Entries Tagged 'Retirement' ↓

The following extract is from a series of articles, videos tips and information about personal finances …

Out of sight, out of mind. That’s pretty much how the 401k retirement plan works. You enter into a contract and your employer deducts a certain percentage of your income (pre-tax) that gets tucked away towards your retirement. Sometimes, if your employer is particularly wonderful, they will agree to match your contributions, so your final pay-out will be twice as much as what you put in.

What makes the 401k retirement plan different from other pensions is its flexibility and the amount of control you have over it. Some options include: What percentage or flat monthly rate do you want to contribute? Also, where do you want to invest? Your employer will provide you with a selection and you can choose between stocks, mutual funds, bonds, money market investments, company stock or any combination of these investment vehicles. You may also appoint a financial adviser to make the choice for you. As with anything in life, there are risks. If your company goes bust, you may lose a huge portion of your retirement savings, especially if you’ve invested heavily in company stocks. You may choose to actively participate in where your money gets invested because some annuities may be losers, while others are winners. Many financial planners will advise you to diversify where your contribution goes so you don’t “put all your eggs into one basket.”

Check with your employer to see which 401k retirement plan you’re under. Either defined benefit or defined contribution. Under a defined benefit plan, your employer has control over the final pay-outs, which do not fluctuate as financial markets do, but instead are based upon your salary history and years employed. With a defined contribution plan, you’ll have more control over how much you put in and where it’s invested, but less guarantee on how much you will end up with when you retire.

When you leave an employer, generally your 401k retirement plan remains active for the rest of your life. If you don’t feel comfortable leaving your savings in the care of your ex-employer, or if your company charges a fee for looking after your account, you may rollover 401 k benefits into an Individual Retirement Account. Look into the rollover 401 k if you’re changing employers too. You’re allowed to draw on your 401k retirement plan after age 59 1/2 and you will then pay taxes on what you take out. Most plans have a minimum distribution requirement you must abide by, meaning that once you reach age 70 1/2, you’ll have to start to withdraw some of your money, unless of course, you’re still working. The only plan that is exempt from the minimum distribution rules is the Roth IRA. You may decide to take a crash course in investing and take a more active role to ensure maximum returns.

For more information on the 401k retirement plan, you can purchase retirement planning software like Quickbooks, or research retirement planning services at places like Fidelity Financial. The best thing you can do is to invest wisely, diversifying where your money goes or devising a supplemental retirement plan in case your 401k or pension doesn’t turn out the way you had planned.

For more tips and videos on managing your money, visit: Personal Finances

Most people these days understand the definition of a mutual fund, however many do not know what mutual fund ratings are. Mutual fund ratings are the numerical scale that is placed on funds to determine the history of their performance. As a result, the best performing mutual funds will have the best mutual fund ratings.

Although the rating is not indicative of the amount a fund will grow or will perform, it is closely related. Judging by the history of the fund in which you are looking at you can often tell whether this fund will do the same or better than another similar fund.

If two funds are of similar style and similar ratings they will normally tend to follow the same patterns. They will typically invest in the same types of equities and will usually produce similar results. Meaning that if one is enjoying positive results the other one should be too. And also the flip side that if one is losing money the other will normally lose money as well.

The style referenced above is essentially a term that is utilized by people in the mutual fund business to determine the majority of the stocks in which they invest. There are many different types of stock. There are mutual funds called large cap funds, small cap funds, real estate funds, cash funds, and emerging markets funds. These are just a few of the different style.

The key here is that not all funds with high ratings will perform the same as other funds with high ratings. For instance there can be a high rating placed on a real estate mutual fund and a high rating that is placed on a large cap fund. If the real estate market is declining then their fund will decline likewise. Also the large cap fund may be increasing because the market is good for those types of stock.

There is also the possibility that a large cap based mutual fund with the same rating of another large mutual fund will not perform in the same manner. For instance there are two different types of cap funds. One is the growth fund and the other is called the value fund. They are different in the fact that they focus on different types of stocks and thus they can perform differently than each other.

One of the drawbacks with retirement is not having enough capital to sustain you in your golden years.

Phased retirement has emerged as a real answer to this ongoing problem especially for people with hard to replace skills in the work force. By hard to replace skills, we mean having developed an expertise in a particular area of your profession which an employer will find difficult to replace in a hurry.

Well, if your expertise is going to be missed, then the chances you’ll be asked to stay on are strong.

Why Would You Want To Work In Retirement?

One of the biggest issues for American retirees is the on going cost of maintaining a lifestyle they’ve become accustomed to. When the income stops, so do some of the perks. This is especially so for those who have been careless with their retirement planning.

Healthcare costs are just about the biggest issue for people in their retirement years, as health care is usually a necessity later in life.

Phased retirement is basically an arrangement between you and your employer which will see you able to work well past retirement age. However, it more than likely won’t be in a full time capacity but is seen as a win-win situation for both you and your employer.

At the moment, there doesn’t seem to be anything set in concrete about phased retirement which is the official guide so to speak.

Phased retirement practices are a little diverse at the present time and while some industries are unofficially practicing it, the real crunch will come when the baby boomer generation starts to exit the work force from around 2010 and beyond.

Self employed people can also look into PR arrangements. If you have a business and plan to sell it at retirement age why not consider staying on in a part time capacity if an arrangement can be struck with the new owner.

If you’re coming up to retirement age and worry about maintaining meaning in your life once you exit the work force then don’t.

There are several great options to consider as part of your retirement planning. Today, people are living longer thanks to modern medicine and advances in nutritional research and while this is great in a sense, it means making your retirement planning count much more as your nest egg needs to sustain you for a longer period of time.

The problem is though as a baby boomer, you’re not ready to accept old age. This means as a baby boomer you’re also part of the largest spending group in human history which means you may have been a little extravagant with your money. But that’s the nature of many boomers who refuse to let old age become an obstacle in their quest to enjoy all life has to offer.

Phased Retirement

Phased retirement is still basically a term but will gather momentum during the next few years as boomers hit retiring age.

Basically, phased retirement, will give you the opportunity to continue to work in some capacity past whatever age you decide to retire. There will be a broad range of options available.

- you could consider a new part-time career
- establish a flexible work schedule with your current employer
- stay with your current employer or former business as a consultant
- sell your business but stay on in a part-time basis

The idea of phased retirement, is to not only ease one into their golden years but to also maintain security in the shape of income. Yes, there will be tax and pension considerations but phased retirement is still basically at birth stage with many issues to be sorted out.

Join A Community

Going online and becoming part of a thriving community is a choice many smart retirees will make and will form part of retirement planning options.

For example, membership sites online offering everything from health and fitness news, financial news, income opportunities and lifestyle information will become big business in the not too distant future.

Forums within these online communities will be a safe and effective way of meeting up with other smart retirees.

The western world is going to experience a major impact from 2010 and onwards and it’s an impact that’s been predicted for sometime. We’re talking about the mass exodus expected from the workforce by our baby boomer generation who number about 80 million just in the United States. The Aging Work Force

It’s not just an aging population, it’s also an aging work force and the question needs to be asked…”Can industry afford to lose such a highly skilled generation in mass proportions?

The short answer is no, yet planning for retirement is one of the main issues when people get close to the golden age of hanging up the work boots. What would happen if one third of the work force phased out over several years?

Industry To Suffer From Mass Exodus

Industries such as teaching and nursing are expected to suffer through loss of expertise. It’s the expertise factor which is going to hurt many industries.

Good news if you plan to keep working after hitting retirement age. The subject of retirement planning should sensibly start at a very young age, preferably in a person’s twenties yet sadly, many haven’t started building a nest egg until they hit their forties.

The topic of phased retirement has started to become more and more widely discussed and while we may not see it come to fore until baby boomers decide to call it quits, phased retirement is already being tried in some industries.

What Is Phased Retirement?

In a nutshell, it’s simply an option for people who want to keep working but don’t want the long hours associated with it. In other words, it’s a reduced and more flexible work schedule.

It really is a win-win situation; the retiree gets to keep earning income while the employer retains a lot of the expertise they worked so hard to establish over a number of years.

Studies during 2007 have indicated people who suddenly retire without any significant purpose in their lives, find it tough going and having purpose is what makes this option very attractive.

One of the drawbacks with retirement is not having enough capital to sustain you in your golden years.

Phased retirement has emerged as a real answer to this ongoing problem especially for people with hard to replace skills in the work force. By hard to replace skills, we mean having developed an expertise in a particular area of your profession which an employer will find difficult to replace in a hurry.

Well, if your expertise is going to be missed, then the chances you’ll be asked to stay on are strong.

Why Would You Want To Work In Retirement?

One of the biggest issues for American retirees is the on going cost of maintaining a lifestyle they’ve become accustomed to. When the income stops, so do some of the perks. This is especially so for those who have been careless with their retirement planning.

Healthcare costs are just about the biggest issue for people in their retirement years, as health care is usually a necessity later in life.

Phased retirement is basically an arrangement between you and your employer which will see you able to work well past retirement age. However, it more than likely won’t be in a full time capacity but is seen as a win-win situation for both you and your employer.

At the moment, there doesn’t seem to be anything set in concrete about phased retirement which is the official guide so to speak.

Phased retirement practices are a little diverse at the present time and while some industries are unofficially practicing it, the real crunch will come when the baby boomer generation starts to exit the work force from around 2010 and beyond.

Self employed people can also look into PR arrangements. If you have a business and plan to sell it at retirement age why not consider staying on in a part time capacity if an arrangement can be struck with the new owner.

The issue of retirement planning has never been as important as it is today. If you’re a baby boomer, then the next few years are going to be the most crucial of your life.

As a baby boomer, you’ve already heard over and over again you’re part of the largest spending group in human history. You’ve been responsible for more trends in the past half century than any group has before.

Baby boomers are those who were born from 1946 to 1964 and yes, many are getting close to retirement age. Have you saved adequately? More importantly, have you planned for your retirement?

The truth is, many baby boomers simply won’t be able to retire into a life of bliss and worry-free debt. In fact, many simply won’t be able to afford to stop working. There is a revolution brewing within the retirement age group and it seems many simply don’t want to stop working, not because they can’t afford to but because they want to keep collecting a pay check. In actual reality, when someone suddenly stops working, a lot of meaning to their life also disappears.

Meaning is one of the most important facets in human life. For retirement planning, a person needs purpose in their lives and being a contributing member of the work force gives them this meaning.

When there is a mass exodus of baby boomers from the work force from 2010 and beyond, there is going to be a lot of skills lost to industries and the simple fact is, there doesn’t appear to be the same skill set ready to take it’s place.

Almost one third of the work force in the United states for example is aged 45 and over. That’s a massive chunk of available talent and skill. Even more interesting is the fact the medium age of workers is about 40. Can we really afford to see a mass exodus of baby boomers disappear from our manufacturing and professional industries?

For baby boomers, retirement is looming quickly. Retirement planning is a real issue today. Baby boomers are regarded as the biggest spenders in human history.

What happens when they retire? Do they want to hang up the work gear and equipment? It was never supposed to happen this quick. Suddenly retirement planning doesn’t look so good.

We’re tipping many of them don’t want to retire either because they can’t afford to or if they do, then they will lose lots of meaning to their life.

As humans, one of our driving forces is having purpose and meaning and the sad fact is, when we reach our golden years, unless we have something of purpose to base our lives around, then it becomes a struggle.

The term Phased Retirement is not very well known now but I’m tipping when the first of the boomers start to hand in their employment identification cards from about 2010, Phased Retirement will become somewhat of a buzz term.

What Is Phased Retirement?

Planning for retirement doesn’t seem important when you’re in your 20s. For many retirees, when it’s time to join the retirement club, many will miss that weekly income.

Phased Retirement is basically described as…”Phased Retirement is any non-traditional work arrangement that allows you to keep working far past the typical retirement age.”

Instead of stopping work completely, you may decide to keep working. It means you could create a relaxed work schedule with your employer or if you’re a business owner, you may strike up a deal to continue working on a part time basis after you’ve sold the business.

In a nutshell, when the baby boomers start leaving the work force in numbers, a lot of irreplaceable expertise is going to be lost. Retirement planning should include a Phased Retirement plan which is a way to retain a lot of that expertise and help the retiree to keep earning income to cover their living expenses.

Bond investing offers almost as many options as investing in stocks. Bonds are a critical component of the diversified portfolio, and taking time to compare stocks vs bonds in terms of one’s investing goals is important to creating a balanced portfolio.

There are low yield bonds, often issued by government entities, that provide small but steady returns for little risk. There are higher risk, and thus higher yield, “junk bonds” issued by financially shaky institutions, typically companies struggling to raise funds. All of these bonds are available in the long and short term and are priced according to the mechanics of the debt market.

Bond holders tend to be first in line when financial troubles loom on a company’s horizon. In the event of bankruptcy, holders of the company’s stock will see their shares become worthless paper, while debt holders are given the proceeds of asset liquidation, etc. While this may end up being pennies on the dollar, the advantage of bond investing over owning shares of a failed company is clear.

mutual fund bond investing is not just for the individual investor. Some large mutual funds own a mix of stocks and bonds. Some will sell short stocks in addition to owning them. There are “opportunistic” funds that look for dislocations and inefficiencies around the world, and “market neutral” funds that reap gains regardless of whether markets are climbing or selling off — all seeking to maximize returns through the use of hedging techniques and the use of leverage, or borrowed money. The ultimate aim is simply to buy low and sell high in increasingly volatile, and therefore uncertain, global financial markets.

Getting a clear view of financial markets can be a challenge in itself. Mutual funds advice can be found on the pages of financial magazines and newspapers. Past performance is usually the main driver of many reviews of these funds. However, sophisticated investors today tend to want peace of mind, too. This typically means investing in a fund that follows a particular philosophy on controversial matters like labor practices and the environment.

A sound investment philosophy can fetch a hefty premium today, as global financial markets gyrate and exhibit a level of volatility not seen in many years. Even bond investing has its risks as uncertainty over interest rates and the global economy remain prominent issues on the mind of investors. But whatever the risk profile of the investor, there is likely a fund that will be a decent fit for one’s portfolio.

As an investment planner, I have one simple rule about human nature. By the time someone asks me about retirements benefits, they are usually starting about 10 years too late. Retirement planning, you see, is a long and tricky process. It is especially important for all us baby boomers to begin planning now. If I had my way, everyone would start planning for retirement as soon as they entered the workforce. This might seem pretty conservative to you, but it has a certain logic if you think about it.

You see, a retirement is the culmination of your working life – your award for years of hard work. If people put even half of the money they spent on fast cars, expensive holiday vacations, and other trivialities into retirement funds, they could be done with work years earlier. It doesn’t require sacrificing a good standard of living. Just using some good financial common sense is enough.

Of course, there are many different retirement planning issues to deal with. Getting a job that offers an IRA or some type of pension benefits is always a good idea. The great thing about getting a position that does some of your retirement planning for you is that it is automatic. You have no choice to put off investing in retirement for another month or another year. Your employer handles those details for you so, whether or not you like it, you will at least be somewhat prepared when the time comes.

Of course, pensions are great, but ideally you should have some retirement planning above and beyond them. Your retirement benefits, after all, are not likely to be enough to cover the life you want to live as a retiree. Of course, pensions are great, but ideally you should have some retirement planning above and beyond them. Your retirement benefits, after all, are not likely to be enough to cover the life you want to live as a retiree. Who wants to spend their last years dirt poor? That is precisely when you should be taking those luxury vacations, traveling around the world and enjoying life! After all, out of all of the retirement benefits there are, the biggest one is free time. You will enjoy it more if you can be carefree about your finances.

Another reason why you shouldn’t depend too heavily on employee benefits is the notorious instability and corruption that so many businesses have shown in the last few years. Who knows if your retirement benefits will be plundered by ruthless executives, or if your company will go under years too soon to offer you the retirement package they had promised. It all comes down to one fact: the only person you can really trust with your financial planning is yourself.