Can We Stall the Coming Retirement Crisis?

May 31, 2011

It is hard not to hear about the pending doom and gloom forecast for the baby boomers approaching retirement.  I was standing in line waiting to pick up my rental car last week and the flat screen TV on the wall had CNN reporting about how boomers “don’t even know what they are going to end up doing” since many are unprepared to face retirement and that Social Security and Medicare may fail as a safety net for the boomers.  The irony is that I was on my way to facilitate a workshop on Retirement Readiness for a company that is proactively preparing their workforce to have a financially secure retirement, bucking the trend of many employers who are putting more of the burden on the workers to save for their own retirement.  So what is the answer to having your employees take charge of their own futures and focus on building a sizeable retirement nest egg? Continue reading “Can We Stall the Coming Retirement Crisis?”

“I Have a Pension? I Didn’t Realize That.”

May 17, 2011

Less than 1 in 5 workers today have a traditional pension these days, so those that do have a pension should be very appreciative, right?  Well, not if they aren’t even aware they have a pension!  I meet with thousands of employees each year who are fortunate enough to work for companies that still offer a company-funded pension, yet they don’t even know how lucky they are and don’t realize they are accruing a pension benefit for retirement by just coming in to work every day.  I’m sure when they were hired, their new employee handbook had details about the pension, and they may even get a yearly statement mailed to them, but do they really understand what it means to them? Continue reading ““I Have a Pension? I Didn’t Realize That.””

Risk of Failure to Balance Budget

May 11, 2011

So in my last blog I outlined the real danger of government spending without a balanced budget.  If the government continues to borrow and spend, borrow and spend, borrow and spend, pretty soon Uncle Sam won’t be able to borrow any more.  If that happens – if foreign governments don’t lend the U.S. money, if investors don’t buy U.S. Government Bonds – how will the government pay for its expenditures?  This is a difficult question, and one we hope we never have to answer, but rather than cross our fingers and put our heads in the sand, we need to face this potential reality head on.  We know that the government’s going to have to do something, so here’s what you can do to be prepared: Continue reading “Risk of Failure to Balance Budget”

What the Navy Seals can Teach Us about Executing a Plan

May 06, 2011

The biggest news story all over the world right now is the U.S. Navy Seals Team Six’s mission into Osama bin Laden’s home.  This event has created an incredible amount of emotion across the globe and as of this writing, a controversy over publishing photos.  While I won’t go into a political discussion here or a religious one either, there are things that we can all take from this event and apply to our own lives. Continue reading “What the Navy Seals can Teach Us about Executing a Plan”

What Should I Consider When Taking My RMD?

May 05, 2011

I was doing some workshops for a group of pre-retirees (talk about envy!) and we were going over a lot of the basic questions that group often has, how do I know if I have enough money, how do I plan for medical costs, what should I do about my investment allocations, etc.  But the question that seemed to generate a lot of interest was if there were any strategies surrounding taking the Required Minimum Distribution (RMD).  The strategies listed below can help you be more efficient in deciding which dollars you should consider using to pay your RMD. Continue reading “What Should I Consider When Taking My RMD?”

Dividends Aren’t Enough

April 18, 2011

Dividends are a beautiful thing.  Last week I wrote about my mother-in-law’s bond fund that paid her a steady stream of dividends over the years – twenty five years to be exact.  Every month, the dividend came like clockwork and she spent it.  Now she is using the funds to pay for her care – she is 97.  This strategy worked for her because she has other funds invested in other types of vehicles.  Here is the problem with using the dividend strategy as the only strategy—even if the dividend doesn’t increase, the cost of goods and services do.  So the dollar buys less and less each year. Continue reading “Dividends Aren’t Enough”

Last Minute Tax Tips for Last Minute Filers

April 13, 2011

In case you haven’t heard, the 2010 tax filing day has been extended until Monday, April 18, 2011.  That means taxpayers get one extra weekend to find as many credits and deductions as they can before sending their returns off to the IRS.  Now it’s not often that waiting until the last minute pays off, but consider these tax tips a reward for your procrastination: Continue reading “Last Minute Tax Tips for Last Minute Filers”

How Can My Avatar Help My Retirement?

April 07, 2011

I love delving into different financial articles because, if nothing else, it provides me with new educational tools I can utilize in workshops and one-on-one conversations.  But the other thing it provides me is entertainment.  It is rare that an article can feed both.  I was lucky enough to find one that really grabbed me. Continue reading “How Can My Avatar Help My Retirement?”

Retirement Preparedness: Don’t Work Until You are 70

April 04, 2011

I read an article today titled, How to Collect Social Security and Still Keep Working?,  and found myself yelling at the computer screen in a rant similar to what I have seen my husband perform during sporting events when his team is losing.  It is out of character for me but this article got me going.  The article gives details of how much you can earn at 62 and still collect your social security and goes on to explain how income from working affects your income after you hit your full social security age (for me that is 67)  but the whole premise to me is backwards.  We CAN collect Social Security and still keep working if we time it correctly and we don’t make too much money if we are under our “full” retirement age.  But seriously, do we really want to? Continue reading “Retirement Preparedness: Don’t Work Until You are 70”

Happy Birthday to Me and to the 401(k)

March 22, 2011

The 401(k) is celebrating its 30th birthday this year – I wish I could say the same for my birthday next week!  I wasn’t quite old enough to be in the workforce back in 1981 (I was in junior high) when the first 401(k) was conceived by Ted Benna, a fellow Pennsylvanian like myself.  As I age I’ve gained wrinkles, a few grey hairs, and a few extra pounds.  As the 401(k) has matured, we’ve seen the growth of auto enrollment, auto escalation, target funds, and even the Roth option.

So why are some employees still not taking advantage of the 401(k) opportunity?  I hear excuses ranging from “I can’t afford to contribute,” “I don’t have faith in the stock market,” to “I plan to eventually after I’m sure I will be staying at my job.”  These are employees that could have been getting matching money over the years but just don’t realize how much that means to their bottom line.  I have actually spoken to a few employees who thought they WERE contributing, but they were NOT!  Try this trick that a client of ours used a few years ago as an eye-opener: Mail a dummy 401(k) statement with a zero balance to all your employees that are not actively participating in your plan.  I guarantee you will get at least a few calls from those workers that thought they were contributing and they are calling wondering why they don’t have any money in their account!

Benefits Communications: Understanding Retiree Medical and Medicare Coverage

March 15, 2011

Over the past few weeks, I’ve been on a roadshow of workshops across the country, talking to groups of pre-retirees about health insurance coverage in retirement.  These particular employees are very fortunate, since their company sponsors a group retiree medical plan, and actually still subsidizes a majority of the cost.

Even so, many of these employees still experienced sticker shock when they found out the cost of the medical coverage and had not even considered the impact on their retirement income.  We also spent some time reviewing how much Medicare will cost, what it covers, and how their retiree health plan will coordinate with Medicare once they reach age 65. Continue reading “Benefits Communications: Understanding Retiree Medical and Medicare Coverage”

Retirement Preparedness: A Wake-Up Call for Generation X Investors

March 11, 2011

Talking with a group of pre-retirees, one of the people in the room (a born entertainer) used Styrofoam coffee cups as visual aids to illustrate his point.  We were talking about incomes and expenses during retirement, and he broke out into a comedy routine/illustration of his financial life.  He filled a big pitcher with water and filled the first cup, broke out a Sharpie and labeled it “Pension.”  He had been an employee of the phone company for 40 years and has a very solid pension income.  The next cup he labeled “Social Security” and he filled that cup about ¾ full.  The 3rd cup he put a few drops of water into and labeled it “Investments.”  He said the 401(k) plan arrived a little too late in his career and he had not participated until the last several years of his career, plus he had a number of children that all went to college which left his personal savings and investment balances rather low. Continue reading “Retirement Preparedness: A Wake-Up Call for Generation X Investors”

Should I Pay Down My Debt or Save More for the Future?

March 10, 2011

There are questions in life where sometimes the best answer is “it depends” (how many times did we hear that when we were growing up?).  This is one of those questions, but I do have some solid guidelines that can help you make a decision on this question.

First, take a hard look at the interest rates you’re currently paying on your debt as well as what you are getting on your savings accounts.  In most cases Continue reading “Should I Pay Down My Debt or Save More for the Future?”

Early Retirement Buyouts: A Good Idea for Who?

March 08, 2011

A school district in Minnesota recently announced an early retirement incentive program to entice their most senior (and highly paid) teachers to retire in order to replace them with less experienced teachers with lower salaries.  The program has an interesting twist – if at least 10 teachers take the buyout, each will receive $15,000 but if at least 15 accept, then they will each receive $20,000.  I can imagine a bit of peer pressure will be felt by those teachers who are on the fence about taking the bait.

How do I know these details?  One of the teachers eligible for this early retirement incentive attended a workshop I was facilitating at her husband’s place of employment, where I happened to be discussing details on Retiree Medical and Medicare coverage (which happens to be next week’s subject I’ll cover). Continue reading “Early Retirement Buyouts: A Good Idea for Who?”

Financial Lessons from a Group of Retirees

March 04, 2011

I have had the opportunity lately to talk with a number of people who have been retired for at least a decade.  I asked them to take a look back at their financial lives to see if there were any lessons they had learned that today’s workforce could learn from.  All of these people were comfortable financially and had successful careers in their chosen fields.  I did not expect to hear so many comments about what they would do differently if they had the opportunity to turn back time.  They had some advice for their grandchildren’s generation, and here are just a few of their observations and recommendations: Continue reading “Financial Lessons from a Group of Retirees”

Are You Saving Too Much?

March 02, 2011

When was the last time someone asked you if you thought they were saving too much?  Someone recently asked me this question and at first I was taken aback.  How is it that anyone could have money to save, let alone enough to wonder if they were saving too much?  Didn’t we just go through a recession?  Aren’t we all just swimming in debt, living paycheck to paycheck, desperately trying to make ends meet? Continue reading “Are You Saving Too Much?”

Retirement Preparedness: Save Forty Years then Spend Forty

February 28, 2011

Think about it.  We work for forty years of our lives starting from our early twenties to sometime in our sixties.  Then we have to support ourselves for the rest of our lives.  In other words, save for forty then spend for twenty, thirty or even forty years depending how your cards are dealt.

In my case, the longevity hand I was dealt isn’t the strongest.  Continue reading “Retirement Preparedness: Save Forty Years then Spend Forty”

Where Do Your Employees Stand Regarding Retirement Preparedness?

February 22, 2011

Employees are grossly unprepared for retirement, and employers are growing increasingly concerned about the cost of delayed retirement, which is estimated to be $10,000-$50,000 per year for every year an employee  postpones retirement.   The implications of this problem are huge, making it the second most pressing issue HR departments are facing, after health care. Continue reading “Where Do Your Employees Stand Regarding Retirement Preparedness?”