Will You Ever Retire?

August 06, 2010, By 10 comments

Will You Ever Retire?

You're at a point in your life where you can see your golden years of retirement approaching, but will those years truly be golden? A comfortable retirement requires a mix of financial safeguards that include Social Security benefits, pensions from employers past and present, personal savings and investments.

Consider the following when drafting your retirement plan.

When should you begin planning for retirement? Most financial experts recommend planning and saving for retirement as early as 20. Most young people, however, tend to be in a state of denial, waiting for the approach of middle age to consider the golden years. In fact, denying the value of savings and compounded interest from ages 20 through 40 could cost the average saver as much as six figures in retirement income. Take MetLife's retirement readiness quiz to get a better idea of what you need to be saving now and into the future.

What will your ideal life in retirement be like? Will you want to maintain your current standard of living or will you choose a simpler, more downsized retirement lifestyle? Will you want to fully retire or will you continue working in a part-time vocation? If fully retiring, make a list of possible leisure time activities, such as playing golf, painting or traveling in an RV. If you've decided to get a part-time job in retirement, assess your likelihood of employment. Make a list of your skills that could easily transfer to a part-time job. Be honest with yourself.

How much money will you need to retire? Take an inventory of how much income you'll need for retirement to maintain your current standard of living. Kiplinger recommends estimating your current yearly expenses by calculating routine costs that include a year's worth of bank records and credit card receipts. The U.S. Department of Labor recommends writing down each retirement goal on index cards. On each card, include what it will cost to accomplish the specific retirement goal and how much you'll need to save per month for that goal. Factor in your current employer's traditional pension plan, and/or self-invested retirement plan such as a 401(k).In your assessment process, include any independent retirement investment plan that's either self-directed or directed by a financial planner. When taking inventory, take into account unforeseen life-changing events such as unemployment, supporting children or aging parents, divorce and/or marriage, disability or coping with a death in the family. Also factor in any cumulative impact of inflation on your retirement cost of living.

When should you retire? Estimate how much in Social Security benefits you'll need to receive to cover most or all of your retirement needs, assuming that your current income level will continue. Visit your local Social Security office and speak to an adviser. Will you be able to afford early retirement at 62, claiming lower benefits, or will it be worth retiring later at 70 for greater benefit amounts?

What is the right retirement investment plan? Typical low risk and liquid retirement investment plans include savings accounts, money market mutual funds, certificates of deposit and U.S. Treasury bills. An individual retirement account (IRA) is a common vehicle for such investments. You can put up to $5,000 (tax-deductible) annually into an IRA. If you're over 50, you can contribute up to $6,000.

How do you find the right credit counseling adviser? Reducing debt is an important part of any retirement plan. Consider getting advice from a credit counseling agency. Because there are many such agencies around, it is best to be as selective as possible. A good starting point is the U.S. Trustee Department website. This Department of Justice agency offers a list of credit agencies approved to give pre-bankruptcy counseling. The Federal Trade Commission (FTC) recommends double-checking any credit adviser through your state's attorney general's office, the Better Business Bureau or any other local consumer protection organization.

How do you find the right financial adviser for your retirement? Go to the Financial Planning Association (FPA) website. Use its "Find a Planner" database to retrieve a list of financial advisers near you. At the Certified Financial Planner Board of Standards website, you can verify the credentials of the financial advisers on your list.

Comments (10):

Eric G. Sorry Jerome but it's not the Greatest Generation that screwed us, I was their off-springs. The greed really took hold in the 80's and 90's with our own feeding the fire. No longer did someone need experience to get the top pay, it was given readily to kids just out of college. Pay for performance is a joke because there was no performance for newbees who often jump to another company paying more when they got a year's experience. Executive salaries are insane because they come on the backs of those that were in an earlier life middle class. When I starting working my company had a traditional pension plan and every year provide a view of what I would receive at 55, 60, and 65. They even gave a view with Social Security so you new what your monthly income would be. This allowed us to donate extensively to charities and pay for education because we knew we were cover for the future. But it's what you don't know that kills you. Our plan was changed just before retirement which reduce it to 1/3 of what was previous. Couple that with the stock and home price devaluation and you have "What retire?" Yet people seem to just accept what is going with the country like they have no part in it. They way it's going the only thing left is being forced to drink the poisoned tea. - 07/26/2011
Joe F. my Dad retired at 62and a half and lived to be 83 ...GOOD FOR HIM.....I am going to have to work for the rest of my life or live on about 1300 a month .....good thing no kids ..no mortgage ...no loans .....house is paid off ....just gotta pay those darn taxes.....good luck to the rest of you..... - 05/12/2011
Katie W. The answer is; NO, I will never retire. Not because I wouldn't love to, but employers have been taking advantage of the unemployment rate and lowering their pay scales. No one will leave their jobs for fear of being unemployed when it's so difficult to get a job and what little they can get will have to do (average salaries in my position have dropped to from 50k to 40k while cost of living here has increased 7%). Employers aren’t offering pensions any longer and they are only contributing 5 - 10% towards health insurance and the employee must pay the rest (as much as $1300 per month). They are contributing less and less to 401K’s and are still encouraging employees towards profit sharing….which never works out for the employee. There are some better companies, yes, but they are catching on to the fact that they don't have to offer much to get a decent employee these days. Should I have put away my own nest egg other than the 401k? Definitely! But being a single mother of two for the past 17 years, I opted for investing in a home in a better school district and safer neighborhood...which I am now loosing along with the 30% down payment and the 401K I used trying to hang on. While I take responsibility and recognize my home was a poor investment strategy and a bad decision on my part, I can’t name anyone in their 40’s who has a retirement plan. So what are we going to do in 20 years with all the undesirable un-retirables? Companies will push them out, Medicare will likely not be free by then and Social Security may be bankrupt by then. Perhaps the Government should start planning for this now by giving extra incentives for people over 40 to start their own businesses. That seems to be the only way we will have jobs in 20 years is if we own the companies. - 04/06/2011
Gordon W. It's hard to get a job after about age 40 -- seriously, VERY seriously. - 02/19/2011
Jake S. Employer of 25 years got rid of pension plan, riffed at age 53. Went into business for myself. Put away 20% for 15 years. Find that if you own your home (a modest one) and watch your pennies you can live comfortably after 65 on $60,000 a year. A lot of families with children and a mortgage don't have any more income than that. - 11/03/2010
Tom G. I like your plan, Jerome. The sooner society rids itself of people with stupid ideas, the sooner we'll have to stop paying for generation's poor planning. @John: Your understanding of the business world probably is directly related to your ability to find employment. Good luck with your "superior skills". - 10/07/2010
Jerome B. I am employed in an industry and company which simply does not provide pensions, and treats 401k plans as mere tools for capturing tax exemptions on excess profits. Still, I am employed and am paid 6 figures per year, on the low end of 6 figures. It is irrational to believe that I can save enough to earn 8% per year in a 3% inflationary environment to accumulate enough that a 4% annual withdrawal rate would supply 80% of my current income. 8% earnings will not happen. 3% inflation is a fantasy. Saving enough means that I set aside in wise investments 80% of my income. Somewhere along the way, I should not have married and should not have had kids. But, I did, and those people have to be supported and educated. So, I gave up. I bought large insurance policies for my wife and myself, and a gun in case. In case I become no-longer employed due to any reason, I'll kill myself. That won't do my wife any good, but at least she'll have a million worthless pieces of green paper to burn for heat. The Greatest Generation screwed us. - 10/06/2010
Clyde W. "Factor in your current employer's traditional pension plan" Who has a pension anymore? Maybe if you're a government worker. All I've ever had in my 25-year career is a 401K. My employer just dropped the 401K match portion of this so-called retirement plan. Guess I'll be working till I'm 70. - 10/06/2010
Gary W. Well spoken John L. Can you imagine what it will be like for all these young Veterans coming home to no jobs. I had to take my Social Security at 62. Even with 40 years work experience and a Marine Corps Vet nobody will hire you. - 10/02/2010
John L. I think this article is far off targeting current retirement reality. It should be titled, WILL YOU SURVIVE EARLY FORCED RETIREMENT? Because I and hundreds of thousands of others, possibly millions, are getting bumped out of the work place long before expected retirement and not being hired again in any significant job, ALL DUE TO AGEISM. Unless you own your business, or even if you do, companies large and small do not want most workers after age 55. As one headhunter told me after I turned that age and was not getting any interviews or exec search calls, "You probably will not get hired in any job you're used to now because it is our job to make sure you don't." All said off the record of course. As explained, because companies don't want the post 55 salary burden or higher insurance costs, retirement costs and bonus costs. Also because younger managers, directors and VPs don't want to delegate to older workers, only those younger and less experienced than they are. So your article has a built-in assumption that is way out of date. Very few get to retire now. You don't get that far to slide into a planned retirement. It rarely exists in 2010. THE RESULT OF AGEISM, HOWEVER, IS THAT AS THESE MANAGEMENT TEAMS REFUSE TO HIRE OLDER WORKERS, GOVT SUPPORT SYSTEMS AND BUDGETS MUST GROW TO MAKE SURE SOCIETY DOESN'T COLLAPSE. So business can either hire us and keep us for our superior skills and dedication, or pay us through greater government programs. - 09/29/2010

© 2012 Man of the House, Barefoot Proximity, P&G Productions