Nevada Retirement Planners

Eight drills to determine if your finances are healthy enough for you stop working and to help get them on track if they’re not.

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The new investment chief of California’s biggest pension fund thinks he can help it recover from losing almost a quarter of its portfolio last year.

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The federal agency that guarantees pensions said Wednesday that it would assume responsibility for the pension plans of 70,000 Delphi workers and retirees.

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Investment firms would be barred from donating to government officials with an eye toward winning public business.

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The federal agency that guarantees pensions said Wednesday that it would assume responsibility for the pension plans of 70,000 Delphi workers and retirees.

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WASHINGTON (AP) — The Pension Benefit Guaranty Corp. said Wednesday that it will assume responsibility for the pension plans of 70,000 Delphi Corp. workers and retirees, as the troubled auto supplier continues to restructure under bankruptcy protection.

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These days young
people can't take their eye off the need to start building long-term
savings.  Photo by Canwest News Service

The second part of today's blog title may seem self-evident but is the gist of an article that ran on the web over the weekend and provided me a "tweet" on Twitter. You can find it here. It was originally tweeted by @FinancialReplan, which is interesting in itself. We've all heard of financial planning but the term "Financial Replan" was new to me. The tweeter defines it thus on his/her bio: "Financial Re-planning is what we do after our best laid financial plans got blown to bits by the recession."

The idea behind financial re-planning is not unlike that famous line in John Lennon's Beautiful Boy, on his last album: "Life is what happens to you while you're busy making other plans." 

Financial re-planning results in the kinds of desperate measures described in the blog entry preceding this one: "Is working just a few more years a pancea for 2008's losses?"

To some extent it is a panacea, since as some note in the comments, there's a positive triple whammy from choosing to work longer: you have more money to rebuild your nest egg; you're giving the markets more time to recover and recoup some of your previous losses; and you'll have that many fewer years in Retirement to draw down on your capital. The only possible flies in the ointment is that at some point you may not be physically or mentally able to keep working full-time in a demanding job. Also, things may happen beyond your control: your employer may downsize you or loved ones may require your full-time attention.

The longer you delay saving, the later your retirement will be  

The subhead above is simply the corollary of the blog title. I'm not attributing it to any financial expert: it's simply my own observation and belief. Most baby boomers have friends or colleagues who have already begun to retire in their mid 50s: admittedly such fortunate individuals are usually in traditional Defined Benefit pension plans that they joined right out of university. But I can also think of several people in their 60s who bounced from job to job and never saved a penny — most of them are grimly hanging on to their jobs with no hope of retiring before 65 or 70. 

In the Financial Mail article linked above, a 25 year old receptionist frets that the age to receive government pensions may rise further, which has been the trend in both the U.S. and Canada. She says she doesn't want to be working until she's 70. I don't blame her since some consider age 68 to be "old." We asked earlier this month: "If we're old at 68 does it make sense to raise retirement age to 70?"

Financial Mail also mentions a recent poll that found 10% of 2,000 consumers had reduced their saving attempts in the recession, with 25% making it a priority to pay off debt. Actually, I think that's wise: I can think of no investment that pays better than eliminating high-interest credit card debt: it's tax-effective and a guaranteed double-digit return. No mutual fund can give you that.

Even so, as employers dismantle traditional Defined Benefit pension plans, young people can't take their eye off the need to start building long-term savings. You can pretty much assume that the longer you delay beginning a retirement savings program, the longer you will be delaying your retirement date.

How to have your (debt-reduction) cake and eat it (savings) too

I'd certainly put debt reduction ahead of saving outside of tax shelters like IRAs and RRSPs. But if your employer has a pension plan and any level of matching employee contributions, you'd be ill-advised to pass on their "free money," especially as it's tax-sheltered. Usually, with a little belt-tightening, it should be possible to have your cake and eat it too: one common strategy is to maximize tax-deductible contributions to retirement savings plans, then use the resulting tax refund to reduce debt.
 

–62– 

Source The Wealthy Boomer : Retirement

Tax laws change, making the decision to turn a regular individual retirement account into a Roth potentially difficult.

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SACRAMENTO, Calif. (AP) — Moody’s Investment Service says it is considering downgrading ratings for programs tied to California’s two giant pension funds.

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The people most hurt by the market crash of 2008 are arguably relatively affluent baby boomers in their 50s and 60s who were not in Defined Benefit plans. Much of their retirement was riding on Defined Contribution plans or RRSP savings, both of which would have taken big hits if they chose to be heavily weighted in equities (or mutual funds, index funds or ETFs invested in equities).

It's a fairly healthy response to all this to decide to work a little longer than one had originally intended. Indeed, regular readers of this blog may be aware of the –62– I end each entry with, which is a throwback to the old days of newpaper journalism, when hard copy always ended in –30– to indicate to the typesetters that the end of a particular article had been reached. 

For a few years this blog often ended with –60–, that being the earliest you could collect Canada Pension Plan benefits. Since 2008, it has varied from 61 to 62, depending on markets and my mood. This has prompted certified financial planner Fred Kirby to call it the "Findependence Day Reverse Indicator." Apparently, whenever I'm optimistic and adjust it down to 60, that's a gloomy portent for the markets. Conversely, when I'm pessimistic and adjust it up to 65 or 70, readers should rejoice in anticipation of impending sunny economic times and stock market surges. 

In any event, click here for various links to recent articles on the web about this theme. The point is that even if you do decide to work longer, the choice may not always be yours to make. There are employers to consider, operating in a rough economic environment. And of course, ultimately, human beings will be confronted by physical or mental limitations to continuing to work full-time. 

–62?–

Source The Wealthy Boomer : Retirement