Let’s Talk About Retirement

Paul Hata asked:


The vast majority of people reading this will never receive the benefit of social security for the purpose of retirement-unless of course serious adjustments are made in the current system. There are simply too many people living much longer than anticipated.

At the same time, regardless of how much you’ve managed to pay into social security over time it is doubtful that anyone could live on the amount of money they would receive in social security benefits even if they had no other significant bills to pay such as house notes, car notes, or insurance on a home or automobile.

It amazes me that my grandparents managed to live on the modest sum that was earned from my grandfather’s retirement and social security. They were never wealthy but in the last decade or so I understood just how little they had and yet they managed somehow to have all the things they absolutely needed in order to survive.

I know that in the world of today, their meager incomes would not even begin to make ends meet for groceries let alone utilities and other necessities in life.

It is because of the struggles my grandparent’s faced that I have devoted a good deal of time and effort into making sure that we do not go through those same challenges and struggles upon retirement.

We have taken steps today to insure that we will have income throughout our retirement as well as a few carefully crafted investments to pull us through. I do not believe that I have all the answers and for this reason we have relied heavily upon the advice of our financial planner.

He has helped us discover avenues for investing money and methods of doing so that have been nothing short of amazing for us as we watch our holdings grow year after year in preparation for retirement.

If you haven’t taken the time to find a financial advisor for your investments there is no time like the present to do so. Even if you are nearing that magical number you might be amazed at the guidance and advice that can be offered by a competent financial planner to maximize your short and long-term investment and retirement planning needs. I believe you will be amazed at the financial miracles a good financial planner can work with even the most modest of investments with which to work.

You should also make sure that you take care of as many of the recurring bills as possible before you retire. It helps greatly if you have your home paid off and do not have the worry of a monthly mortgage payment. Another thing that is good to keep in mind is that you will want to downsize rather than upsize at retirement. Eliminate the second car and ride together when possible (this also eliminates an insurance payment as well).

If you are planning to move to a particular area of the country for your retirement you may want to begin now, as early as possible, seeking property in that area at a much lower price than you will pay ten to twenty years down the road when you actually get around to retiring.

This will increase the likelihood that you either have your retirement home paid for or are very close to having it paid for. Another thing to remember is that you will want to get a smaller home for your retirement rather than a larger home that you will need to care for. This means you can eliminate some of the utility costs, which may prove substantial.

The most important thing to remember when planning for retirement is that it is your retirement for which you are planning. Make sure you set aside funds to make your retirement worth retiring for. Don’t merely exist throughout your retirement because you can’t afford to live, take the steps now to insure that this is not going to be a problem for your retirement years.



JEWEL

Hanajima asked:


The person in question is my music teacher. He has been the music supervisor for our town (or county I think? xD) for about 36 years and he is retiring this December. I’m not too sure what to give him so any suggestions would be helpful!

HALLIE

dubs81csu asked:


As our elderly start pulling from retirement funds rather than contributing to them, do you think we’ll see the market as a whole take a dive?

ADELE

Albert William asked:


There are several people, who take up retirement as the end of their active life and get depressed over the issue. However, there are others, who take a different perception to the prospect of retirement, as they would have free time completely to themselves. Most of these people start retirement planning and retirement investment much before they are about to retire, so that they get to execute their plans in a proper manner. Their retirement plans may include different things like spending quality time with the family members, devoting more time to their hobbies or try for some side jobs to keep themselves engaged.

Start building social life

Definitely for the hard workers, life becomes miserable due to the hectic work schedule they have to follow every day; it is as if they do not have any social life. Thus, individuals should take the opportunity of retirement to make up for everything that they have been missing so far. When you would be going about your retirement planning, try to focus on the different ways you could make use of the time by staying with your family. Even your family members, who have been seeing much less of you, due to your busy schedule, would feel happy to have you around.

Make use of your hobby

Most of you have unique abilities or interests, which you might not have been able to culture with during your working phase. These things, like your hobbies, may have been very dear to you before you started working; but owing to the pressure you had to keep them bottled in. This is the best opportunity for you to start fresh with them, and try to keep space for them in your retirement planning. Some of you might have even better plans to go out on travels and enjoy your life, viewing the various wonderful places the world has to offer.

Consider doing some side jobs

Moreover, you might also consider continuing doing some side jobs, as part of your retirement planning program. This obviously is a good measure, as it will keep you active even after you retire and provide you with a standby income, which would further promote your financial stability. If you feel that this may be a tough call for you, think again; there are plenty of options of getting side jobs even after your retirement. Starting from the internet to several other firms and organizations, experienced individuals are required to help them stabilize their work process.

Keeping these factors in mind, try to continue your retirement planning in such a way that it helps you to get the upper hand. Make sure that your retirement planning would guarantee you the enjoyment and space that you wanted for a long time. The thought of retirement should bring a new hope to you, pushing you further to dream about the numerous possibilities that lie ahead of you; consider all these in your retirement plan. If you do it with some time in hand and do it in a proper manner, then you could enjoy your retirement in a grand style that could be envied by many.



GLEN

licorice34 asked:


I would like to know why the raccoon is retiring so fast. It didn’t retire yet, but I heard because the material was getting expensive. Is that right? And I would like to know if you have a raccoon webkinz and what is its name! I have one. I named it Bandit.

LAVONNE

Jon Arnold asked:


There has always been a need for retirement planning and today is certainly no different. There are 401(k)s and many other types of retirement plans that are available to you. You will need to take the time needed to evaluate what your current financial needs are and what you expect the future to hold.

Recent events, such as the rise in energy costs and the ever-skyrocketing health care costs need to be factored in. Although gas prices have been fluctuating lately, I think they are going to go back up, possibly even surpassing the extremes we saw all too recently. These types of events can take a toll on your retirement plan very quickly. Prudent planning begins early and you need a good source of information. Websites like http://jag-info-resources.com/retirement/ are an excellent resource to go to find answers to the questions you may have.

Did you know that most retirement plans have a ceiling of 10% of your pre-tax wages that you can contribute? While that may sound good when you view it against a 2% inflation rate, you must keep in mind that your planning today is not just for the ideal future, but the future that will be reality for you if things turn out to not be ideal or according to your plans today.

By starting early and contributing the maximum that you can afford, you will have a better chance of being prepared for the unforeseen. This is made much easier today because your 401k plan is now transferable from one employer to another. This allows you to continue to grow your retirement account even when you choose to change jobs or even careers.

Unsure of what you will need for retirement? There are calculators like the one at my site as shown in my author box below that will help you figure it out for yourself. This is a helpful tool that lets you see if you are on track or not. Don’t forget that life expectancy is getting longer. When Social Security was passed in the 1930s people lived about 2 years after retirement. Today you can expect to live 20-30 years past retirement and, suddenly, the amount you need to retire comfortably with a major change in lifestyle gets very large.

Lets say that today you need $40,000 to live on and you retire in 20 years, you will need a minimum of $850,000 to carry you through retirement. That is assuming that you will live an additional 20 years after you retire and are in good health. There is something to be said for debt reduction as being part of your retirement planning, as well, since the last thing you want to do is go into retirement with a ton of debt still hanging over your head.

Having $40,000 a year to live on with little to no debt will obviously go farther than if you still have the same debt load as you do now. If you reduce your debt load by the same amount that you save for retirement, you double your retirement savings.

One cannot have a conversation about retirement without the subject of taxes coming into it. The money you put into your 401(k) is pre-tax so you will pay taxes on it when you get disbursements. The 401(k) is intended for retirement, so there are also very heavy tax penalties if you withdraw any funds before you turn 59.5 years of age. If at all possible, do not make any early withdrawals from your retirement account, since most people have found that in addition to the heavy tax penalties for doing so, the prospect of paying it back, even with good intentions, is tougher than it seems.



YOUNG

Albert William asked:


Analyze the modern definition of man and you would find that he has become a machine. Hectic schedules, lot of pressure, obligations etc that are required to keep afloat in this cut-throat competition has made him a mere mechanical structure. This situation becomes even more intense when he retires. All day and night he is surrounded by thoughts. Whether staying in the current residence would be good? Is retirement community the best place to stay? What will happen if I get ill? What will I eat? And the list is endless. The answer to these entire questions is to look for retirement plans before retirement itself.

However, most of the people think about these questions when he is already retired. Things like retirement investment, retirement income etc, which should have been pondered upon before retirement, is being taken into consideration after retirement. Strange, is it not? This incongruity is brought by the lack of knowledge about what they would need after retirement. They only have one thing in mind, peace, solace, rest etc. Ask yourself, whether these things would be able to make you live. Without any doubt, no!

Here’s is a list of what you may need to sustain your life after retirement.

Psychological Needs

Psychological needs include basic needs like food, shelter, clothing and others. Whether before retirement or after, these three parameters would always play an important part in your life. Whatever, your retirement plan is; make sure that these things are their epicenter.

Safety needs

Safety needs, after retirement, also has an important act to play. Off course, we need stability, protection and on top of that a society with a better law and order norms. With physical assaults on senior citizens rising like never before, this need should not be ignored in any case.  However, this safety need is not only about physical protection but it also includes financial protection. Most of the retirees choose pension system as one of the forms of security.



Belonging need

Belonging needs are, however, not in your hands. It is the warmth and love that you get from your friends, family and society. You reap what you sow. No doubt, you are very busy but it is also important to maintain good rapport with your old mates, family, society etc.

Self-esteem need

Though most of the people would remember all the above said three needs while sorting out their retirement plans but they would definitely forget this one. Now, this need is fulfilled through fame, dignity, status and ability to make and influence decisions both in community and family.  



Need for Self actualization

This is the need which no one can fulfill but always caters for. It is actually the endless force to be everything that you can be or that you can achieve.

Apart from the last needs, all the above said needs should be properly analyzed and then implemented in to your retirement plans. Moreover, most of the government and non-government organization are coming up with a good retirement plan to help retirees. But we need to wait and watch how much they will be efficient enough to sort out every problem.



MILLIE

Joe L asked:


This seems to be a missing topic in all the online articles about retiring.

ERNA

John Trauth asked:


Do I have enough money to retire? That is a question that 77 million baby boomers are asking themselves. Many do not retire simply because they don’t know the answer. And they are right to be fearful. Studies have shown that, based on their current savings, 60% of Americans will not be able to sustain their present lifestyle in retirement!

The most common advice you will hear from the financial community is that you will need 80% of your pre-retirement annual salary. Frankly, that is poor advice, and I think you will agree once you have read this article.

No one can answer this question for you, not even your financial advisor, because the answer involves more than just money. The process for finding the answer is simple, but doing the work to get the answer is more difficult. Knowing HOW to do it is the first step.

Basically, you need to answer four questions: (1) What kind of Life Do I Want, (2) What Will It Cost, (3) Where Will the Money Come From, and (3) How Much Will I need?

What Kind of Life Do I Want in Retirement?

The first question you need to ask yourself is “what do I want my life to be like in retirement?” But before you answer your financial advisor’s questions about where you will be living, who will you be with, will you be traveling, etc., answer this question first: “What kind of life will make me happy, satisfied and fulfilled?”

To find the answer, look to your past. Think about what you were doing when you were in what is called a state of “flow,” when you were functioning at a very high level, using all your talents, and so involved that you lost all sense of time. Where were you? What were you doing? Who were you with? What was the environment? What were the circumstances?

By deconstructing these memories, you will be able to learn a lot about yourself and what psychologists call your “motivational needs.” By thinking of your “flow” experiences, you are analyzing your personality in the context of doing something which has a purpose, and we all need purpose in our lives, particularly in retirement.

Many people think they were happiest when they were on vacation, say those recent two weeks in Florida or that trip to Hawaii. I call this the “Carnival Cruise” retirement myth, because vacations are great only because they are a counterbalance to a set routine. Treating your life like a perpetual vacation is not going to keep you happy in the long term. Doing what you love will. So you first need to think about your retirement life in this context and then think about how to pay for it. Not the other way around.

What Will My Retirement Cost?

Now you are ready to do some projections of the costs of your retirement. Begin by analyzing where you are currently spending your money, pre-retirement, on a monthly and annual basis. Look at your checkbooks, your credit card statements, and how much cash you withdraw from the ATM each month. Put these in the appropriate categories (housing/property maintenance expenses, food, health care, personal living expenses, unreimbursed professional expenses, travel and entertainment, etc.).

Now, given the life you want to lead in retirement, look at these numbers again and anticipate how they are going to change. Your commuting costs and professional expenses may go down, but your travel and entertainment expenses will probably increase, and don’t forget that health care expenses tend to increase as you get older, so take this into account based on the type of coverage and deductibles you have. Also travel is more expensive these days, particularly foreign travel due to the weak dollar.

Don’t forget to estimate your tax liabilities, including taxes owed on any withdrawals from tax-sheltered accounts. As a result of this analysis, you will be able to determine the projected annual income you will need to support your “new life” in retirement.

Where Will the Money Come From?

Your next step is to determine where your retirement paycheck will come from. Traditional sources are a pension from your work (if any), social security, any part-time work you plan to do, and your savings (both tax-sheltered, including your 401k, IRAs, SEPs, etc. and after-tax savings and investments). Don’t include home equity unless you plan on selling your home and downsizing, thereby releasing money for your personal use.

From your previous analysis, you have projected how much annual income you will need. Now add up the recurring payments from pensions, social security, and any others (i.e. investment property you plan to keep in retirement which has a positive cash flow). To this figure add a 4% withdrawal from your total combined tax-sheltered and after tax savings. It has been proven that a 4% annual withdrawal rate, adjusted annually for inflation, will insure that your money will last for the rest of your life.

How Much (More) Will I Need?

So what if it all isn’t adding up? Now you can see if there is a “gap” between what you have and what you project you will need. How can you fill that gap?

Let’s take a simple example. Let’s say you find you need an additional $1500/month, or $18,000 a year. Divide $18,000 by .04 which equals $450,000. That is how much you will need to add to your savings to generate the additional income you require.

But what if that is not realistic? Then you need to go back to your “new life” expenditure calculations and make some adjustments. Remember what you learned about yourself from your “flow” memories and use this information to prioritize what is really important to you. Reduce or eliminate other less important things.

Perhaps you still want to travel, but you might consider reducing the number of trips. Continuing to work for a few more years, or working part-time in early retirement can make an enormous difference in sustaining a higher lifestyle. Research has shown that working 30% in the first five years of retirement will result in a portfolio 40% larger than it would otherwise have been at the end of that period, and this larger portfolio will sustain a higher lifestyle afterwards since there will be more money covering fewer years.

The financial advice I have given you is very conservative, and will ensure that you never go broke in your retirement, providing you continue to spend within the annual budget you have established for yourself to support the life you want to lead. There are circumstances where you could exceed 4% (if you have a shorter life expectancy due to some illness, if you anticipate a significant inheritance in the future, etc.) but 4% is a very safe number.

Better safe than sorry. And better happy, satisfied, fulfilled and enjoying every day of a purpose-driven retirement than sad, depressed, wandering aimlessly through an eternal “vacation” and worried that you will run out of money before you run out of life.



BRADFORD

GMS Sheriff asked:


I have a teacher who is retiring this year and I need to know what would be the best present to give her. She is a ninth grade teacher at a high school who teached honors english. She has been teaching for 30 years and is around 65 years old. She loves Shakespeare, drama/theatre, Greek stuff, poetry, research papers, debate, and is the head of debate team. What would be a good present to get her?

LAWANDA