Jun
15
Family Talk – Planning for Retirement
These days it’s hard, if not impossible, to get families together and talking at dinnertime. Between Blackberries, iPads, summer camp for the kids and long days at work for the parents, it seems the once treasured time for families to catch up and talk about work, school and life is a thing of the past. Luckily as summer approaches, the BBQs, vacations and picnics that are the hallmark of the season somehow seem to renew our sense of family.
Now if we could just get families to discuss their retirement future retirement in addition to their lives today. With an uncertain future for Social Security, traditional pensions fading, and a rocky stock market, many may have to rethink what retirement will look like for their family. Fortunately, last week Americans for Secure Retirement and a number of their coalition partners provided the questions to help get parents, spouses, siblings and all loved ones talking about the financial realities of retirement.
Here are a few of the questions:
1. When am I hoping to retire? Deciding the timing of your retirement is important, and it is equally important to have a target date in mind. However, to retire when you want to, you must be adequately prepared and consider a number of variables. Keep in mind the biggest financial risk retirees may face, experts say, is not knowing how long they will live – and therefore, not knowing how long their resources must last.
2. Am I making use of an employer-sponsored retirement plan? If you have access to an employer-sponsored plan, you should participate in it, especially if your employer matches a percentage of your contribution. If you don’t have a retirement savings plan at work, you should learn about Individual Retirement Accounts (IRAs) and how they work. Another important retirement tool is the annuity. It allows you to accumulate retirement savings on a tax-deferred basis and then reap the benefits of your savings when you retire in the form of regular payments that can last for life.
3. What will my expenses be in retirement? This is a tough one. You may not be commuting. You may not need dry-cleaning on a regular basis. If you are fortunate, your mortgage might even be paid off. But it is tough to determine your actual expenses – from food to health care to funding the activities of your “dreams.” The uncertainty of expenses in retirement makes it difficult to manage your savings to last the 20 to 30 years or more of retirement.
4. How should I manage my retirement savings? In addition to the need to increase personal savings, these shifts in our nation’s retirement system requires an increasing number of retirees to manage their savings on their own and manage them so they provide a steady stream of income for the 20 to 30 years or more many will spend in retirement.