| For Baby Boomers, outliving your savings is becoming | | | | well. |
| an increasing concern - and if it isn't, it should be. | | | | That equals a 10% annual contribution to your |
| One of the main reason for concern is the rising life | | | | pension plan (5% from your employer + 5% from |
| expectancy. In 1906, the average life expectancy | | | | you) and in addition, you can deduct your 5% |
| was 54 for men and 61 for women. | | | | contribution from your taxes - up to a total of |
| Today the life expectancy has risen to 78 for men | | | | $3,000. |
| and 84 for women - a 31% increase in life-span for | | | | You will be taxed on your pension funds when you |
| men and a 27% increase for women. | | | | start to withdraw them. |
| In today's world if you haven't started planning for | | | | 3. Traditional Individual Retirement Account (IRA) - |
| your retirement by age 25 you may already be too | | | | This is the most typical way to save for retirement, |
| late. | | | | outside of work and probably the easiest. |
| Among the 78 million Boomers approaching | | | | With an IRA you set up your plan through your bank, |
| retirement only about 25% are in a position to be | | | | a financial planner, broker or your accountant. |
| able to retire comfortably. | | | | Yearly contributions are limited to $3,000 and the |
| There are a lot of reasons that Boomers, as a whole, | | | | contributions are deductible from your current taxes. |
| are so ill prepared for retiring but one of the main | | | | You can begin receiving benefits from your IRA at |
| reasons is the way they have approached the | | | | age 59 1/2 if you have retired. The taxes you pay |
| retirement process. | | | | on the amount withdrawn are at a lower rate (in |
| Most have failed to ask and answer the important | | | | most cases). |
| questions that can go a long way in helping your | | | | You are required to begin withdrawing from you IRA |
| retirement planning. | | | | no later than age 70 1/2. |
| The questions require almost brutal thinking and | | | | 4. Roth IRA - The Roth IRA is the same as a regular |
| planning for your future - which most people don't | | | | IRA but with a twist many people like. |
| like to do since they are forced to face a certain | | | | With a Roth IRA you make contributions again are |
| reality. | | | | limited to $3,000/year but instead of deducting your |
| But lets face it, failing to do any sort of planning is an | | | | contributions from your current taxes, you pay taxes |
| even more brutal reality since you are left floating in | | | | on your yearly contributions. |
| a rudderless boat - no direction and very little chance | | | | There is difference in withdrawal requirements as |
| of reaching the port you started out for. | | | | well. |
| So if you are ready to get started thinking about | | | | Since you have already paid the taxes on your |
| your retirement here are the questions you need to | | | | pension plan there are no withdrawal requirements or |
| ask and answer as a first step (don't worry, there | | | | early withdrawal penalties. |
| are only 3) in basic financial planning: | | | | Plus the huge benefit of no taxes on any amount of |
| How much money do I need to retire comfortably? | | | | gain your IRA may have accumulated through the |
| 2. Where is that money going to come from? | | | | years. |
| 3. How can I make my money last for as long as I | | | | 5. Keough Plan - If you have a small business that |
| need it? | | | | you run part time out of your home it is |
| We'll cover these in some detail to give you an idea | | | | recommended that you investigate setting up this |
| of how to get started in your retirement planning | | | | type of pension plan that is designed specifically for |
| process. | | | | small businesses. |
| 1. How Much Money Do I Need To Retire | | | | Even if you participate in your employers pension plan |
| Comfortably? | | | | and have an IRA, a Keough can give you huge |
| This question is completely subjective because no | | | | benefits not only for saving for your retirement but |
| two situations are exactly the same. The best you | | | | it may also give you some very nice tax advantages. |
| can do is take the examples given here and apply | | | | Before you begin setting up a Keough make sure to |
| them to your own lifestyle. | | | | get competent legal and financial help. |
| First, this discussion assumes that you have less than | | | | 6. Increased Savings - The one thing most Boomer's |
| 20 years of working before you reach 67 (the soon | | | | have failed to do is develop the discipline needed for |
| to be minimum Social Security retirement age) and | | | | regular savings. |
| have pretty much ignored your retirement savings | | | | The year 2005 saw savings in the U.S. drop to a |
| and planning. | | | | -1.7% - the lowest savings rate ever recorded. |
| Most financial planning models will say that you need | | | | In other words, we are spending way more than we |
| a minimum of $250,000 in total savings - a | | | | make and seem content be squandering any hope |
| combination of savings and your pension fund - in | | | | for a secure retirement. |
| order to retire and maintain your current standard of | | | | Most people will say that they "can't afford to save" |
| living. | | | | because they have no money left after all their bills |
| However, the reality is that most people don't have | | | | are paid. |
| anywhere near that much money saved. In fact, the | | | | If this description fits you need to readjust your |
| average amount that most Boomers have saved for | | | | thinking and make sure you pay yourself first every |
| retirement is less than $10,000! | | | | month. |
| In today's economic climate this amount will be no | | | | You can start by having your paycheck directly |
| where near sufficient for you to retire on. The | | | | deposited to your SAVINGS account instead of your |
| question now is if and when you will be able to retire | | | | checking account. |
| depending only on Social Security. | | | | Transfer at least 10% of your earnings into a money |
| If you live month to month and aren't saving | | | | market account you set up and then earmark that |
| anything you may have to adjust not only your | | | | money as untouchable and not part of your family |
| retirement date, but what your retirement will be like. | | | | budget. |
| The first place you should start is determining what | | | | The remaining money in your savings account can be |
| your current cost-of-living is and what you expect it | | | | transferred to your checking account as you need it |
| to be once you retire. | | | | to pay your regular bills. |
| A good rule of thumb in determining your | | | | It will amaze you how fast your savings starts to |
| post-retirement cost-of-living is that you will need a | | | | build and how little you will have to adjust your |
| total monthly income from all your sources that | | | | standard of living. |
| equals @ 60% of your pre-retirement income. | | | | For all the work you do to earn your money it |
| This figure makes a huge assumption that you are | | | | seems only fitting that you treat yourself as any |
| entering retirement debt free - no short term or | | | | other bill you pay - only with this bill you get to keep |
| credit card debt and a home that is paid off or will be | | | | your money. |
| in the first five years of retirement. | | | | How To Make Your Money Last Your Lifetime |
| If you enter retirement carrying a lot of debt your, | | | | The biggest decision you will make after you do |
| post-retirement income may need to be as much as | | | | retire is how you will live the rest of your life. |
| 75-90% of pre-retirement income just to pay your | | | | With us Baby Boomer's the way most of us will live |
| living expenses plus your debt service. | | | | in retirement is still being formulated. |
| If you are deeply in debt when you retire the | | | | For some Boomer's retirement means sailing off into |
| chances of you ever getting yourself debt free are | | | | the sunset. Others see retirement as being endless |
| not that great. | | | | travel or games of golf and tennis. |
| The important lesson here is that even before you | | | | Still others will start a business doing something they |
| start saving significantly for retirement you need to | | | | have always dreamt of doing or volunteering their |
| get out and then stay out of debt before you retire | | | | time with local agencies and charities. |
| - pay off your credit cards and short term loans and | | | | Whatever you decide to do after retirement there is |
| then make every effort to pay off your mortgage. | | | | one certainty that will affect everyone - that is the |
| There is one more important reason to be debt free | | | | very best way to make the money you have saved |
| before you retire - the older you get the more you | | | | last as long as possible. |
| will spend for your health care. | | | | After you retire you will realize a reduction in your |
| Right now health care costs are increasing by about | | | | cost-of-living simply from the elimination of certain |
| 15% per year (that figure shows no sign of slowing | | | | things that were connected to your job. |
| down) and the amount you have saved is going to | | | | You will no longer have the cost of a daily commute |
| need to cover those rising costs. | | | | or a wardrobe nearly as extensive and costly. Gone |
| Where Is My Money Going To Come From? | | | | will be the cost of expensive lunches and your daily |
| There are many different ways that you can save | | | | fix of a Starbucks double latte Grande. |
| for retirement. | | | | The only way you can make sure your money lasts |
| There's always the old-fashioned way of hiding | | | | as long as you need it is to invest it in a money |
| money in your mattress, but there are probably | | | | making instrument of some sort. |
| some better ways to save for retirement that will | | | | Stocks, bonds, annuities, or mutual funds are all things |
| also save you on your income taxes as well. | | | | you can invest in which will earn money on top of |
| The following discussion lists the most common types | | | | your money. |
| of retirement savings plans available. | | | | CD's through your bank are another thing you can |
| It is strongly suggested that you seek competent | | | | invest in but you must make sure that the interest |
| financial advise if you decide to set up one of these | | | | you will earn will exceed the rate of inflation for the |
| plans. | | | | time your money is unavailable to you. |
| 1. Defined Benefit Plan - These are sometimes | | | | If you participate in a 401(k) you will need to roll the |
| referred to as traditional pension plans since they are | | | | amount in your fund into an IRA after you retire. |
| provided by your employer and require no employee | | | | This is likely to be the largest single amount of |
| contributions. | | | | money you will be responsible for. |
| An employee's pension benefit is usually based on the | | | | You absolutely must become pro-active in making |
| number of years you worked for your company - i.e. | | | | sure the money you have earned continues to grow |
| $XX/month for every year worked for the company. | | | | throughout your lifetime. |
| An example would be $65/month x 35 years of | | | | You need competent and unbiased advise when it |
| employment = $2275/month pension. | | | | comes to handling the money you'll need to live on |
| These pension plans will generally pay for as long as | | | | for the rest of your life. |
| the employee survives after retirement but you can | | | | You can get the best advice from someone who is |
| set them up to pay a lower amount to the employee | | | | NOT trying to sell you their product or something |
| for life but will then continue to pay an amount to | | | | that will earn them the highest commission. |
| your spouse for as long as he/she lives. This is | | | | If you need help in finding financial advice and you |
| known as a Life and Certain plan. | | | | don't know of any, call your local Better Business |
| 2. Defined Contribution Plan or 401(k) - This is the | | | | Bureau and ask for a list of FEE BASED Financial |
| retirement plan started in 1973 and known as an | | | | Advisors or Financial Planners in your area. |
| ERISA plan. | | | | Like attorneys or accountants, you pay these |
| With this plan your employer sets up a pension plan in | | | | professionals a fee for their services. |
| your name and then contributes an amount equal to | | | | By wisely managing your money you will stay ahead |
| a percentage of your wages every year. | | | | of two things that can destroy your estate - inflation |
| For example, your employer may contribute up to | | | | and income taxes. |
| 5% of your annual salary. This is money you receive | | | | Please feel free to e-mail this article to anyone you |
| tax deferred from your employer. | | | | think might benefit from the information. |
| If you are smart, you will then contribute an amount | | | | Copyright information and my Sig File must be |
| equal to your employer's contribution every year as | | | | included. |