Planning to Retire
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Keeping Seniors Connected
Continue reading… 1 CommentMost seniors can remember a time before their family purchased a television. The first commercial sets hit stores in 1928, but it took over a decade for them to become household items. And even 20-somethings can recall life before every public gathering was interrupted by someone's cellphone belting out pop music. But two organizations are worried about our elders' access to mobile phones and television.
Mobile security. Cellphones can be a lifeline for seniors living alone. A single button push can connect anyone who has experienced an accident, a sudden health problem, or a crime situation with help. The nonprofit Seniors Coalition says that older consumers can best take advantage of the "cellphone security blanket effect" by wearing a cellphone whenever it's not being charged—even around the house—and preprogramming the phone with key numbers to emergency services and their doctor, pharmacy, and adult children. Seniors who plan to use the phone only for emergencies can avoid pricey cellphone contracts that start at $30 to $40 per month by using low-cost prepaid cellphones for as little as $15 and prepurchased minutes for $20 or less for three months. U.S. News technology blogger David LaGesse recently tested four cellphones for seniors.
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Retirement Rollover Ads Spark Controversy
Continue reading… 5 CommentsIf you read the newspaper, watch television, or have picked up a recent copy of U.S.News & World Report, chances are you've seen an advertisement encouraging you to roll over you retirement dollars into a IRA. TIAA-CREF and Fidelity both recently ran advertising campaigns encouraging federal employees and retirees to move their retirement savings out of the ultralow-cost Federal Thrift Savings Program and into higher-fee accounts.
U.S. Senate Special Committee on Aging Chairman Herb Kohl, a Wisconsin Democrat, sent letters on July 15 to Fidelity and TIAA-CREF pointing out that "consumers can suffer unnecessary harm when they choose plans that have higher fees than their original 401(k) plans" and requesting that each company re-examine its marketing practices.
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A 401(k) Automatic Enrollment Snapshot
Continue reading… 1 CommentA 2006 law that made it easier for companies to automatically enroll employees in 401(k) plans went into effect late last year. And, indeed, employers have changed their retirement offerings.
A new online survey of 436 plan sponsors by Deloitte, the International Foundation of Employee Benefit Plans, and the International Society of Certified Employee Benefit Specialists offers a snapshot of current 401(k) participation.
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Mick Jagger Turns 65
Continue reading… 10 CommentsRolling Stones frontman Mick Jagger reached retirement age on Saturday. But the deep grooves lining his face don't mean he can't groove. This aging but still gyrating rocker's last tour with the Stones in 2007 grossed close to $558 million.
Sir Mick is now eligible for a U.K. pension of just under 91 pounds a week, Reuters reports. But, like many of the aging boomers who flock to his shows, Jagger is eschewing retirement because he gets more satisfaction from working. The Rolling Stones and Universal Music Group have signed a long-term recording agreement that includes rights to future albums, Universal announced Friday. The deal also covers iconic anthems like "Brown Sugar," "Angie," and "It's Only Rock 'N Roll," and a "long-term campaign to reposition the Rolling Stones's entire catalogue for the digital age."
Grandpa Jagger also displayed his energetic strutting and pouting in the Martin Scorsese (who is also 65) 2008 rock documentary, Shine a Light. But he will have to wait another five years for free roof insulation, according to Reuters. That benefit is available only to Brits over age 70.
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The 20 Fastest-Growing Jobs for Aging Boomers
Continue reading… 48 CommentsMore older Americans now work as retail salespersons than in any other occupation. But baby boomers are expected to find other things to do besides being store clerks as they come to dominate the 55-plus age bracket.
Boomers are likely to land in growth fields that welcome older workers, according to a new Urban Institute study. And many boomers will breathe a sigh of relief to find that retail jobs did not make the top 20 occupations projected to be the fastest growing among the older set.
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Cracking Into Your Nest Egg Early
Continue reading… 7 CommentsMost people who diligently tuck money into a 401(k) know that those dollars are intended for retirement. But many 401(k)'s have provisions that allow workers to take loans when necessary. And economically squeezed workers are increasingly raiding their retirement plans to make ends meet.
Here's how 401(k) loans work. If your 401(k) plan allows loans, you can borrow $50,000 or one half of the vested balance from your retirement account, whichever is lower. Any loan has to be repaid within five years, except for loans taken out by first-time homeowners who get up to 15 years to repay.
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The Demi Moore Model of Retirement Planning
Continue reading… 1 CommentSometimes, saving for retirement seems an awful lot like going to the dentist. You worry about it a lot before you go. Then, you busy yourself with some extra brushing and flossing immediately preceding your visit. But after you finally succumb to a half-hour under the bright lights, your shiny and smooth teeth can make you feel somehow healthier.
A study released yesterday by the Hartford insurance company and MIT AgeLab quantified the retirement anxiety we all face. And no matter what we do to prepare, it never seems to be enough—especially in the years immediately preceding retirement. Women in particular seem to have a nagging little voice in their head telling them to plan more for retirement and scolding them if they haven't saved enough.
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Social Security Unveils a New Online Calculator
Continue reading… 8 CommentsIt's difficult to plan for retirement when you can't predict the precise amount of your Social Security checks. A new tool is available to more accurately estimate what your Social Security benefits will be.
Social Security Commissioner Michael Astrue unveiled a new online calculator yesterday. The Retirement Estimator allows you to test out retirement options such as various retirement dates or expected future earnings. You can also calculate what your benefit will be if you begin collecting at age 62, wait until your full retirement age, or further delay claiming until age 70. The future benefit amount is adjusted for inflation.
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Generation Glum
Continue reading… 4 CommentsAmerica's baby boomers are feeling gloomy. Yes, you couldn't pick up a newspaper or turn on the TV all weekend without hearing grim economic news. But the members of this especially large generation born from 1946 to 1964 are more downbeat about their lives than older and younger adults, according to a new Pew Research Center survey.
Baby boomers, currently ages 43 to 62 and, in their peak earning years, have the highest income of any age group, but they are the most worried about money as their epic and thoroughly discussed retirement looms, the survey of 2,413 adults found.
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Coping Strategies When Retiring Into a Bear Market
Continue reading… 3 CommentsRetiring during a year when stocks are down can have disastrous consequences for your nest egg. Investments that dip into the red during the first five years of retirement drastically increase your chances of running out of money during a 30-year retirement, a recent study found.
If an investor who retires with a $500,000 portfolio (invested 55 percent in equities and 45 percent in bonds) withdraws 4 percent of his portfolio ($20,000) the first year and increases that amount by 3 percent each year to keep up with inflation, the investor has an 89 percent chance of having enough left in the portfolio to last 30 years, according to a T. Rowe Price analysis.
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Keeping Older Workers on the Job
Continue reading… 11 CommentsCompanies that fear a shortage of qualified workers are trying to entice older workers to stay on the job longer. The Los Angeles-based defense and technology corporation Northrop Grumman is exploring innovative ways to keep baby boomers at their desks and get them to teach younger workers their vital skills. I recently spoke with Ian Ziskin, chief human resources and administrative officer for Northrop Grumman, about how he balances new hires with older worker retention. Excerpts:
How much of your workforce is planning to retire in the next decade?
If you look at the demographics of the workforce for Northrop Grumman, which are pretty consistent with the demographics of the aerospace and defense industry in general, we have about 122,000 employees, approximately 50 percent of whom are going to be able to retire over the next five to 10 years. -
A Generation Gap in Retirement Planning
Continue reading… 3 CommentsAlmost everyone aims to attain financial security in retirement. But each succeeding generation expects to be more self-reliant than the preceding one, according to a new online survey by Charles Schwab, Age Wave, and Harris Interactive. Americans are depending more on personal savings and investments and less on the government or their employer.
Current retirees depend on the traditional three-legged stool: Social Security, pensions, and personal savings and investments. Each leg supports their retirement to a substantial degree. But generations X and Y expect to rely largely on their own investments, the survey shows.
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The State of Retirement Planning
Continue reading… 4 CommentsPeople who live in U.S. News's hometown of Washington have the best shot at retirement security, according to a new study. Yes, the cost of living is among the highest in the country. But workers in the District of Columbia are much more likely to have federal government pension plans and retiree health insurance that make retirement planning much easier.
The study by Ernst & Young and Americans for Secure Retirement is the latest in a series of studies predicting that Americans will be woefully unprepared for retirement. While almost 60 percent of new middle-class retirees can expect to outlive their financial assets if they attempt to maintain their preretirement standard of living, Ernst & Young calculated, the probability of outliving one's assets ranges from 39 percent in the District of Columbia to 72 percent in Montana.
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4 Warning Signs: Giving Up the Car Keys
Continue reading… 0 CommentsDriving is a rite of passage in the United States. Remember when you passed your driving test and took your parents' car out onto the open road? Unfortunately, there comes a time in life when you need to think about hanging up those car keys.
In most parts of the country, the privilege of driving is conferred at age 16. But judging how and when to take away or limit access to the keys is harder. In areas of the country without reliable public transportation, losing your ability to drive can feel like a life sentence of isolation and dependency.
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3 Retirement Mistakes Women Make, and How to Fix Them
Continue reading… 0 CommentsBaby boomer women are more likely to have a more financially secure retirement than their predecessors. A new study found that men and women at large companies are both on track to produce the same share of their working income—85 percent of pay—in retirement.
At first that sounds like good news. But women are fraught with the double whammy of lower salaries and a longer life expectancy. So, a woman will need to save 2 percent of pay more per year than the average man over 30 years to achieve the same standard of living, according to Hewitt Associates' calculations.
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Working in Retirement: Motivating Boomers to Stay on the Job
Continue reading… 3 CommentsWorking past the traditional retirement age can give you essential extra income, provide something productive to do, and offer opportunities to interact with peers. Unsurprisingly, 85 percent of baby boomers plan to work in retirement, primarily for financial reasons, according to a McKinsey & Co. survey.
Work at older ages has some pretty good perks for society, too. If early boomers between the ages of 54 and 63 delayed retirement from age 65 to age 70, the McKinsey analysis found, the share of households prepared for retirement (and not draining public resources) would nearly double from 31 to 60 percent. Plus, working longer would boost economic growth, enabling the economy to generate an extra $12.9 trillion in GDP between now and 2025, McKinsey calculated.
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Surprise Expenses in Retirement
Continue reading… 1 CommentMike Pride, a Concord Monitor columnist in New Hampshire, was looking forward to retirement until he actually got there. He expected normal monthly bills, property taxes, and a visit to his wife's parent's home in Belgium. But he didn't foresee record high oil prices and a 401(k) that rapidly hemorrhaged in value. He also didn't budget for home repairs, like a broken dishwasher and garbage disposal, a refrigerator and freezer that gave up cooling, cold showers when his hot water tank started leaking, and squirrel damage to his home, which all hit him seemingly at once.
"It is not so pleasant to start retirement with so many ill omens, with the national economy quaking, with our 401(k) bleeding. In the shadow of these things, it is a struggle to embrace—or even feel—our new freedom," he says in a Concord Monitor column.
Tell us, what unexpected expenses crept up on you in retirement?
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How Rising Fuel Costs Affect the Elderly
Continue reading… 0 CommentsMany seniors rely on local aging services like rides to the doctor, home-delivered meals, and home healthcare to keep them living independently. But rising gas costs are forcing cutbacks. Over half (56 percent) of Area Agencies on Aging have already reduced services in 2008 to keep up with climbing fuel costs, according to a survey by the National Association of Area Agencies on Aging, and 90 percent expect to do so in 2009. Gas prices are also making it more difficult for over 70 percent of agencies to recruit and retain volunteers.
"Increased costs, all tied to the rising price of oil, are making it harder and harder to keep families together and maintain these patients at home where they prefer to be," says Tim Rogers, executive director of the Association for Home Care and Hospice of North Carolina and the South Carolina Home Care Association.
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A Spending Target
Continue reading… 0 CommentsAfter you've amassed a nest egg, you need to develop a plan for sustaining it. But workers aren't sure how much they can spend in a given year and still make their savings last a lifetime. A recent MetLife Mature Market Institute and GfK North America survey found that 43 percent of workers between the ages of 56 and 65 who plan to retire in the next five years say they can withdraw 10 percent or more of their savings each year while still preserving their principal. But most retirement experts suggest a withdrawal rate of 4 percent or less annually. Here's how long MetLife calculated your savings will last for a given withdrawal rate.
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A Taxing Decision
Continue reading… 0 CommentsWant to save money on taxes in retirement? Give Alaska a try. It's the only state in the country without a state income or sales tax. But before you grab your parka, here's a look at other states with low tax rates.
Income tax. Seven states have no income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. And two states, New Hampshire and Tennessee, tax dividend and interest income only. Other states tax as much as 9.5 percent of your income, although certain types of retirement income are shielded from income tax in some states. To find out which types of retirement income are exempt in your state, contact the state department of revenue.
