With the yearly chore of tax filing upon us, all those year-end retirement account statements can become quite confusing for your group of employees who have chosen to remain in the workforce into their seventies. Which accounts can they still contribute to? Which accounts do they need to take a withdrawal from? Continue reading “Educating Older Workers on the ABCs of RMDs”
My most popular blog post (and the most popular one on our whole blog) called “How to Be Financially Independent in 5 Years (No Matter What Age You Are)” was about a concept called “Early Retirement Extreme” in which people save very large percentages of their income to be financially independent before they even turn 40. For example, if you save 75% of your take-home pay and earn a 5% real rate of return, you would have enough savings in just 5 years to maintain that standard of living for the rest of your life (assuming a standard 4% safe withdrawal rate of your initial savings amount and adjusted each year for inflation). While this would probably not be realistic for most people, the more you can save, the sooner you can be financially independent to use your time as you see fit. (The author of the blog that inspired my post actually ended up going back to work but out of enjoyment rather than financial necessity.) But in addition to the challenge of living on much less income than we’re used to, there are some other considerations facing anyone looking to retire extremely early: Continue reading “How to Plan for an Extreme Early Retirement”
When it comes to topics to write about in this blog, I usually look through the news or around the home, but this week’s topic actually comes from another reader, not because they asked me to write on a particular topic—although I welcome your suggestions—but rather because the reader gave me a new way to look at an old subject. I’ve written many times already on the topic of Roth IRAs, and each time I’ve taken the position that the Roth was somehow sacred, and that everyone in America should have one, but my new online friend gave me some compelling arguments as to why I shouldn’t be so down on traditional retirement accounts. Rather than try to recap the conversation, I welcome you to scroll through the dialogue that is found in the comments section of my June 8, 2011 blog titled To Roth, or Not to Roth. Continue reading “Unconventional Wisdom: Confessions of a Financial Professional”
My favorite gift from this past Christmas has to be my new Kindle Fire. I would have never bought one for myself, however, because I swore that the reading experience from turning the pages of an actual book could not be duplicated. But now, I am a Kindle convert. Not only because it gives the look and feel of a real page in a book; I now have access to hundreds of books for FREE in the Amazon bookstore. Continue reading “Sparking the Interest of Retirement Readiness with Your Employees”
If you have ever sat through a retirement planning workshop then you probably know that 401(k) plans and traditional IRAs are subject to required minimum distributions (RMDs) starting in the year you turn 70 ½, but what you might not realize is that RMDs from 401(k) plans are NOT required as long as you continue to work. Recently I received an email from a webcast participant who wanted to know when he would be required to take a distribution from his 401(k) plan, and how the distribution would be calculated. Continue reading “Working Past 70 and a Half”
My mother-in-law, Stella Anderson, passed away in her sleep last month with her family at her side at the age of 97. She was dearly loved and will surely be missed. At her memorial service, her granddaughter (my niece) Britt Anderson spoke lovingly about lessons she learned from her grandmother which made me reflect on some of my own – financial lessons I picked up from her over the years. Some of the lessons Stella taught her grandchildren were intentional, of course, but other lessons were learned from observing how Stella lived her life. Britt shared the “intentional” ones first: Continue reading “The Most Important Lessons in Life are the Unspoken Ones”
I read this article on Bankrate.com about investors’ belief that target date funds come with a guarantee of a sufficient retirement income. The statistics are a little bit startling (51 percent — of people investing their retirement savings in target-date funds see them as a retirement planning panacea and think that putting their money in them guarantees their retirement income needs will be met), frightening even, from the perspective of a financial planner. The conclusion of the article is: Continue reading “The Truth About Target Date Funds”
Over the last month, most of my working hours have been spent talking to people about the reality of deciding, in a short time window, if they are going to retire in the next several months. Why? These people have all been offered an early retirement incentive package with a deadline for accepting or rejecting the offer. This meant that, for them, retirement was no longer something that was “out there in the future.” It became a “right here, right now” opportunity. There were things I learned during that process, and over the next 2 weeks I’ll talk about the “universal” factors. Each person had their own story, their own situation, and their own set of circumstances that was remarkably different than anyone else’s. But, there were some factors that were important to every single person I met. They all asked about several factors that would impact the rest of their lives. Here are the first few factors (more to come next week): Continue reading “Things to Consider if You Were Offered an Early Retirement Incentive Package”
There is a series of humorous commercials that show men and women holding a long, seven-figure number under their arm. This number is supposed to represent “their” number; the amount they will need to save in order to enjoy the retirement they are looking forward to. It seems silly, but the truth is, very few people actually know how much they will need to save in order to retire comfortably. Even our own research suggests that only about one in three employees has used a retirement calculator. With so few crunching the numbers, it’s any wonder retirement confidence is at record lows, but the good news is that this number doesn’t have to be a mystery. Let’s look at six (relatively) easy steps to finding yours: Continue reading “Do You Know Your Retirement Number?”
“Why didn’t I sell before the market dropped?” is a question I got from a caller to our helpline last week. This is a common question, as you can imagine, after a big drop in the market or during an extended bear market. This caller was extremely frustrated because he was stuck between a rock and a hard place. He had already turned in his paperwork to retire within the month (too late to cancel) and was making a transfer from his 401(k) to a pension purchase to provide additional fixed income – essentially changing the goal of this money from long term growth to income. The market drop would lower his monthly income for the rest of his life because his lump sum was being used to calculate his monthly income payment. He was distraught. Continue reading “Why Didn’t I Sell?”
One of the things that makes the lives of financial planners so difficult is that we usually have to get people to do what they don’t want to do, so that they can get what they want. In other businesses and professions, you’re generally either providing a good or service that will provide some immediate pleasure or alleviate some immediate pain.
Financial planning is more like dieting and exercise. Almost all the pain (saving money, taking a little more investment risk, diversifying out of your favorite stock, or taking the time to draft boring estate planning documents) is upfront for a gain (being debt free, having enough money to retire, or making sure your family is taken care of in case something happens to you) that often seems distant and far away. Continue reading “How to Be Financially Independent in 5 Years (No Matter What Age You Are)”
The other day I was talking to an extreme saver , Jonathan Fogel, an attorney in Brooklyn who follows something called “Retirement Extreme” where he is living off of 25% of his income and saving 75%. Until I talked to him, I thought he might be a little crazy! I must admit I have a bit of an anti-frugal bias because of some bad experiences when I was a young woman – having to buy everything at yard sales and shopping at the bulk stores. As a financial planner and financial educator, savings is highly valued, of course, but “extreme savings” has always been associated with “extreme pain” and deprivation. So, that is what I was expecting when I talked to Jonathan about his experience. Continue reading “How to Buy a Bike and Other Major Purchases”
As part of my four-part series, I’ve been exploring what I see as the four key reasons why employers do not prioritize benefits education, even though the majority of employers are very eager to increase employee satisfaction with their benefits package. These four reasons are: Continue reading “Obstacles to Benefits Communications”
The secret to a good retirement planning strategy can be found in Las Vegas, but not at the poker table. The SHRM 2011 Annual Conference and Exposition kicks off on Saturday, June 25th at the Las Vegas Convention Center and promises to be loaded with practical tips, informative HR sessions, new innovations, and networking opportunities – not to mention nonstop entertainment, Vegas style. Continue reading “Could Vegas Hold the Answer to Your Employees’ Retirement Jackpot?”
The other day, I have to confess, I was in a very sour mood as I just found out my flight had been delayed (that never happens right?) and I was not going to be home for THREE HOURS. Why did this bug me so much? My wife and I were scheduled to look at some homes as we are still in limbo relocating from California to Chicago. So this three hour delay cost me the ability to view some possible locations and extended our time horizon of not having a home by at least another week. The only redeeming factor here is that this delay was out of my control. Continue reading “What Will it Cost if You Delay Saving for Retirement?”
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?”
It was only after my son Ethan got home from school and played an April Fools’ Day joke on me that I even realized it was April. In the spirit of laughing at ourselves, I thought it would be fun to do my best David Letterman impression by offering what I consider to be the top ten most “foolish” financial decisions we make: Continue reading “Top Ten Most “Foolish” Financial Decisions”
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”
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”
It seems that every retirement planning workshop I do lately, this question rears its head. Used to be not too long ago many people didn’t know what a reverse mortgage even was (Quick definition of a Reverse Mortgage: A special type of home equity loan for persons 62 and older. The loan proceeds can be in the form of a lump sum, cash advance, or a line of credit. The loan does not usually have to be repaid during the homeowner’s lifetime, which is why it is often used by retirees.) Now that people are aware of this investment product, it has suddenly started becoming a first choice answer to retirement security for some people. Continue reading “Is a Reverse Mortgage Right for Me?”
