Do you have a 5/10/20 Year Retirement Plan?

Think your expenses will drop in retirement? Don’t count on it!

Tips for a planning ahead on your retirement plan

5-10-20 year retirement plan“In the first two years of retirement, 28.0 percent of households spent more than 120 percent of their pre-retirement spending. By the sixth year of retirement 23.4 percent of households still did so.”1 

If you’re 5 years away from retirement:

  • Make a list of retirement “needs” and “wants.” If you do not have enough savings for all your “needs,” make a five-year plan to increase your funds.

Continue reading

Individual Retirement Accounts (IRAs) Celebrate its 40th Year

Individual Retirement Accounts turn 40

Happy Birthday, IRAs!

January 1, 2015 marks the 40th anniversary of Individual Retirement Accounts (IRAs) in the United States.  Born from the passing of the Employee Retirement Income Security Act (ERISA) of 1974, IRAs were created to protect workers’ earned company retirement benefits and transfer them to their own retirement accounts, thus the name Individual Retirement Accounts. IRAs also provided an alternative for Americans to save on their own rather than depending entirely on company pensions to fund their retirements. With fewer lifetime employees and increasing mismanagement or underfunding of pension plans, IRAs shifted the financial responsibility and the risk from the employer to the employed.  IRAs have proven to serve as a vehicle to give Americans more control over their retirement savings and have become the ultimate retirement savings vehicle as many retirement contribution plan funds end up in IRAs as rollovers from 401(k), 403(b) and other company plans.

Continue reading

Rethink Your Retirement Income

Are you saving too much? Here’s how to look beyond the formulas.

Article credits: The Wall Street Journal by Kelly Greene 12/21/13

Retirement SavingsThe only hard-and-fast rule for how much retirement income you will need is that there is no hard-and-fast rule.

The financial industry’s typical rule of thumb—which states that retirees need to save enough to be able to replace 75% to 85% of their preretirement income every year after they stop working—isn’t really useful for many people.

New research shows that many retirees can live well on less than that but others rack up higher expenses through travel, expensive hobbies or medical costs that can’t be avoided.

The 75%-to-85% ratio may work for younger workers who have no way of knowing precisely what their incomes or expenses will be as they head into retirement.

But if you’re closer to the finish line, it’s crucial that you figure out for yourself how much you personally will need in “replacement income”—or the percentage of your working income you’ll need in retirement—so you can get a better idea of whether your savings, any pensions and Social Security can provide it.

Continue reading