Retirement Planning
Financial Tips for Retirement
The average American spends 18 years in retirement.
That's a long time to be financially insecure, or even worse
financially dependent. The following tips are designed
to help you accomplish your goal of financial security
in your retirement.
- Find out about your social security benefits. Social
Security helps you with this by periodically mailing statements
apprising you of where you stand. The statement provide you with
the amount you will receive if you retire at 62, 65 or at 70. Of
course the earlier you retire the less you will receive.
- Find out about your employer's retirement plans. You
should know what your benefits are worth. You should know if and
what type o plan your employer offers, as well as what happens if you
change jobs. You should also know if you have benefits from a
previous employer.
- Contribute to a tax sheltered plan such as a 401K. Your
employer may offer a 401K or other retirement plan. if not perhaps you
can ask them to start one. For those whose companies offer 401K, 25% of
you fail to take advantage of this benefit.
- Put money into an Individual Retirement Account or IRA. You
are allowed to put up to $4000 a year in an IRA. This money is
not taxed during the period its there. There are two types of
IRAs, a traditional IRA and a Roth IRA.
- Save for your retirement. I know this is hard.
Especially since the cost of living has gone
up but not our income. Most of us have barely enough to get
by. But it is important to come up with a retirement savings plan
and stick to it. You'll be grateful when it comes time for you to
retire.
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- Laurence Kotlikoff with Bloomberg proposes a voucher system for health care services. This voucher would also cover nursing home care.
"Fixing health care is easy: Each American receives an annual voucher to buy a basic plan like that provided to Congress, but also with nursing-home and home-health-care coverage. The size of the voucher is based on a person's pre-existing conditions and calculated using electronic medical records." - A good investment according to Motley Fool is,
"National Healthcare a sleepy company in the quiet industry of long-term care. Founded in 1971, National Healthcare operates nursing homes, assisted-living centers, and home care programs for the elderly and sick. While revenue growth is tepid at less than double digits, efficient management at this company has translated into healthy bottom-line growth and cash flow generation. Net income grew 24% in 2007 -- part of the reason investors have seen a 148% return on their money over the past five years." - After you reach age 70, you could be taxed as much as 50% on your income. That's why it's important to plan right. For more information, read this article from BusinessWeek - Don't Let the Rules Overtax Your Retirement
What is an IRA
An IRA is a personal savings plan which allows you to save
for retirement. Many companies no longer have traditional pension
plans. The Individual Retirement Account is a government's
solution to this problem. IRAs work like this: You
can put a certain amount a year in an IRA. In most cases you can
receive a tax deduction for the amount you contribute. You pay no
tax on the contribution or income earned on the contribution until you
withdraw it from your account. Withdrawals which are also called
distributions are taxed in the year you withdraw them. In the case of
Roth IRAs, none of your with drawals are taxed. The
government discourages you from withdrawing IRA money prior to an
assumed retirement age of 59 1/2; The disincentive is a 10 percent
penalty on any withdrawal you take prior to age 59 1/2; The
government also try and prevent you from not taking out IRA money soon
enough. Usually, you have to begin taking out money no later than
April 1 of the year following the date you reached 70. The
penalty for violating this rule can be as much as 50 percent.
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