The only way to pass a TIAA-CREF account beyond the current generation requires that you elect not to annuitize. You must instead elect the Minimum Distribution Option, because that avoids the conversion of the account into a premium. The first benefit, assuming that this comports with your values and resources, is that you will have responsibility for your own financial destiny. To underline the point, you have rejected the safety net of a lifetime annuity and have chosen instead to take distributions at your own pace, subject to the governmentally prescribed minimum. (more…)

There are two primary factors that affect how long your money will last and how much money do you need to retire. One is inflation, and the other is taxes. Both of these factors are a certainty you can’t ignore.

Inflation means your retirement dollars will buy less, so you’ll need more retirement dollars just to stay even. For example, let’s say you’ve got a fixed retirement income of $25,000 a year. Inflation will eat into the buying power of that money in short order. Fixed income leaves you in a fix when it comes to inflation. You’ll need to grow your retirement income just to keep pace with the ravages of inflation. Certainly, you need better retirement income strategies to cope with inflation and taxes. Table below shows annual inflation for the past 25 years. (more…)

You need to know how to calculate your estimated retirement benefits based on your personal financial situation. To help you calculate retirement benefits, the following is an easy-to-use retirement calculator with a case study.

The following is a seven-step guide to help you determine if you are on target to meet your retirement goal, or how much you need to save annually to meet that goal. (more…)

Once the investment objectives are set, the next decision involves distribution of the plan’s assets. This process is twofold: selecting the types of assets to be used and then determining the amount to be invested in each type.

In the United States, the preponderance of pension plans is invested in familiar financial assets such as bonds, stocks, and cash equivalents. However, investment is growing in other types of financial instruments, such as guaranteed investment contracts, private placements, venture capital investments and options. (more…)

You can retire at 62 and can consider it as early retirement, but it come with a penalty. You can also retire in the years between the earliest retirement dates and full retirement and get a bit more money with each passing year. Suppose you create a financial plan based upon the three-legged financial stool of personal savings, part-time income (by having retirement part time jobs), and getting Social Security Income (Social Security benefits). As your planned-for retirement date approaches, (more…)

Tax law changes also provide workers age 50 and older the opportunity to make additional “catch-up” contributions, above the maximum amounts listed above, to Roth and Traditional IRAs and to employer salary deferral plans. IRA catch-up contributions are $500 for 2003–2005 and $1,000 for 2006 and after. Catch-up contributions for employer plans are $2,000 in 2003, $3,000 in 2004, $4,000 in 2005, and $5,000 in 2006, with amounts adjusted for inflation in 2007 and after. Older workers who take full advantage of the increased contribution limits and catch-up contributions will save significantly more than those who invest in taxable accounts or limit their contributions to pre-2002 tax law limits. (more…)

There are at least two schools of thought with regard to the basic principles involved in planning for retirement spending. The first, and most common, approach poses the problem as a seemingly simple determination of the retirement income needs of a retiree relative to pre retirement income. This is typically expressed as a “replacement rate,” in which a retiree targets a given fraction of his or her pre retirement income level as an amount adequate to sustain a desired lifestyle without working. Often, a particular level of income is given as a rule of thumb (e.g., 80% of pre retirement income). (more…)

Older workers of today are healthier, better educated, more highly skilled, and a larger proportion of the labor market than in any previous era. Yet, many employers continue to view older workers through a lens distorted by negative stereotypes that developed during the early days of the industrialization process. High rates of unemployment and a sense that human capital, developed in early adulthood, should be sufficient to see workers through their careers made “shedding” older workers a seemingly affordable solution. The long-term costs of that “solution” are now being realized, not only in terms of the pension liabilities that encumber the finances of firms, but also in terms of the organizational loss that occurs when senior workers disappear. (more…)

Many people want to know where to get the best rates for: Roth IRA. In order to improve investment returns, there are no real answers specific to the place where you can find. But please take note that your Roth-IRA is not set up as an investment. Your Roth IRA is actually an investment vehicle. (more…)

There are a number of strategies for managing your post retirement income sources. One idea, which I discussed earlier, is to postpone taking Social Security until you reach age 70. A five-year delay is worth about 35 percent more in monthly benefits. You may want to consider buying a five-year immediate annuity to replace the income you are electing to defer from Social Security.

If at all possible, make sure that you avoid penalties on withdrawals from your retirement plans. (more…)