Eric Bayne asked:


Do you know how much money you will need at retirement? Do you know if you will even have that much money? The best method to know for certain is for you to start putting together your retirement worksheet today. Before you begin your worksheet, however, you will need to answer the following 3 vital questions:

How much do you want to make a year, in today’s dollars, when you retire? Or, to put it another way, if you were to retire right now, what yearly salary would you require in order to keep you living in the fashion to which you have become accustomed. The majority of worksheets and calculators will have built into them projected appraisals for inflation and will be able to use this figure to calculate roughly the amount of annual income you will need at retirement.

How many years are there before you retire? This is critical because it is the number of years you have remaining in which to add funds to your financial portfolio. The spreadsheet will take the value of your current portfolio and add to it any expected contributions up to the retirement date. The calculation will show how much you can expect to have at retirement. If this amount is less than what you require, you will either have to add more money to your portfolio, change your investment strategy, or lower you expected standards of living at retirement.

What is the sum of all your sources of expected retirement income? This includes your expected Social Security income as well as any of the following investment plans – 401k, 403b, 457, Keoghs, SEP, IRA, and pension plans. It’s important to get as concrete figures as you can and put them on paper. This helps to avoid the rose colored glasses scenario where you think you have more money than you actually do. A major cause of people getting to retirement and being shocked that they don’t have enough money to live at their current lifestyle level is their failure at an earlier age to take a hard look at their financial situation when they had plenty of time to do something about it.

How many years will your retirement funds be expected to last? This is a sensitive question as it gets into life expectancy and mortality issues. Once you begin to collect Social Security, your income from it will be relatively constant. But Social Security will most likely cover less than half of your desired income. And in many cases, it will cover much less. This means that your remaining investments have to supply the rest of your income. In the best of circumstances, you will be able to live off of a combination of the interest and dividends from your investments and not have to touch the principal. If, however, you are forced to start drawing against the principal, your annual income from it will continually decrease until gone. Knowing how many years your retirement funds will be necessary will help you make the decision as to whether you should start to draw the principal down or accept a lowered standard of living.

How is your health? For many retired people, their medical bills are their biggest out of pocket expense when they retire. Even with Medicare, you may have deductibles to pay for. We can’t look into the future and say for certain what our health will be at retirement. But if you already are taking medical treatments for a disease such as high blood pressure, diabetes, cancer, and so on – you can be almost certain that those bills will increase significantly as you reach retirement age. Many people when making their retirement plan, forget planning for future medical bills. But now, before your retirement, is the best time to do this.



Vanessa

ali.mama asked:


I am a 28 year old stay at home mother, who is not married. I am concerned about what this is doing to my retirement savings. I want to know what my options are to be prepared for retirement.
I forgot to mention I do not receive any assistance (e.g. welfare). I do live with my boyfriend, who is my daughter’s father.

Rosemary

dipendra asked:


Most of the people I have met have not planned for their retirement as they say ‘future is unpredictable and we need to live in present’ but my dear friend’s future is the outcome of present, our present will decide our future. When we think of retirement we generally think of old age, a period when you have to give up the job and sit at home doing nothing. Contrary to the fact, most of the retiree lives a very active life. We need to seriously consider out planning towards retirement because once we retiree our income stops coming but our expenses remain as it is and in some cases it rises with the rising inflation.

In this regard mutual fund has turned out to be the right answer for making retirement planning easier and safer. Mutual fund being managed by professionals is a key to effective retirement planning.

Some people like it. Some people don’t but the fact is that retirement is a reality for every working person. Most young people today think cannot think of retirement as reality as they believe in ‘living at present’. However, it is important to plan for your post-retirement life if you wish to retain your financial independence and maintain a comfortable standard of living even when you are no longer earning. This is extremely important, because, unlike developed nations, India does not have a social security net. In India people still depend upon bank savings and fixed deposits for retirement purpose, which is unfortunately inadequate.

Retirement Planning acquires added importance because of the fact that though longevity has increased the number of working years haven’t, so you end up spending the last phase of your life without earning.

In simple words, retirement planning means making sure you will have enough money to live on after retiring from work. Retirement should be the best period of your life, when you can literally sit back and relax or enjoy your life by reaping benefits of what you earn in so many years of hard work. But it is easier said than done. To achieve a hassle-free retired life, you need to make prudent investment decisions during your working life, thus putting your hard-earned money to work for you in future.

With the special features of mutual funds like Systematic Investment Plan, Systematic withdrawal plan, systematic transfer plan in addition to other unique features of different funds, the investor can easily plan for its post retirement requirements and ways to achieve it.

Unlike many other countries of west, in India we do not have state-sponsored social security for the retired people. While you may be entitled to a pension or income during retirement, but will it be sufficient post retirement.

Although the compulsory savings in provident fund through both employee and employer contributions should offer some cushion, it may not be enough to support you throughout your retirement. That is why retirement planning is extremely important for every one. More over with mutual funds the investors can actually plan for themselves and also achieve their planned objectives. As compared to direct equities this option of mutual fund is much safer for planning your retirement corpus.

There are many reasons for the working individuals to secure their future emergence of separate families and its attendant insecurity, increasing uncertainties in personal and professional life, the growing trends of seeking early retirement and rising health risks are among few important risks. Besides falling interest rates, also the sustained increase in the cost of living make it a compelling case for individuals to plan their finances to fund their retired life.

Planning for retirement is as important as planning your career and marriage. We need to take conscious and careful decisions to prepare for our retirement. Life takes its own course and from the poorest to the wealthiest, every one gets older with time. We get older every day, without realizing. With our coming old age we tend to become more understanding to the facts of life and realize the importance and impact of retirement. The future depends to a great extent on the choices you make today. Right decisions with the help of proper planning, taken at the right time will assure smile and success at the time of retirement.

In my words, retirement planning means making sure you will have enough money to live on after leaving your work. Retirement should be that period of your life, when you can sit back and relax. Retirement should bring more of enjoyment in your life by reaping benefits of what you earn in so many years of hard work. But it is easier said than done. Most of the people live their worst life during retirement. To achieve a hassle-free retired life, you need to make right investment decisions during your working life, thus putting your hard-earned money to work for you in future. If you are not very aware of the investment that you need to undertake then you can easily take help of online advisers to help you with your retirement plan through mutual funds. The earlier you start the better it is for you.

Now retirement planning can be done with a single click and with the advice of a registered mutual fund advisor by Association of mutual funds in India (AMFI). Fill this retirement questionnaire to know your current financial situation and your investor profile which will help you plan for a worry-free retirement.

This is a no obligation free mutual fund advisory; investors can make informed mutual fund investment decisions with the expertise of our advisors.



Ruby

Wayne Miller asked:


And it is true that a big part of being ready to retire involves being ready financially to be able to step out of the work world and start to take life easier.

But just as life is not just about making money, retirement is about so much more than having the money not to work. Preparation for retirement also means preparing to live a simpler life, preparing to become a senior citizen and a grandparent and preparing to look at life differently.

Your health care is going to be an important issue in your retirement years. As you enter retirement, you may be strong as an ox and active and full of health and life. But any of us can fall prey to poor health or accidents. And if your employer from whom you retired does not extend your health care insurance for you to continue your coverage past your employment, you should make other plans. You can continue the same coverage that you had under the Cobra system but that can get pretty costly and dip into your finite retirement savings pretty significantly. Medicare can be helpful too. But to be perfectly comfortable that you have coverage, look to Medicare supplement insurance so you maintain the same quality of care in retirement that you have now in the working world.

Do not just limit your retirement planning to your money. Your retirement will be a time of a big change of lifestyle and a change to your values and how you spend your time as well. You will have more time on your hands and studies show that those who enter retirement without an agenda can become adrift in all that time and that is not healthy. Human beings are doers so even though you may no longer be working for a living, find ways to be productive and make a difference in your community. You can start finding those opportunities long before retirement so when you finally step out of the work world, expanding those hobbies and volunteer efforts is as natural as can be.

In addition to the change of where you spend your time each day, you may have even a bigger change in where you live ahead for you in retirement. Many times people who step into their retirement years find that maintaining the house where you raised the kids is just not necessary and more work than it worth. Selling the home and using the equity to finance a leisurely retirement life is a great way to go. But you should start early both preparing the home for sale and preparing the family that a grandma and grandpa house is going away.

In addition, where you go to live is something that can be great fun to dream about and doing some research on just the right place. You may choose to rent a small place in an older part of town and enjoy a whole new lifestyle in that setting. Or you might go for a high-rise condo with a view of the river or a nice quiet apartment in a retirement oriented apartment complex where you and other retirees can explore this new world together.

Above all it is important to embrace the retired lifestyle with the enthusiasm and excitement that you might greet any new opportunity. Do not let being retired mean just not working. In fact, go through the mental and emotional exercises of putting the working world behind you and redefining yourself in this new role. You are retired now and you are a senior citizen and maybe even a grandparent.

These are not negative things. There is a strong role for grandma and grandpa in society and in your family. And the world takes great joy in a senior citizen who embraces that time of their life and sets out to be the best senior citizen they can be. If you predetermine that this is the kind of retired person you are going to be, that attitude will propel you past that sudden change of life shock and get your retired life off in running in an exciting way that will lead to many happy and fun times in your life of leisure as a retired person.



Norma

Michele L asked:


If I have a retirement account, say a 401k or an IRA, can I use those funds – not to borrow – but as an investment in a mutli-tenant residential apartment complex that I will be leasing to unrelated tenants to derive income? How is this done? Who do I talk to about the details?

Valerie

Ian Williamson asked:


There are several retirement accounts with tax implications. 401K accounts, Keogh accounts, Roth IRAs and standard IRAs are some of the most important and widely know retirement accounts.

What is an Individual Retirement Account (IRA)?

An Individual Retirement Account (IRA) is a retirement investment into which you put contributions on which you do not pay taxes until you withdraw the money from the account after you retire. Usually, your tax bracket will be lower after retirement and so you won’t have to pay as high a percentage of the money in taxes as you would have if the money had been taxed at the time it was originally earned. When you put money into an IRA, you get a tax deduction. When you take a “distribution” from that IRA later, it counts as taxable income. There are penalties for early withdrawal up to age 59 1/2.

You are required to start taking money out of your IRA no later than at age 70 1/2.

You should check with your accountant or the IRS to see how much you can contribute in the current tax year. How much of this money is tax deductible depends on your Adjusted Gross Income (AGI) and whether you are covered under an employer retirement plan.

There are other variations of the standard IRA, such as the “Simple IRA,” a relatively new but popular employer based plan allowing employer contributions and a higher contribution by the taxpayer.

What is a 401K Retirement Account?

A 401K plan is named after a section of the 1978 U.S. Tax code. It is a plan offered by employers which allows you to automatically save a portion of your income for retirement without paying taxes now on the money you are saving. As with the IRA, the idea behind it is you’ll be in a lower tax bracket after retirement and therefore will have less tax to pay on the saved money than you would pay now at your higher salaried income rate. You only pay taxes on the money when you withdraw it from the 401K account after retirement.

Usually, the 401K money is automatically deducted from your paycheck by the company’s payroll system in much the same way your taxes are withheld.

In its basic configuration, a 401K account is similar to a standard IRA, but in many employers’ plans, there is a matching contribution from the employer which provides the real power to the plan. Beware. Many companies invest the 401K plan money heavily in their own company stock. If the company has an unusually bad financial problem, you might find this money in jeopardy as well as your job. The best 401K plans allow you to control the investment vehicles for your money.

Typically, at the time of retirement, a 401K plan is “rolled over” into a standard IRA, from which the retiree then makes withdrawals over time to provide retirement income.

What is a Keogh Retirement Account?

A Keogh retirement account is a tax deferred retirement plan for self employed people. If you are self employed, with a sole proprietorship or a partnership, then this is the plan you may want to consider setting up. Any type of qualified retirement account can be set up to cover self employed individuals. You should also look into 401K plans, and standard and Roth IRAs.

There are advantages and disadvantages to each. One advantage to the Keogh plan is that contributions are deducted from the gross income. Contribution limits are more liberal than those allowed with some other retirement accounts. As with other retirement accounts, tax is deferred until money is withdrawn, usually after retirement. In some cases, lump sum withdrawals may be eligible for 10 year averaging which can provide a tax benefit.

Another IRA type used for self employed sole proprietors is a SEP IRA which has less complex filing administrative paperwork and allows higher contributions.

What is a Roth IRA?

The Roth IRA came into existence in 1998 and is named after the late Senator William V. Roth, Jr. The chief advantage of a Roth IRA is obvious. Although there is no deferral of taxes on the money originally invested in a Roth IRA, as in other IRAs, all income earned by the investments in a Roth account is tax free when it is withdrawn. Another benefit is that you are not required to take distributions beginning at age 70 1/2 as with other accounts, so if you don’t need the money to live on, it can continue growing and earning for you tax free. Also, a Roth IRA makes it easier in some cases to take early withdrawals without penalties compared to other retirement accounts.

For many people, the Roth IRA is a wonderful retirement investment account. Some employers offer Roth 401K plans.

There are, however, limitations on who may contribute and under what conditions. Individuals with higher incomes may not be able to use a Roth IRA. Check with your accountant or the IRS for current rules.

You need to plan early and do your homework thoroughly. Review your choices regularly since rules and types of accounts change over time. Don’t wait until you are 60 to start planning for your retirement or you’ll be sorry.



June

Kortor Kamara asked:


 OVERVIEW:

 

The NASSIT Act, 2001 established a virtual state-monopoly in the NASSIT for the management and investment of pension funds in Sierra Leone. However, as is generally the case with monopolies and especially quasi governmental monopolies in Sierra Leone, we must continue to be vigilant and guard against inefficiencies in management and oversight, politically-driven investments, political interference, nepotism and a blotted bureaucracy which have in the past become hallmarks and recipes precipitating their subsequent failures and demise.

 

It is thus against this backdrop that the continued viability of the current retirement system remains to be seen especially as we continue to await the second statutory actuarial evaluation report and the failure by the Trust since 2006 to post an annual report encompassing the Trust’s operational performance and audited financial accounts for the fiscal years 2007 and 2008 (NASSIT website: www.nassitsl.org). Management and the Trustees must be reminded that pursuant to Section 16(1) of the NASSIT Act No.5 of 2001, the Trust is by law required to submit and publicly file such annual reports.

 

LONGEVITY RISK:

 

Despite the still very low life expectancy rate currently estimated at 41.24 years (CIA World Fact book Report March, 2009) and high infant mortality rate of 154.43 deaths per 1000 live births (UNDP Human Development Report, 2008) in Sierra Leone, the past few years have witnessed positive, though minimal movements in data reflecting a decrease in the nation’s longevity risk. This is borne from a comparative analysis of life expectancy figures of 35.4 years from 1970 to 1975 to 41.0 years in the period from 2000 to 2005 to the current 41.24 years estimated for 2009. Generally, the longevity risk in retirement is the hazard of aging and uncertainty of knowing how long one will live and how long social security retirement benefits, such as provided by the National Social Security and Insurance Trust (NASSIT) can go before one runs out of retirement funds prior to death. The focus of this article is thus how can one minimize the risk of running out of money in retirement through the use of annuities and retirement funds?

 

The Society of Actuaries in a survey report entitled “Key Findings and Issues: How Americans Understand and Manage their Retirement Risks” identified the following retirement risks viz: outliving assets; loss of spouse; decline in bodily function; healthcare and medical expenses and inflation. These retirement risks are not unique only to Americans as the same basic risks confront retirees in Sierra Leone as they seek to understand and manage their retirement options. Generally the most common retirement risks are categorized as follows:

Longevity Risks Investment Risks Planning Risks

 

According to the latest published data by NASSIT (NASSIT at a Glance Facts & Figures as at June 2008), the monthly average retirement pension payable currently in Sierra Leone is a paltry SLL108, 504.72 (One hundred and eight thousand five hundred and four Leones and seventy two cents). This amount represents a fraction of retirement income required by employees for basic sustenance in the current economic environment in Sierra Leone, where even a bag of rice costs more than the average monthly retirement provided by NASSIT. A retiree with even a modest family, not to mention our extended family system, would be hard pressed to provide and maintain a household based solely on the pension currently provided by NASSIT.

 

With a majority of the participants either at average or below average income earnings and hence contributing at the average and below average rates, it stands to reason that most of the scheme participants will not be eligible to receive pensions at even the modest average amount as currently computed by the NASSIT actuaries.  Thus, the goal of a comfortable retirement envisaged by the architects of the NASSIT risks becoming a fleeting illusion, unless other new retirement options and vehicles are incorporated into the nation’s retirement and social safety network.

 

As postulated by Kerry Pechter in her book “Annuities for Dummies”, “many people confidently walk the financial high wire of life without a safety net. Others, especially those who are approaching retirement, feel more secure when a net is there to catch them-just in case the tightrope snaps”. In the Sierra Leonean context however the social protection and safety net is needed by all and not just a few, thus my continued passion in ensuring that the Trust is professionally run and maintains accountability consistent with actuarial, retirement and insurance principles.

 

REPEAL THE NASSIT MONOPOLY:

 For with the inability of the NASSIT to provide the requisite financial safety net, based on the current actuarial projections, it is but prudent that government seeks to break up the NASSIT’s near monopoly over pension fund management in Sierra Leone to allow not only life insurance and annuity companies but more so retirement funds to establish and manage employer-sponsored retirement plans.

 

The NASSIT model is akin to the Social Security system in the United States which as a hybrid defined contribution and defined benefit plan, establishes and sets a fixed percentage both employees and employers contribute and also defines the benefit formula participants receive at retirement. As a result of conservative projections and outright ill-advised investments with little or no redeemable value-added equity to be realized in some investments even in the long term, the NASSIT cannot be solely relied on by Sierra Leonean workers for their retirement needs.

 

With the repeal of the NASSIT monopoly, employer sponsored retirement plans and annuities, with an investment and insurance component will be established and marketed to allow employees to save and invest in their own retirement.  

 

THIRD SCHEDULE RETIREMENT FUNDS: What are they?

 

What I have elected to dub “Third Schedule Retirement Funds” emanates from provisions in the third schedule of the Sierra Leone Income Tax Act, 2000, which provides for the establishment of complying retirement funds with the approval of the National Revenue Authority (NRA) Commissioner.

 

This little known provision in our tax code already provides the legal and regulatory framework for the establishment of individual retirement accounts managed by these so-called Third Schedule Retirement Funds in Sierra Leone. These are intended to augment and provide other guaranteed income during retirement separate and aside from the NASSIT pension. Moreover, these retirement plans allow employees to save and invest for their own retirement by the employee authorizing the employer to deduct a certain percentage of his/her wages to be invested in the employer-sponsored plan.

 

Tax incentives and deferrals are usually provided by governments to encourage retirement planning, savings and participation.  Amounts contributed by employees into such plans are not taxable resulting in a larger carry home paycheck monthly. Moreover, as an employee benefit, employers also contribute a percentage into their employees’ retirement accounts, with a concomitant tax savings by the employer.

 

However, the provisions of The First Schedule Part IV of the Income Tax Act, 2000 which requires a 15% withholding from payments on pensions and annuities needs to be repealed as it is regressive and discourages retirement savings. It is also envisaged that employee contributions are on a pre-tax basis so that employees participating in these retirement funds can take advantage of favorable tax brackets and rates.  As an example, the tax rate for individuals with incomes over 480,000.00 Leones is 25% per annum while the tax rate for individuals earning over 7,500,000.00 Leones is 40%.

 

The United States based African-focused reinsurance consultancy company, Saddleback Re, in California managed by the author has over the past few months designed annuities and retirement policies to be introduced in Sierra Leone and managed under the provisions of the Sierra Leone Tax Code. Additional information on these retirement vehicles can be addressed to admin@saddlebackre.com.

 

ANNUITIES:  

 Annuities, whether fixed or variable, immediate or deferred are generally retirement tools or vehicles designed to supplement an employee’s retirement income and guarantee pension-like income over the life of the annuitant or beneficiary. These are only issued by insurance companies and have both a hybrid insurance contract and investment features.

 An income annuity generally provides for conversion of a large sum of cash into monthly, quarterly or an ann ual payout wherein an insurance company agrees to pay the annuitant or beneficiary an income over a certain period of time.

 According to the Sierra Leone Insurance Commission (SLICOM) 2006 Annual Report, the Life Insurance business sector is serviced by only 3 insurance companies, with a net industry wide premium of 1,323,640,000.00 Leones; with Aureol Insurance Company dominating with a 104% share of the market. Thus annuities which are principally life insurance contracts still have a long way to penetrate the Sierra Leone insurance marketplace.

 THE SOCIAL SAFETY NET PROGRAM AS AN ANNUITY:

 The Social Safety Net Program currently managed by the Ministry of Employment and Social Security represents a program that should have better been managed as an annuity. During the program’s launching in 2006, President Kabbah stated that “NASSIT has been able to pay back over 5.3 billion towards the establishment of the Social Safety Net Scheme. Additional support to the scheme amounting to 5.0 billion Leones will be made by government”. The program launched by President Kabbah in 2006 with paid up capital of 5.7 billion Leones and additional 5.0 billion investment pledged by government was designed to be administered by NASSIT, without any administrative costs and projected to reach an estimated 16,000 extremely vulnerable households, as a component of the country’s 2005 to 2007 Poverty Reduction Strategy Paper (PRSP).

 

However, since the Social Safety Net pilot adopted a cash transfer scheme the following has been expended, according to Ministry of Employment and Social Security presentation at the Regional Experts Group Meeting on Social Protection in Dakar, June 2008:

 

Cash: 200,000.00 Leones (US $68.00) per person for six months. The overall cost of the pilot was 3.746 Billion Leones (US $1.270 million ) 16,890 persons were targeted costing 3.396 Billion Leones (US $1.151 million) Administrative costs was 350 million Leones (US $118,644.07) Only 65 out of 156 chiefdoms were covered.

From the above figures the program as managed and supervised by the Ministry of Employment and Social Security clearly lacks long term sustainability, is too short term and lacking an entrepreneurial oriented vision. For with the amount of the initial seed money having been used to purchase annuities for all the participants in the targeted groupings, the benefits of retirement income and savings that annuities provide would have been made available to some of the most vulnerable members of our society. Rather the decisions of transferring management of the program from NASSITT, where the funds would have been better managed and invested to a Ministry program was a recipe for failure.

 



Kelly

Ramsay Mameesh asked:


This new year, think big, make your top new year’s resolution retirement. Conventional wisdom says to create small, manageable new years resolutions, that are easy to accomplish. Lose ten pounds, join a gym, get better organized, all are typical new year’s resolutions. And saving more money for retirement, increasing your 401k contributions, reducing your debt, are great retirement new year’s resolutions as well. But why not consider going for the whole thing this year? Why not retire in 2008?

You may be in a position to retire in 2008. You may be wealthier than you realize. But listening to conventional wisdom, and thinking small, may cause you to miss the great retirement opportunity of 2008!

According to the U.S. Census Bureau. In April of 2007, 15 million American Households had a net

worth over $500,000. That means 15 million American Families can stop working right now. An individual can retire on even less. Over 30 million American Adults don’t need to be working! Unfortunately, since the time of that report, the two assets that make up the majority of Americans net worth, housing prices and stock values, have both been on the decline.

And many economists are predicting, lower house values and the strong possibility of a recession, in the coming year. So while you are achieving your small and manageable retirement resolution, increasing your 401k contribution in 2008 for example, the overall value of your retirement portfolio may be dramatically lower at the end of the year. You may be in a better position to retire now, than you will be again, for many years to come. This is not the time, to be thinking small, or for conventional wisdom.

Conventional wisdom says you need to be rich to retire. Conventional wisdom is often wrong. The truth is you don’t need to be rich to retire. Conventional wisdom in the retirement industry for instance, assumes you will consume, between 70 – 80% of your current income, annually in retirement. It’s a guess. It’s a “Consumption Assumption”, that forces you to save more money than you need for retirement, and causes you to delay retirement. If you are prepared to challenge conventional wisdom, and think big, you may be able to retire in 2008.

But how do you know if you have enough savings to retire in 2008? That depends – on how much you need to spend in retirement. You determine how much you need to spend in retirement, therefore, you determine how much savings you need for retirement. It’s really that simple, and to make it even easier, here are some free retirement tools to help you achieve retirement this year.

Free Retirement Guide – This 15 page retirement guide destroys conventional wisdom, and reveals the secret to early retirement, the formula to accurately calculate retirement, and much more.

Budget 2008 Retirement Software – Your retirement budget, the amount of money you are going to spend in retirement, is the crucial element in calculating if you have enough savings for retirement. This free retirement software enables you to easily create a budget, track your current monthly expenses for all of 2008, and plan for your retirement.

Retirement Widget – A fun little desktop widget, to remind you how much time you have left, to retire in 2008.

This new year make your 2008 top new year’s resolution retirement. Thinking big, and challenging conventional wisdom, may lead you to retirement in 2008.



Julia

Bhumika Goel asked:


Whether we want to accept it or not, old age is a definite and leads to retirement from professional life. Thus, to have a comfortable and secure senior period, it is important to plan your post-retirement life prudently. Credit Union Retirement Planning gives you financial independence and a comfortable living standard even when you are no longer earning. With the help of a retirement calculator, we will help you to plan your retirement in a more effective manner.

With skyrocketing costs, it becomes difficult to keep your monthly budget intact. Even a well-salaried person may become off balance. With costs going up every day, you can imagine how high they will be when you are ready to retire. However, retirement planning provides you with a steady income every month to support you during times of rising costs. Retirement planning is a guarantee that you will continue to receive enough income to enjoy a comfortable lifestyle.

Planning for retirement is as important as planning your career or marriage. The future depends largely on the choices you make today. Correct and wise decisions with proper planning, taken at the right time, will promise many smiles at the time of retirement. Therefore, reach out to your retirement calculator and know your retirement needs.

To understand why a large number of people have already started planning for their retirement, and why you should also check your retirement investment calculators for perfect retirement planning.

Retirement is the ultimate reality that happens to every working person and we believe that it should be your best phase of life. Most young people today think of retirement as a distant reality. However, it is important to plan for your post-retirement life today if you really want to retain your financial independence and live a comfortable life. Retirement planning can be done anytime. It is never too late or too early to start saving for retirement with NMTW’s Traditional, Roth and SEP IRAs.  

With NMTW’s traditional and Roth IRA accounts, saving for retirement becomes even easier. You can have a regular amount deducted from your paycheck and directly invested into your account that can serve as your regular earning after retirement. Our traditional, Roth and SEP IRA accounts help young professionals to plan their life after retirement with feasibility. With such retirement planning, you will never feel a burden on your present life and can save a hefty amount for your life after 60.

Traditional IRA Account

With a traditional IRA, you may be able to deduct your annual contributions on your federal income tax return and your earnings are 100% free from federal income tax until you withdraw them from your account.

Roth IRA Account

With the Roth IRA, your contributions are not tax deductible now, but if you follow certain rules, your earnings will be tax free when you withdraw them.

Visit www.nmtw.org and know more about our different personalized retirement planning to make your future secure and independent.



Karl

Ramsay Mameesh asked:


There are three fundamental retirement planning questions, that are universal to everyone, no matter their age, income, or wealth. More than investments, asset allocation, or tax strategy, people want to know the answer to the following three questions:



When can I retire?

How much savings do I need for retirement?

How much can I spend in retirement?

The most important of the three questions, from a

retirement planning perspective, is the last one – How much can I spend in retirement?

How much can I spend in retirement?

How much you can spend in retirement, is based on how much you have saved for retirement, divided by an annual safe withdrawal rate of between 3% to 4.75% depending on your age at retirement.

A better, and the more important, question to ask is “How much do I need to spend in retirement?” To answer this question you will have to create a retirement budget.

Creating a retirement budget, insures that you will not run out of money during retirement, and it allows you to answer the other two retirement planning questions.

How much savings do I need for retirement?

How much savings you need for retirement, depends on how much you spend in retirement (your annual retirement budget), divided by an annual safe withdrawal rate of between 3% to 4.75% depending on your age at retirement.

The amount you need to save for retirement, is the amount of money you will need, to cover the cost of your retirement. The cost of your retirement is your retirement budget, which we calculated, when we answered the previous question – «how much can I spend in retirement?»

When can I retire?

When you can retire, is determined by when your savings can pay for your spending in retirement, based on your retirement budget. So, if your retirement budget is $3,000 per month, you currently have $600k, you need $900k to pay for your retirement, you save 25k per year, and your investments earn 10% compounded annually – you can retire in 3.5 years.

Did you notice, that the common thread in answering all three questions, was your retirement budget? That is because creating a retirement budget, your spending plan for retirement, is the key to calculating how much you will need for retirement, and to figure out when you can retire.



Glenda