Calculate your retirement income needs


While you can calculate your retirement on your own, the best way to obtain an accurate forecast is to seek the services of a financial planner.

A financial planner can be objective about your finances.  He or she can advise you as to the approximate amount of your pension based on the contributions you have made over the years.

Moreover, they will probably advise you to begin contributing the maximum amount of pension contributions the closer you get to retirement age.  This is significant because it can boost your pension earnings more than you know.

In order to receive the best advice, you have to do a little calculating of your own.  The planner may ask when you plan to retire, whether you plan to move to another state, travel, pursue higher education, and what type of lifestyle you hope to maintain.

You also have to take into account your healthcare expenses.  For example, a city worker may have a healthcare plan such as Blue Cross/Blue Shield and GHI (Group Health Incorporated).  This type of insurance is worth approximately $12,000 a year and is a necessary component that can alleviate expenses resulting from ill health.

If you would like to calculate how much you will need for retirement, there are many online calculators you can use.  One is located at: How much you need to retire calculator

You simply enter your current annual income, 70% post-retirement income, expected annual pension, expected annual Social Security payment, current age, age at which you will retire, and life expectancy.  Note these are approximate figures.  The figure of 70% is the amount of your income that one would need to retire comfortably.

Once the calculations are made, you can then proceed to increase your pension contribution, if applicable, and/or begin a savings program outlined by your financial planner that will yield a high rate of interest and allow you to retire knowing there will always be money available to you.

If you are years away from retirement, calculating your pension income now will give you a clear and concise measure of what to expect.  Here is an example of an individual who did not plan well for retirement.  A man retired at age 57.  He contributed less than 10% to his pension and the result is that he now receives under $1000 a month.  Although he did consult a financial planner, the pressure of the job was such that he had to retire early for health reasons.  He is currently working full-time in another position.



How to Save Money for Retirement

Saving money for retirement can be easy or difficult depending on your current salary. If you are like 75 percent of the American population, earning just enough money in your current job to meet your monthly bills, then it’s time to do some serious thinking on how you are going to live when you retire.

Social Security isn’t going to meet all your monthly payments. That is, if Social Security, or some revised form of it, still exists when your day of retirement arrives.

Here are some tips on how to save today for your future. No matter how little, or how much, you earn today.

Estimate how much you must save to give you the income you know is necessary for you to retire in comfort.

Experts suggest that you will need an income equaling about 75 percent of your current take home pay. Be sure to estimate a rise in inflation which has historically been about 5.3 percent per year.

Figure out how much of your current salary will need have to save each year to achieve your retirement goal by counting backward from the year you plan to retire to see how many years you have before retirement. Include the possibility of being on a fixed income for as long as 20 or 30 years. Depending on how many years you have until retirement a U.S. Treasury bond that guarantees six percent interest might be considered, while stocks might have the potential for a much higher return, but has a much higher risk of loss.

A financial planner, stockbroker, or an accountant, can offer guidance, expertise and access to knowledge about almost any type of investment or retirement planning concerns.

Spread your money out over a variety of investments. Some will prosper while others may fail.

Set up an automatic draft from your bank account from your paycheck so that a portion of your income goes directly into your retirement funds. Pay off major debts, such as home mortgages, college loans and other significant cash-flow drains, as quickly as you can.

For more information visit:

Yahoo launches personal finance site – tools to manage your budget, retirement, college, and more

Yahoo is banking that Internet users want online tools to manage their budgets, retirement, college plans, taxes, debts, investments and more personal finance matters.
Internet giant Yahoo has offered information and services aimed at investors for years, but now the taken the wraps off its new Yahoo Personal Finance Web site, aiming to provide everyday users with online financial tools and information to help them better manage many aspects of their money and investments.
Rather than attempting to offer an online ledger application, in which users would directly monitor accounts and transactions, Yahoo Personal Finance aims to provide a wealth of information, advice, guides, calculators, and other tools designed to help users get a hand on their money without getting into risky privacy territory.
“The goal of Yahoo Finance has always been to help our users make informed financial decisions, and now we’re able to do that across every aspect of their financial lives,” said Peggy White, Yahoo Finance’s general manager, in a statement.
“Not all of our users manage an investment portfolio, but we all manage a checkbook.
This presents a huge opportunity for Yahoo Finance to expand beyond our core investing-focused offerings.”
Features in Yahoo Personal Finance include more than five dozen calculators designed to help users get a handle on common scenarios like retirement planning and loan payments, as well as advice and guides covering topics from college planning, having children, tax planning, insurance, real estate, and more.
Yahoo Personal Finance has partnered with twenty-five content providers (including, Consumer Reports, The Motley Fool, Smart Money, and The Wall Street Journal) to provide top-notch material, and will also carry exclusive advice columns from thirteen financial exports, including a career advice column The Brazen Careerist by Penelope Trunk.
Of course, Yahoo wouldn’t be Yahoo if it didn’t tout the online advertising opportunities afforded by a personal finance site.
Their message to advertisers: if you want to reach consumers as they’re making important life decisions, buy an ad on Yahoo Personal Finance!

Yahoo Launches Personal Finance Site (DesignTechnica)

Yahoo is banking that Internet users want online tools to manage their budgets, retirement, college plans, taxes, debts, investments and more personal finance matters.

technorati tags:, ,

5 tips to help you meet your retirement planning goals

Five tips to help Americans kick your retirement planning into overdrive:

1)   Save, Save and then Save Some More!

You’ll never save enough for retirement if you don’t start saving now.
Put every penny you can into your company’s defined contribution plan,
(commonly referred to as a 401(k), 403(b), 457 plan, etc.) especially
if your contributions are being matched by your employer. You want to
shelter all the money you can from taxes and take full advantage of
your employer’s matching retirement plan contributions. Also, don’t be
afraid to look at after-tax planning vehicles like the Roth IRA or the
new Roth 401(k), which is now a permanent part of the tax code as a
result of the Pension Protection Act. We are not likely to see tax
rates as low as they are now, so it may make sense to grow assets that
you won’t have to pay taxes on later.

“While it may be hard to give up the current year’s tax deduction, you
should ask yourself which makes more sense: paying tax on the seed
(your original contributions) or the crop (your earnings). In most
cases it makes more sense to pay taxes on the seed. That’s why we like
the new Roth 401(k)s,” says Hinds.

2)   A Retirement Account is NOT an ATM

Don’t even think about touching the money you put toward your
retirement. “Think of your retirements as a black hole,” says Hinds.
“Once you’ve contributed the money, tell yourself that it’s

Hinds says that having a good reason to withdraw money doesn’t matter.
While you may think it wise to pay off debt or buy a bigger house,
remember that you will likely have to “pay yourself back with interest”
for any loans you take against your company-sponsored retirement plan.
If you have a self-directed IRA, you will incur taxes and penalties if
you withdraw the money too soon. Worse than that, says Hinds, the money
will not be growing – either tax-free or tax-deferred, depending on the
type of IRA you’ve got. Early withdrawals for the wrong reasons put you
further away from your goal of achieving a secure retirement.

3)   Social “not much” Security

If you were counting on Social Security benefits to help supplement
your retirement savings, think again. Most experts agree that the
social security benefit program that our parents and grandparents knew
will not be the one we experience. According to many studies, within
the next decade, Social Security will begin to pay out more in benefits
than it will collect in taxes. Hinds warns that the Social Security
check that arrives in the mail each month will not likely be a
meaningful contributor to retirement income, and says the need for
people to develop their own effective retirement planning strategies
has never been more important.    

4)   Diversity Matters

A diverse portfolio can be your ticket to stability. By creating a
diversified portfolio – and not just among stock sectors – your
investments may perform more stably. An investment portfolio should
include stocks, bonds and money market securities. According to Hinds,
having technology stocks, airline stocks and automobile stocks does not
constitute diversification.

“Investors should look to strike a balance, to create a diversified
portfolio that will help them reach their retirement goals effectively
and safely. And, while the core part of your portfolio should include a
strategic mix of stocks, bonds and cash, a portion should be devoted to
more progressive strategies aimed at producing greater potential
growth. Some of the newer strategies even have built in income
protection in retirement, while still having the growth potential of
the stock market,” she says.

Diversification seeks to improve the performance by spreading your
investment dollars into various asset classes to add balance to your
portfolio. However, using this methodology does not guarantee a profit
or protection from loss in a declining market.

5)   Retirement Planning is a Rolling Stone

If you switch employers, consider rolling your retirement plan into a
self-directed IRA account — not your next employer’s 401(k) account. A
self-directed IRA opens additional investment options not available in
a 401(k) account and provides the opportunity to create a Stretch IRA,
a great distribution and legacy planning strategy. Although it is
tempting to take the cash and treat yourself to something nice, the
responsible thing is to preserve your retirement funds.

“Leave that money alone. You want it to grow so that you can enjoy a
secure retirement later,” says Hinds. “The average American gets a new
job every four years. If a retirement plan is cashed out every time a
person gets a new job, that person will never be able to retire and
live a similar lifestyle from his or her savings. That doesn’t even
take into account the tax penalties associated with cashing out a
retirement account.”   

For more info:

Five Perils to Your Retirement Well-Being (PR Web)

Long-time Financial Advisor Offers Tips to Supercharge Retirement Planning

technorati tags:, ,

Even if you can barely afford your bills, you can still save for retirement


Here’s an article I came across about saving for retirement even when you can barely pay your bills now.

I barely have enough money to pay my bills. How can I afford to save for retirement?

It may be a lot easier than you’d expect.
The government and most employers kick in some money to help you reach your goals, so you can set aside a substantial amount of money without taking much of a hit in your paycheck.
In that case, you’ll get $1,200 from your employer, bringing your total contribution up to $3,600, just by contributing $2,400.
And that $2,400 doesn’t lower your paycheck dollar for dollar, either, since you’re investing the money before you pay taxes on it.
If you’re in the 25% bracket, investing $2,400 will only reduce your take-home pay by $1,800 for the year.
So it actually costs you just $150 per month to end up with a $3,600 contribution every year.
If you start doing that at age 30, you’ll have about $670,000 by the time you’re 65, if your investments return 8% per year.
And if you can afford to invest even more, open up a Roth IRA, which will give you tax-free money in retirement.
Even a little bit can add up, especially when you’re young.
Investing just $100 per month into a Roth IRA can add up to $1,200 by the end of the year.
And if you’re 30 now, keep up that savings pace for the next 35 years and your investments earn 8% annually, then you’ll have more than $220,000 in tax-free money by the time you’re 65 — just by investing $100 per month.
That’s a big chunk of your savings goal, but it may not be not enough to cover all of your retirement needs — especially if you start saving after age 30.
Keep adding more money to your retirement savings whenever you get a raise or bonus at work or a big gift.
That way, you’ll invest the money before you get used to having it.
You can also look for ways to trim your spending to free up cash for investing.
See Stop Living Paycheck to Paycheck for some helpful tips.
That’s in addition to any retirement savings you set aside before you turned 40, which has even more time to grow by the time you retire.
For advice on saving for retirement, and calculating your savings goals, see How Much is Enough?
Then run your numbers through our retirement savings calculator to help set your specific target.

Read the full article here

A Little Savings Goes a Long Way

I barely have enough money to pay my bills. How can I afford to save for retirement?

technorati tags:,

Are you ready to retire? Take this Retirement readiness quiz

Are you ready to retire?? Take this retirement quiz.
We are so ready. To live our dreams in retirement, that is.
No surprise to us, but we hit the top of the “readiness scale” in a 20-question online retirement readiness quiz at
Results range from “not ready,” “time to start getting ready” to “ready, only finetuning necessary.”
For some disclaimers: The Web site with the quiz is commercial, designed to promote the book Your Retirement, Your Way (McGraw-Hill, $16.95).
Before you submit your answers, you are asked to give your name and e-mail address.
(We value our privacy and made ours up.)
But we like this quiz — and can recommend the book — because of the focus on the all-important lifestyle issues that people neglect in their obsession with finances.
The first question in the quiz, for example, asks you to choose which one of six statements is closest to your current vision of your retirement.
Statements range from “I am dreading retirement, so I am giving it as little thought as possible” to “I have a clear idea of my retirement lifestyle, which will be a balance of a number of activities, and I could write it down right now if you asked me to.”
This last statement reflects a major emphasis on planning for retirement beyond the money part.
“We all spend so much time and effort preparing for our careers, doesn’t it make sense to spend some quality time preparing for what comes after?”
say the book’s authors, Alan Bernstein, a psychotherapist and career counselor in New York, and John Trauth, a management consultant in San Francisco who specializes in financial services.
To probe how much preparation we’ve done, the quiz asks us not only whether we are confident our money will last but also what we want to accomplish in retirement, how we want to spend our time day to day, and how we are planning to replace the social and intellectually challenging activities associated with work.
These issues are explored in depth in the book, which carries the appropriate subtitle Why It Takes More Than Money to Live Your Dream.
But most books on retirement planning focus way too much on finances and neglect other areas.
Many people, regardless of how much they have, struggle because they have not adequately prepared for their new life.
“Jobs create structure, community and purpose for your life, and you need to add these back in your retirement,” the authors advise.
Through the use of a brief version of the Birkman Method personality-assessment tool used by many corporations and government agencies, the book helps readers explore their interests and motivations, and prepare for a more fulfilling life in retirement.
First, stop feeling sorry for yourself, Bernstein and Trauth say.? Then find a new challenge or interest that will add purpose to your
life. If this includes helping others, then you have the best chance of
finding fulfillment.

Lifestyle issues deserve emphasis in planning (The Columbus Dispatch)

We are so ready. To live our dreams in retirement, that is. No surprise to us, but we hit the top of the “readiness scale” in a 20-question online retirement readiness quiz at www.yourretirementyourway. com.

technorati tags:, , ,

Making it easier to plan for retirement

Fidelity’s making it easier to plan for retirement with their simplified retirement calculators.

All you have to do is answer 5 questions.?

Fidelity Investments said yesterday it will simplify its online retirement planning tools, citing both its own experience and academic research supporting this conclusion: People are lazy.

“Americans just love to procrastinate when it comes to planning and saving for retirement,” said Fidelity vice chairman Robert L. Reynolds during a presentation in New York yesterday, carried on a conference call.
He cited a company survey that found just 29 percent of 1,511 working people considered themselves good at financial planning.
The new tools and a forthcoming ad campaign aim to help people start saving and “get them into the pool, even if it’s a wading pool” at first, he said in a later interview.
Among other things, the law makes it easier for financial companies to offer advice directly to workers on how to save for retirement, and makes it easier for employers to enroll workers automatically into savings plans when they are hired.
With an eye on these changes, other large investment organizations including Vanguard Group Inc. and TIAA-CREF also have added online calculators and tools to draw in more retirement savings.
By raising savings rates, investment companies also aim to increase the assets they manage and in turn their profits.
Reynolds and other Fidelity executives said their new online guidance program, “myPlan,” will go live in two weeks and will show users a simple total amount of money they must save to support the retirement they envision based on five questions.
Users don’t have to be Fidelity customers, and the site also will have tools to create a broader retirement plan in 30 minutes, Fidelity said.
That’s a problem, as traditional pension plans are in decline, said Abigail P. Johnson, president of Fidelity’s corporate services division and daughter of company chairman Edward C. Johnson III, in rare public comments.
Yet there are still 22 million people who don’t participate in corporate savings plans they are eligible for, she said, because they face other demands on their cash and may be confused by too many choices.
“People don’t want to give anything up; they only want to act when there’s a sense of urgency; and all those investment choices make it harder to take action,” she said.
Fidelity also stocked the New York event with a trio of economists from Harvard, the Massachusetts Institute of Technology, and the University of California who have done research into the ways people decide how much to save or spend.
Their field, know as behavioral economics, tries to explain why individuals don’t always act in obvious or rational ways.
For example, a chief obstacle to savings is that it doesn’t produce immediate tangible benefits, said Harvard economist Brigitte Madrian.
Another panelist, MIT’s Dan Ariely, said in a later interview that he and the others were paid to appear, but did not play any direct role in developing Fidelity’s products.

Fidelity will simplify its online tools (Boston Globe)

Call it savings for slackers. Fidelity Investments said yesterday it will simplify its online retirement planning tools, citing both its own experience and academic research supporting this conclusion: People are lazy.

technorati tags:, ,

Retirement planning tips are just the start


This article highlights what to expect and what not to expect from a financial advisor.

Their free retirement calculators will provide you with a good snapshot of your financial picture and let you know if you will be able to meet your retirement goals but that’s just it – they are only a snapshot.? If your life changes then you need to do the calculations again.


Starting Out: Retirement planning tips are helpful, to a point (Juice)

WHAT TO EXPECT: I called Fidelity Investments, the mutual fund company where I have retirement funds.

technorati tags:,