#retirement #RetirementPlanning #layoffs #buyouts
It’s an alarming trend, a letter writer wrote.
People in their 50s are getting laid off, he continues. The workers may get an optional early-retirement package which, if not taken, leads to a layoff a short time later, he continues.
Or, he says, it may mean becoming a contract worker making half the money with fewer, and more expensive to you, benefits. “A friend who refused a package last year will retire with much less this month because of shortsightedness,” he writes.
The letter writer signed his missive “B.” He wrote the letter to Peter Dunn, the USA Today columnist known as “Pete the Planner.” His column was also published March 4, 2018, in The Atlanta Journal-Constitution.
To sum up Pete’s response, he advises: “Draw a horizontal line on a piece of paper, and create a series of hash marks on the line, representing future age markers. Next, list major life events on the timeline. Be sure to note events such as your mortgage payoff year, when you reach age 59.5 (when retirement funds become available) and when you hit 62 (the first chance to activate Social Security). …
“When I drew my line, I noticed my need for money peaked at age 53,” Pete continues. “If I were to lose my job at or around 53 years old, I would be in big trouble. Therefore, I want to be sure not to take on any additional obligations around that time in my life. Knowing when you’re the most at risk is a reasonable way to avoid additional risks,” Pete writes.
He goes on to say that the age timeline will help people evaluate any early buyout options.
This topic is trending at a rapid pace. Pete advises that retiring at a normal age, with “normal” benefits etc., is challenging enough. Retiring early because one is forced to can be torture, he writes.
Planning is obviously a wise decision, but the best laid plans can go awry when you least expect them, or want them, to. So, we are in a milieu in which we have to PRESUME that we will not be able to work at our current jobs for as long as we want. Reorganizations will come frequently. Bad managers will come into your life and throw you out – or force you to leave on your own.
The age-old advice is to spend less and save more, as consumer adviser Clark Howard preaches. If you “have to have” the latest, up-to-date gadgets, think about whether your current gadgets are serving you well. A rule of thumb might be: if a new gadget will give me pleasure, and is not a necessity of life, postpone buying it and live with the older technology. When the old stuff craps out, then replace it.
If you have, say, a daily habit of buying a cup of coffee in the morning, you might think about buying a Thermos and brewing your own coffee to take with you.
In other words, examine the little things you do in life that cost you money. Do you really need to spend it? Remember, too, to think value rather than price. Sometimes, buying better stuff up front will keep you from buying multiple cheap things later on.
Finally, if you are planning your financial life as best you can, but you don’t think it will be enough when you get shown the door at work, think about investing a few part-time, off-work hours in something that may not only augment your income, but could surpass it. There are many such vehicles out there. To check out one of the best, message me.
Meanwhile, draw the diagram Pete suggests. This is especially good for folks who are less careful about their spending. Save well. Invest well – or as best you can – with a good, trusted adviser.
In today’s world, for many people, retirement decisions, unfortunately, are made FOR them by others. Be prepared for that decision to be made for you, as early as tomorrow, no matter how old you are.
Peter
Tag Archives: retirement savings
MILLENNIALS NEED TO BE CONCERNED ABOUT MEDICARE
#millennials #Medicare #RetirementSavings #HealthCareSpending
Millennials may be a long way from Medicare eligibility.
But they need to care about it now, lest it runs out of money, or pays fewer benefits, when their time comes.
“Previous years’ surpluses, stowed away in a trust fund, will cover the (funding) gap until 2029. After that, Medicare Part A will be able to cover 88 percent of promised benefits, rather than 100 percent,” writes Liz Weston, a personal finance columnist for NerdWallet.com. Her column was published March 3, 2018, in The Atlanta Journal-Constitution.
Weston also writes that the younger folks need to figure out ways to cut health care spending in general.
Let’s break down the situation. First, as Weston writes, some in Washington are itching to cut Medicare, which provides relatively affordable health insurance to the 65-and-older demographic. Depending on what happens in Washington, health care costs could go up for millennials as they age. “Without a sturdy Medicare system, health care for older Americans could quickly become unaffordable,” Weston writes.
Also, young people in the private insurance market – those who do not have decent insurance benefits from their employers – should think about buying individual insurance policies now. Sure, you think you are young and won’t get sick or injured, but what if you do? Plus, they are relatively affordable for young, healthy folks. Also, having a health insurance policy young may make it easier for you to get health insurance when you are older.
Young folks tend to spend less time thinking about eventualities when they get older, so they tend to spend more and save less. The earlier in life you start saving, the more comfortable you’ll be when you get older. Also, retirement won’t necessarily come when you want it to. Companies reorganize frequently, and jobs you think are indispensable today could be gone tomorrow.
“Millennials already have enough burdens. They earn less, have a lot less wealth and owe a lot more in student loan debt than previous generations did at their age,” Weston writes.
So what’s a young person to do? First, have a bona fide, regular savings plan. Even if you can only put, say, $5 a week into it at the beginning, do that religiously. As your income increases, add more. Any raises you get should go into that fund, so, as your income increases, you can learn to economize on living expenses. Whatever you do, don’t touch that money until many years down the road.
Easier said than done? Perhaps. So you have to make a point of doing it, perhaps sacrificing some immediate pleasures to ensure you are keeping your promise to yourself.
As your savings increase – when your fund builds to a point that keeping it in a bank account seems unprofitable – find a trusted investment adviser who can guide you through the different investment vehicles for each stage of your life. Unless you are a financial professional, trying to manage your own investments can be risky. Obviously, some risk is warranted, but good, objective advice on the type of risk for your situation is essential.
Then, think about how you use your time. Are the things you spend your non-work time on enriching you? If not, there are many vehicles out there that, with a small investment of time consistently, can make you money. To check out one of the best, message me.
Young folks need to worry about Medicare, if they want it available to them when they reach that stage of life. So, pay attention to what happens in Washington. But, also, set up your own life so that no matter what happens, you’ll have the best life you can get when you reach your parents’ or grandparents’ ages.
Peter
PENSIONS: WHAT YOU WERE PROMISED MAY NOT BE DELIVERED
#pensions #retirement #RetirementSavings
Retired Teamsters are sweating.
For those covered by the Central States Pension Fund, a multiemployer pension fund, the outlook is grim.
Central States is paying out $3.46 for every dollar it’s taking in, according to Mary Sanchez, columnist for The Kansas City Star. Her column appeared in a February 2016 edition of The Atlanta Journal-Constitution.
To avert a dissolution of the fund, Central States applied to the Treasury Department, the federal Pension Benefit Guaranty Corp., which ensures pensions against bankruptcy, and the Department of Labor for permission to cut pension payments to beneficiaries, Sanchez writes.
If the plan goes through, many beneficiaries would face cuts of up to 60 percent in the payment they had spent their lives working for, believing it was guaranteed, Sanchez writes. Until 2014, it wasn’t legal to do that. But that year, the Multiemployer Pension Reform Act was attached at the last minute to a must-pass omnibus spending bill, according to Sanchez.
On its face, it’s not fair to those retirees. It is not their fault that their pension fund is losing its economic viability.
But it’s not as if this was a surprise. We’ve been warned for years that because there are more retirees than workers to support them, a pension crisis was looming.
The Great Recession exacerbated the problem because many of the workers have lost their jobs. In the case of the Teamsters, union membership has declined. There are fewer jobs, and more of the jobs that still exist are being done by non-union labor.
In fact, many employers are not including pension benefits as part of the employment package.
If you are still working, chances are very good that you are on your own to fund your retirement.
What to do?
First, especially if you are young, dedicate a portion of what you earn toward your retirement. Put that amount from each paycheck into a fund and, with the help of a trusted adviser, invest it properly. Don’t fret the gyrations of the stock market. Time usually heals such wounds, and the market, over time, has proved to increase a person’s wealth considerably.
Another solution is to find one of the many alternative ways to earn money outside of your job, and see whether it is right for you. For one of the best, visit www.bign.com/pbilodeau. If you like what you see, and do it properly over time, you may not have to worry about your retirement.
If you are currently retired, or near retirement, such Plan B options may help you live a secure retirement.
As Sanchez points out, the solution to the pension debacle will be costly. Even the Pension Benefit Guaranty Corp. is in danger, she writes.
Though making the pensioners pay the price may be unfair, it may be unavoidable.
Even if you were promised a good, secure pension, be it from the public or private sector, don’t presume those promises will be kept forever. The option of working longer may not be available. It’s best to take such matters into your own hands. Only you can assure a comfortable, secure retirement.
Peter
WILL A FINANCIAL EMERGENCY KILL YOU?
#FinancialEmergency #savings #spending
Fewer than 38 percent of Americans have at least $1,000 in savings.
Say what?
Peter Dunn quotes that statistic in a column he wrote for USA Today, published Jan. 26, 2016.
A car repair, a refrigerator breakdown etc., can drain that $1,000 just like that. When you need a car to get to work, or a refrigerator to keep your food from spoiling, one, more or less, has to find the money to take care of these.
Dunn suggests making a plan. First, determine whether immediate spending changes or income changes will take care of your financial emergency. Second, grab the money from savings, if available. Third, borrow the money for the emergency, while concurrently creating a plan t pay off the debt in a specific period. Fourth, pay off the debt in that time.
“If you don’t leverage your emergency to create stability, you’re going to find yourself in deeper and deeper trouble,” Dunn writes.
Let’s get to basics. If you really only have $1,000 in savings, there are much bigger issues here, especially if you are older than, say, 18. You have to start planning not just for emergencies, but for your retirement years.
You don’t make that much money, you say? Well, then, start with looking at what you are spending, and whether your spending is necessary. Buying a cup of coffee on your way to work? Buying lunch at work? It might be better to make your own coffee and buy an insulated container to take it to work. It might be better to make your lunch at home and bring it to work.
You don’t have the extra time in your day to do that, you say? Then, look at how you spend your time. Perhaps getting up 15 minutes earlier in the morning to make your coffee, or making your lunch the night before as you sit in front of the TV may leverage your time better.
Look at other spending habits. For example, how much do you spend on “entertainment?” That can include dining out, movies, even digital services. As a start, look at your cell phone, television and Internet packages. Are there ways to trim back those costs in a way you can live with? Maybe get rid of your premium TV package.
Want a pet? Remember, pets are expensive. They need food, perhaps medicine, as well as your time and attention. Time is money. Are you prepared for that?
You should be able to save a portion of every paycheck, no matter how small. Regular savings, multiplied by time, augmented by wise investment, equals financial security in your later years. If you start saving $5 every week at age 20, and never touch that money, it will amaze you how much you would have at age 40. Then, at 40, check out the amount you’ve saved and continue not to touch it until, say, age 60, all the while continuing to put a regular amount from every paycheck into that fund.
Of course, getting back to Dunn’s point, you also need money for financial emergencies. Remember, if you are young, that you can’t lean on your parents or other family members forever.
Perhaps you might look at ways to earn extra income in a way that doesn’t interfere with what you are doing now. There are many such vehicles out there. For one of the best, visit www.bign.com/pbilodeau. You may get a two-fer: a lesson on saving money and a way to earn more money.
Most of all, you need to make saving an absolute priority. What you sacrifice today will pay off tomorrow. One never knows what tomorrow brings. One never knows when you might be forced to retire, or forced to look elsewhere for a job. What you save today may save your life later.
Peter