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Cracking Into Your Nest Egg Early
Tweet Share on Facebook July 24, 2008 Comment (7)Most 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
Tweet Share on Facebook July 23, 2008 Comment (1)Sometimes, 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
Tweet Share on Facebook July 22, 2008 Comment (9)It'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
Tweet Share on Facebook July 21, 2008 Comment (4)America'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
Tweet Share on Facebook July 18, 2008 Comment (3)Retiring 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
Tweet Share on Facebook July 17, 2008 Comment (12)Companies 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
Tweet Share on Facebook July 16, 2008 Comment (3)Almost 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
Tweet Share on Facebook July 15, 2008 Comment (4)People 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
Tweet Share on Facebook July 14, 2008 CommentDriving 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
Tweet Share on Facebook July 11, 2008 CommentBaby 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.
