Tuesday, March 27, 2007

Early Retirement: What You Should Know

For many reasons, more and more people are opting to retire at an early age. The growing trend for the retirement is based on the fact that people are enticed to retire early than continue working and wait until they reach their retirement age of 65.

In fact, most of the surveys conducted in the United States asserted that 60% of the respondents would love to retire at an early age.

In reality, there are many benefits that people can derive when they retire early. However, there are also many consequences that result from early retirement. What they do not know is that early retirement has the potential of bringing more problems than reaping in benefits and advantages.

Here is a list of some of the reasons why retiring early can be a pretty risky activity.

1. Not in accordance with the regulations of Social Security

When people will retire at an early age, there is a great possibility that they cannot immediately obtain their Social Security benefits. This is because according to the rules and regulations of Social Security, anyone who is born after 1938 will have to wait longer than their retirement age of 65 before they can get their benefits.

Hence, early retirement may only contribute to a negative upshot if the older people’s finances where not managed properly and the only thing they expect to help them are the Social Security benefits they can get.

2. If people who took early retirement get sick, they cannot acquire some Medicare benefits.

This is because the age when people can get their Medicare benefits is when they already turn 65. Hence, if they are hospitalized and they have already filed for their early retirement, they have to obtain the necessary amount of money in order to cover the expenses in the hospital without Medicare.

3. Penalty charges apply to those who retired early and had withdrawn their IRAs early.

For people who would like to retire at an early age and wish to obtain their IRAs, they have to face a hefty 10% penalty charge.

Moreover, experts contend that the nest egg of people who wish to retire early is only 80% of what they should be getting when they retire at the age of 65.

The bottom line is that early retirement is, indeed, a personal choice and preference of an individual but one must consider the factors that may affect their life in the end.

Jim Pollard

Saturday, March 17, 2007

A Guide to Secure your Retirement

There are several meanings that people might put to the term "retiring comfortably". You might plan on hopping around the globe, or obtaining a dream 'castle' in a faraway land, or lazing around in a tropical destination.

Despite these romantic scenarios, you still have to listen to your practical side. See if you can afford the standard of living that you want in your leisure years.

Whether you want to live abroad or stay in the country during retirement, you would not want to worry about finances, so it is better to plan ahead.

Secure your finances.

Studies show that most pensions do not make up the difference between what you actually need and what Social Security provides. The key is to build a solid financial plan.

You need about 70% of your income before retirement to live up to the lifestyle that you now have.

Sure, your living expenses might be lowered during your leisure years. But other things that you need to spend on will definitely increase.

Another factor to consider is inflation. Have you ever heard of prices of commodities going down?

In spite of a basically steady economy, costs are sure to rise as you grow older so you need to foresee if you will be able to afford steep prices when you only have your monthly pension to rely on.

Think "Social Security" equals "Retirement Security".

By law, a person is eligible to receive benefits once he turns 62 years old. Age, eligibility, marital status and the amount that you have contributed trough the number of years that you worked will determine exactly how much pension you will receive.

If you decide not to take advantage of the benefits by the time you turn 62, then you will definitely have more once you start withdrawing money from the system.

Check if your pension plans can keep up with growing costs.

When considering your financial situation upon retirement, check on automatic COLA's, also known as cost of living adjustments. These help your pension payments keep up with inflation. See if your pension plans have them, as most plans do not.

Consider your health care options.

Medicare coverage does not always satisfy your health care needs and expenses so you better look into it twice, especially when retiring. One way to do so is by making sure that your employer pays a sufficient amount to supplement Medicare.

By looking into all of the above factors, you will surely be secured upon retirement and once you have all the practical considerations out of the way, you will get to enjoy retirement to the fullest.

Jim Pollard

Thursday, March 15, 2007

Retirement At It's Best - How To Get Ready

7 Ways to Boost Your Retirement Income

Retirement contributes almost 1/3 of a person's life. It is for this reason that retirement should be given preparation and planning. Many Americans forget to save or just ignore their retirement. It’s very easy when you are young to think you have time to consider retirement later. However, the years roll by quickly and you can find yourself approaching middle age with no plan in place.

You need to start now and think of better ways to prepare for that time. It doesn’t mean that money will also retire once a person has retired. Here are some ways on how you can boost your retirement income:

1. Start saving now. It is never too late to start saving even for a little amount of money. When you save money, make it as untouchable as possible. Allocate your cash on your savings starting today and you will be surprised by the amount of money you will have by the time you retire if you start now.

2. Make a review of your finances and revise your budget. Reviewing your expenses will help you analyze where you spend your money the most. This will help you to cut your expenses and eliminate the things that you do not really need. This also teaches you on how to choose your priorities and weigh the things that really matter in your lifestyle. If golf is something that you can live without, why not allocate the money you spend on golf in your savings?

3. Review your insurance terms. Increasing your deductibles will help you cut your premiums to 20%. Do not count on Social Security or your pension plan.

4. You may want to make a quarterly payment on your taxes instead of being automatically deducted from your retirement distributions. You can also seek the help of a tax advisor regarding this issue.

5. Consider where you take your distributions. You may want withdraw funds from your Social Security first, then your taxable investments like the IRA. The main purpose here is that you should be able to cover your monthly expenses, lessen your tax fees and save as much money as possible.

6. Research investments that are intended for retirement. There are establishments that offer an investment while in retirement. You may want to get involved with with-profit bonds, stock market bonds, individual savings account, distribution bonds, and venture capital trusts.

7. Make use of your company plans. If your current company offers retirement services and then consider contributing the maximum amount. This will help you take advantage of pre-tax contributions.