In 1980, the concept of the 401(k) as we know it was born at the Johnson Cos., a benefits consulting firm located not too far from my home in Pennsylvania. Sadly, the founder of the firm, Edwin T. Johnson, passed away last month at home after a long battle with cancer. Mr. Johnson had been helping his clients with pensions, retirement plans, and health insurance since he started his company back in 1963. Continue reading “A Sad Farewell”
Do you have a retirement plan from a former employer? Last week, I received two separate questions about what to do with a 401(k) from a previous job. Both times the person asking the question was thinking about moving it and both times they decided to leave it where it is after reviewing the pros and cons. Continue reading “7 Reasons NOT To Roll Your Retirement Plan into an IRA”
In her blog post last week, Linda Robertson wrote about her experience at this year’s ISCEBS Employee Benefits Symposium and in particular, a presentation by former U.S. Comptroller General David Walker about “The Future of Retirement.” Walker spoke about the growing national debt and the impending insolvency of the Social Security, Medicare, and Medicaid programs. He then argued that it will take a combination of both tax increases and benefit cuts to dig our way out of the hole. To the degree that we don’t take these steps, we could see higher inflation by either the government trying to print money to cover the debt and/or investors dumping the U.S. dollar in anticipation of or reaction to a devaluation of the US dollar. So what does this all mean for us? Continue reading “Are You Ready for “The Future of Retirement?””
An interesting topic I heard repeatedly at this month’s ISCEBS Symposium in San Francisco had to do with the concern of future health care costs becoming a critical variable in the retirement income equation. Several of the major plan providers held sessions that focused on the next generation of retirement planning tools that will be needed to recognize and personalize health-related issues. By now, most of us have heard the estimate of close to a quarter million dollars that a 65 year old married couple may face in out-of-pocket health costs throughout the rest of their lives. But since that’s an average, some will need much more. Some will need much less. This will depend on the health and medical needs of the retired couple, so that is why Putnam Investments has recently introduced a new retirement calculator that incorporates 7 data points from a health risk assessment into the income needs formula to estimate future projected healthcare expenses. Continue reading “The Intersection of Health and Wealth Planning”
I’ve written before about the Early Retirement Extreme concept, in which people save as much as 75% of their after-tax income in order to become financially independent in as little as 5 years. I recently came across a post in Forbes called Why You Need to Ditch Your Retirement Plan that was surprisingly written by another financial planner who argues essentially the opposite: that people should stop worrying about saving for retirement and enjoy life now. That could mean taking a lower paying job that you like more or working fewer hours, even if it means saving less and retiring later. He points out that working longer wouldn’t be so bad if you love what you’re doing. Continue reading “Should You “Ditch Your Retirement Plan?””
Last week I hit the road to conduct retirement planning sessions for a couple of mid-sized companies up in New England, and many of the attendees had some serious concerns about the future of Social Security. I heard younger workers complaining that Social Security is a Ponzi scheme and older workers expressing their confidence that any fixes to Social Security probably won’t hurt their own benefits since past changes have been gradually phased in over time. Not surprisingly, many of the misconceptions that were being voiced to me are on the list of The Top Ten Myths About Social Security by Morningstar columnist Mark Miller. Continue reading “Are Your Employees Falling for These Social Security Myths?”
If you haven’t been saving for retirement, putting even a little away on a monthly basis can have a huge impact on your future quality of life – especially if you invest in a tax-advantaged retirement account like your employer’s 401k plan or an IRA. This is because of compound interest: If you don’t have to pay taxes on the interest your account earns, that interest stays invested and earns yet even more interest – and the longer you’re invested, the more money you can make. For example, a mere $50 invested every month for 30 years will turn into almost $75,000 if it earns 8% annually – even though your total investment was only $18,000. Continue reading “Top 4 Ways to Begin Investing for Retirement Today”
I am always looking for interesting ideas and stories about people who choose a different path financially. I haven’t always done things the standard way; I lived on my boat for 3 years, which made people think I was either crazy or cool. Either way, it was definitely out of the realm of the “normal” path. Continue reading “One Radical Way to Reduce Your Cost of Living in Retirement”
When I was growing up, I was surrounded by numbers and I actually liked that. (Yes, I’m admitting that I’m a geek from way back.) My friends and I could tell you the batting average of almost any member of baseball’s Hall Of Fame and the stats of major NFL players, compute a pitcher’s ERA in our heads or talk about the winning percentage of various great teams throughout history. Numbers were fun! Numbers were cool! (To us, at least…) Numbers were all that was right with the world back then…Last week, I read an article about the cost of healthcare during retirement and those numbers scared me! Continue reading “What’s Scarier Than Monsters??? Numbers…!”
She proved me wrong. When my first appointment of the day for a work site personal financial planning session came in, I was skeptical because the first thing she said was that she wanted to retire in six months and she was sixty years old. I raised an eyebrow and told her, “It’s not easy to retire at sixty – in fact it is really tough. Not many people do it these days.”
Continue reading “You Can Retire at 60!”
The IRS has given us 2 extra days to file this year due to April 15th falling on a Sunday and the recognition of Emancipation Day on April 16th. This also provides a few extra days to consider contributing to an IRA. Your employees are probably aware that any changes they make to their 401(k) contributions can’t impact last year’s tax picture but do they know about the ability to make a prior year contribution to an IRA and how an IRA contribution can increase their overall tax refund with a Saver’s Credit? Continue reading “1 Week to Go – Remind Your Employees of the IRA Deadline”
I told you last week about a caller who was still unsure about her financial capacity to retire despite having $1.5 million in her nest egg. The purpose of her call was to get a second opinion on how her retirement nest egg should be invested. A financial advisor wanted her to roll the money over to an IRA and invest it in a moderate balanced portfolio so that she would not run out of money but she wasn’t sure if that was the right thing to do. I’m glad she called because we discovered a few interesting facts during our conversation: Continue reading “Your Advisor Told You What?”
The resident financial planners at Financial Finesse handle a variety of difficult questions from employees representing many different walks of life and unique backgrounds. One common area of concern these days is retirement. In fact, nearly 31% of all employees indicate that retirement is their number one financial planning priority. A recent helpline caller represented a perfect example of how a seemingly complex retirement planning scenario can be simplified using some quick and easy to use retirement planning tools. Continue reading “Does Calculating Your Retirement Needs Even Matter?”
Last week I received a call from Ann who could not decide if she was ready to retire. Based on the lifestyle she’d like to have in retirement, she needs about $70,000 a year in income. If she retires right now, she will receive $52,000 in pension benefits, $11,000 in Social Security benefits, 80% of her retiree health benefits paid by the company, and have $1,500,000 in savings. Hmm…sounds pretty good, so why on earth is Ann so torn over making this decision? The truth is there are a lot more things to consider than just finances when it comes to retirement. Continue reading “Are You Sure You’re Ready to Retire?”
With spring right around the corner, it seems employees start to ask themselves if this work stuff is really worth it. This week alone I have seen an uptick in the number of employees that are contemplating whether or not it is time to take this next step. Here is just a smattering of the questions we have received via phone calls and emails this week alone: Continue reading “When Do You Know It’s Time to Retire?”
If you’re like most people, you may not know much about investing or quite frankly, even care to know. Perhaps you’re only vaguely aware of what’s going on in the stock market and rarely look at your 401(k) performance. The last thing you want to worry about is researching and monitoring mutual funds. Yet, you’re responsible for choosing and managing the investments that will help determine whether you can retire early or end up having to eat cat food in your retirement. Continue reading “Investing for People Who Hate Investing”
Housing costs and related household expenses make up the single largest spending category for Americans over fifty, a recent study by Employee Benefit Research Institute reports. This has many pre-retirees concerned because for most retirees’, their income declines or is fixed but certainly doesn’t grow. At the same time, expenses just keep on coming. While household expenses eventually decline with age as Americans reach their mid–eighties, health care costs increase substantially for that age group, wiping out any advantage of the cost savings. Continue reading “7 Ways to Reduce the Single Biggest Expense for Retirees”
We recently received this question on the Ask a Question to a Financial Planner section of our blog:
“I have $35k in bank card debt+$30k in retail credit debt. Bank interest range 13/23%, retail 18/29%. I’m 63, and have $40k in a 401acct where I work. I want to retire this year with two company pensions ($1750/month) and early SS($2400/month, both wife and me). I need to get rid of some monthly payments of debt, where should I use my 401 money toward this goal. All my debt is unsecured, my home is paid off, health is good. I’m ready to go fishing.” Continue reading “Using Your 401(k) in Retirement”
On Sunday, October 30th, I ran the Marine Corps Marathon in Washington, DC.
Call it a “runner’s high,” or chalk it up to trying to distract myself from my painful feet, but I spent much of those five-plus hours in deep philosophical thought. I thought about the courage of our military, as I studied the faces and dates of too-short lives emblazoned on the backs of so many runners. I thought about the dedication of the spectators, who not only waited for several chilly hours to catch a 10-second view of their runner, but also propelled 19,999 other runners to the finish with their motivating and humorous signs. My favorite: “26.2 miles? Because 26.3 would just be crazy!!” Continue reading “GUEST BLOG POST: The Course to Financial Success: A Marathon, Not a Sprint”
Last night, after going out to dinner with my girlfriend, I did something I thought I’d never, not in a million years, ever do. I got up in front of an audience and sang at a Karaoke Night! This may not be noteworthy for many people, but for me it is. You see, when I sing most of the dogs in the neighborhood start to howl, glass starts to shatter, and anyone within earshot either starts to bleed from the eardrums or shouts, “Stop, PLEASE!!!!!” I’ll never be confused with the next American Idol. But, I got up and did my best to make everyone else look exceptionally talented. But, that’s not the point. Continue reading “Karaoke & My Grandparents’ Simple Success Formula”
