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RETIREMENT IS COMING!
by Laura Bell
I know. It happened to me. My "golden years" were to have been with my husband and grandkids. The divorce was final seven years ago and life has been one big struggle. This is a combined result of the divorce, on-the-job injuries and the recession. There are not many who don't have similar tales to tell. Unexpected sidetracking events can also hit members of the X generation.
Today is the time to plan for a secure retirement. Keep in mind: forced early retirements are here to stay. The need to become an entrepreneur may be a part of your future. Being able to use a retirement fund or using it as collateral, may spell the difference between disaster or a bright future. Change in lifestyle brought on by the shrinking job market is here to stay. This, along with the constant threats of cutbacks in Social Security and questions about the fund's reliability to support new contributors past the turn of the century, are all the more reason, to take the bull by the horns.
HIRING OUT YOUR MONEY
When it comes to any investment planning, you put your money to work. It takes planning; and, it takes self-education. There is a difference between saving and investment. According to: "The Penguin Dictionary of Economics," "saving is not spending." Whereas investing is: the purchase of an asset from which there will be derived some benefit (paraphrased). Buying stocks is a good example.More years ago, than I want to remember, I had a witty stock broker for a public relations client. His favorite saying was: "...there are only three ways for you earn money in this society -- as a wage earner, charity (i.e. welfare), or putting your money to work." Hiring out your money will ensure that you don't have to work as hard or long as a wage earner.
SOME NITTY GRITTY IDEAS TO KEEP IN MIND
Everybody is an individual; and as such, has different views of how they want to spend their retirement years. For some it might mean the launching of an entrepreneurial career/a dream which had been postponed because of earlier obligations."The first rule of investment planning (retirement is just one kind of investment) is that no one strategy is right for everyone. Instead, every investor should recognize he or she is an individual with specific financial goals and that these goals will change with the passage of time." (Dean Witter Trust - pamphlet, "Personal Investment Alternative...)
If you are in the X generation, and have a risky nature, you might want to allocate a part of either your 401(k) or IRA money into a higher yield area. If you think, because of potential shifts in family needs, you might need to cash in on your retirement pot, despite income tax penalties, then you need to take liquidity into account. As with all good investment planning, diversification is always a key -- never put all your eggs in one basket.
DEAN WITTER INTERCAPITAL, Inc. puts out a nifty booklet called "Financing your Future." On the last page of the pamphlet is a retirement planning worksheet. The most valuable piece of information is the phone number for social security information: 1-800-772-1213. Request Form SSA 7004. Filling it out will bring projections of your social security retirement benefits.
Here are some the things Dean Witter's worksheet instructs you to include in projecting your retirement needs: expected SSI benefits, average lifetime salary (projections), household required expenses (you and your spouse or others), current age, value of current investments, and the cost of inflation.
IF YOU ARE NOT READY FOR ALL THIS HEAVY STUFF
No matter what stage you are in your working life, you need an IRA account. It may be changed at a later date into a specialized/designed investment plan. This does not mean, however, there may not be penalties involved in moving the money. These rules are constantly changing. Ask your banking officer for a pamphlet to go along with the account. Formal planning for this account can come later.You may, if you wish, allocate retirement planning to your 401(k) corporate-designated plan. Be sure, however, to read the fine print when it comes to penalties you may incur if you (a) move the money, (b) leave the company before becoming vested or retirement time (59 1/2 for tax purposes currently.)
Investment strategies can change as unexpected variables pop into your life.
PERSONAL RESPONSIBILITY
The Federal government has been telling us for several years they are no longer going to take responsibility to make sure our golden years are secure. It is up to us to secure our retirement.If you are not convinced yet, take a free session with an account executive at a local brokerage firm. He/she will be glad to show you that how a small amount started in your 20s can multiply. A broker will also be willing to go over tax liabilities with you if this kind of decision making leaves you nervous. You don't have to make a commitment, but get the professional advice needed for something as important as this before launching full steam ahead.
Feeling restraints of a tight budget? If you didn't owe Uncle Sam last year, you might consider changing the amount of deductions so you have some extra dollars in your pocket every pay check. They can be used to start your retirement investment. Work over your household's budget with a financial planner. Have retirement planning and saving a top priority. Nobody else is going to do it for you.
DEATH, TAXES AND RETIREMENT are three things nobody avoids.
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