workers would reach 65 and then retire to a life of leisure.  Today however, baby boomers are thinking differently.  With modern medicine, the life span has grown significantly.  The average lifespan of someone who is 65 has increased by seven years.   Instead of simply retiring, many baby boomers are planning on taking up a second career in this new space of time.  42% of baby boomers have expressed their ideal retirement to be a continuous rotation between work and leisure.  While only 17% have stated that they want their retirement to be complete leisure. 

Despite the increase in the cost of life (food, medical bills, housing, etc.) 67% baby boomers have stated that the need to work comes from wanting continuous mental stimulation and challenge to “stay in the game”.  However, baby boomers biggest fear in regards to money is the cost of medical bills.  The Merrill Lynch survey stated, “They are three times more worried about a major illness (48%), their ability to pay for healthcare (53%) or winding up in a nursing home (48%), than about dying (17%).”

 Ultimately, the baby boomer generation has decided, “financial preparedness is the gateway to retirement freedom and the antidote to retirement phobia.  81% of baby boomers have decided that have enough accumulated wealth to live the way they want is more important than retiring by a certain age.