How to Plan Your Retirement Successfully
How to Plan Your Retirement
Successfully!
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How to Plan Your Retirement Successfully
Table of Contents
Chapter 1 – What is Retirement Planning? ....................................................... 4
Chapter 2 – How to Start Your Retirement Plan .............................................. 6
Setting Goals ................................................................................................. 7
Creating a Budget ......................................................................................... 7
Members of your Family .............................................................................. 7
Keep to the Plan ............................................................................................ 8
Chapter 3 – How to Choose Your Retirement Investments .............................. 9
Choices for the Short Term ........................................................................... 9
Choices for the long term ............................................................................ 10
Chapter 4 – Comparing Roth and Traditional IRAs ....................................... 12
Yearly Limits for Individuals...................................................................... 12
Roth vs Traditional ..................................................................................... 12
Chapter 5 – About The 401K .......................................................................... 14
What the 401K is ........................................................................................ 14
How to Balance a 401K .............................................................................. 16
Chapter 6 – Making The Most Of Your 401K Plan........................................ 18
Chapter 7 – The History Of Annuities ............................................................ 21
Chapter 8 – Take time to Review Your Retirement Plan ............................... 23
Chapter 9 – Is Retirement What You really Want? ........................................ 25
Chapter 10 – Whether to Work Full Time, Part Time, or Retire .................... 27
Chapter 11 – How Will Having A Job Affect My Retirement Income? ........ 28
Chapter 12 – Ways to Help You Prepare for Retirement ............................... 30
Chapter 13 – Your Retirement And Debt ....................................................... 35
1. Your Budget ........................................................................................ 35
2. Your Credit Cards ............................................................................... 35
3. Contribute Extra .................................................................................. 36
4. Bonuses from work ............................................................................. 36
5. Keep to the plan .................................................................................. 36
Chapter 14 – About Early Retirement ............................................................ 38
The early retirement package ...................................................................... 38
Should you take an early retirement package? ........................................... 38
Health Insurance ......................................................................................... 38
Life Insurance ............................................................................................. 39
Your Pension ............................................................................................... 39
Your Bottom Line ....................................................................................... 39
Chapter 15 – Full Retirement Age According to Social Security ................... 40
How to Plan Your Retirement Successfully
Chapter 16 – Retiring With Only A Social Security Income.......................... 41
Chapter 17 – What To Do Just Before You Retire ......................................... 43
Chapter 18 – Is Retirement Coaching For You? ............................................. 44
What is a retirement coach? ........................................................................ 44
What a retirement coach does not do .......................................................... 44
How to choose a retirement coach .............................................................. 45
Chapter 19 – Retirement Plans For Self Employed and Small Business
Owners ............................................................................................................ 46
The simple IRA ........................................................................................... 46
Payroll Deduction IRA ............................................................................... 47
Chapter 20 – How to make the change from work to retirement.................... 48
Chapter 21 – How To Be Happy After Retirement ........................................ 51
1. Do your planning early ....................................................................... 51
2. Consider your options ......................................................................... 51
3. Include your spouse ............................................................................ 51
4. Retirement and your health ................................................................. 52
5. Keep up the good work ....................................................................... 52
6. Don’t let yourself get depressed ......................................................... 53
How to Plan Your Retirement Successfully
Chapter 1 – What is Retirement
Planning?
Retirement planning is a way to insure that you will have enough
income to live comfortably when you retire. Most people will be retired
25 years or more, and careful planning is the key to successful
retirement. Why would you want to have bill pressures and mortgages
when all you really want to do is relax, or follow that dream of traveling
the country in an RV?
There is always Social Security, and you may have a pension, but will
this be enough for you to retire comfortably? Do you plan on staying in
your present home, or will you be moving? Do you plan to travel?
These are only a few of the questions you will need to ponder when
you prepare for your eventual retirement.
You will need to begin retirement planning as soon as you can. When
you are young and taken by raising a family, it is difficult to think ahead
toward retirement at first. However, this is the time to look into a 401K
or a pension plan where you work and put as much as possible into
these from every pay check. You need to start investing something
toward your retirement. The investment can also be in IRAs, stocks,
bonds, mutual funds, money markets, or other investments of your
choice. Set aside an amount every week that is strictly for investment.
Make this a habit and not be tempted into spending it.
How to Plan Your Retirement Successfully
If you have just started thinking about a retirement plan, and you are
an older individual, there are ways to make up for the years gone by.
While it is always better to start when you are young, making good
investments now, may gain enough money for you to retire
comfortably. Find a reputable broker and discuss what you will need to
reach your goals. When the plan is finalized you will need to stick to it
faithfully.
The amount of retirement income you end up with will be the amount of
money you will need to live with during your retirement. If it is not
enough, you may not be able to do much traveling or make any of your
retirement dreams come true. You really need to plan wisely for
retirement.
How to Plan Your Retirement Successfully
Chapter 2 – How to Start Your Retirement Plan
There is more to retire planning than putting money into a 401K,
having a pension plan, or opening an IRA. This is a great place to start,
but you need to plan for all of the years you will not be working. You
may be retired for more than 30 years and the effort you put into
planning your retirement, the better off you will be.
You can begin retirement planning at an early stage of your life, or you
may need to start a bit later in your work career. Whatever your age
may be, you will need to put together a plan for your retirement.
Starting at an early age will give you more time to build investment
portfolio for your retirement.
After you have your investments set, you will need to monitor the
investments with your financial advisor or broker. You will also need to
set up tax shelters so that you are not swamped with taxes when you
retire.
Starting a retirement plan is the hardest part. It becomes easy for us to
think about retirement as an event that is far away, and put off planning
for it. It is good to remember that the years will pass by quickly and you
will find you are faced with retirement just around the corner. This
could cause a loss of thousands of dollars for you. This amount could
be the difference barely getting by and being comfortable when you
retire. When you are between the age of 20 and the age of 40, you are
very busy buying your first house, furniture, a car, and thinking about
sending your kids to college. You may feel as if you are not able to put
any money into a retirement plan during this time. Know that even a
small amount of money, invested wisely, could make a big difference.
How to Plan Your Retirement Successfully
Setting Goals
Now that you have decided to plan for retirement, where will you
begin? Whatever goals you set, you will need a certain amount of
money to accomplish them. You actually need a plan that will cover
your retirement for 30 or more years. You need to figure how much
money you will need when you retire.
Creating a Budget
If you don’t already have a budget, you will need to create one. To do
this you will need to keep track of your monthly spending. Begin by
keeping a journal of every penny you spend for three months in a row.
When you look back at this, you will see how you have been spending
and where you can cut expenses. Then you will be able to manage
your budget in a better fashion. When you make out a budget you will
need to include a payment to your retirement plan, even if it is just a
few dollars.
Members of your Family
Talk about your plan for retirement with your spouse and other family
members. Both you and your spouse will probably retire around the
same time, so you will need to make your plan together. When both
partners have a career, they will both probably be putting money into a
retirement plan. Sit down together and develop a plan that you both
agree on.
How to Plan Your Retirement Successfully
Keep to the Plan
You may be tempted to take money out of your retirement funds. If this
happens you will not have enough money for your retirement. The
budget you have put together should cover all of your expenses, if not
maybe you should figure your budget again. You may be confusing a
need with a want. You may be spending money on things that you do
not really need. Before you take anything out of your retirement fund,
decide whether it is necessary to purchase this item. You do not need
to go without everything, just judge how much you really need
something and spend wisely.
How to Plan Your Retirement Successfully
Chapter 3 – How to Choose Your Retirement Investments
When you begin to put a retirement plan together, you will be faced
with many investment choices. The age you begin your retirement plan
will be the key to what these choices will be. If you are between 20 and
35, you have a bit more time to look over options. Between the ages of
35 and 50, you still have time to build a retirement fund that will allow
you to live comfortably, but you will need to choose your investments
very carefully.
Choices for the Short Term
When looking at short term investments, you will be looking at several
choices. Savings accounts, checking accounts, certificates of deposit,
and money market funds, are short term investments.
With a checking account you will be able to deposit and withdraw
money. A checking account you also have access to ATMs and can
arrange to have your bills paid automatically. Money markets accounts
can be checking accounts, and will pay a small interest rate as long as
a set balance is kept in the account. These funds are insured by the
FDIC.
A savings account will pay a small interest rate on your funds, and your
money is available when you need it. You can also set up a plan where
your bills can be paid automatically and taken from your account. This
money is also insured by the FDIC.
How to Plan Your Retirement Successfully
When you open a money market account, you will realize a higher
return than with a savings or money market checking account. Money
market accounts are usually managed by a broker as a way to store
money until it is invested. These funds are not usually insured by the
FDIC.
A certificate of deposit is a way to invest money for a set period of time
until they mature. The longer the time money stays in the account, the
higher percentage of interest it will earn. A penalty is enforced if money
is withdrawn before the certificate matures. These funds are insured by
the FDIC.
Choices for the long term
Long term investments are for those who have money to save that they
will not need to use. This is a good choice for a retirement plan.
Stocks, bonds, and mutual funds, are all long term investments.
Investing in a stock will give you a partial ownership in the company
you choose. When the company is successful, you will make money
when you decide to sell the stock. Some companies pay dividends on
investments at regular intervals. You will usually need to consult a
broker to purchase company shares. It is always important to research
the company you are thinking of investing in thoroughly. It is best to
hold onto stocks for a long time as there are fees when buying or
selling, and the tax implications that will apply. Bonds are usually safe
investments and are often backed by the federal government.
How to Plan Your Retirement Successfully
Mutual funds will let small investors have more choices than they
would have when investing on an individual level. The money from
several investors is invested in different companies so that the risk is
minimized. The strategy in this type of investment is to assure that a
profit is made from some of the businesses so that if one should fail,
others will still do well. You should really research where your money
will be going and what kind of track record the businesses have had in
terms of gains before investing.
How to Plan Your Retirement Successfully
Chapter 4 – Comparing Roth and Traditional IRAs
An Individual Retirement Account or IRA, is a retirement plan that will
allow you to save a part of your earned income every year. Those over
50 can contribute a bit more. Anyone can open an IRA as long as they
have earned income for the year that is at least the amount they will
contribute. There is a limit to the maximum amount you can put into the
IRA, and those over 50 can put in additional funds. This is so they can
catch up with the money they want for retirement, in the case that they
waited until they were older to start a retirement plan.
Yearly Limits for Individuals
For the 2006– 2007 tax years, the maximum amount for those under
50 was $4000, and for those over 50 the maximum amount was
$6000. The 2008 tax year will see these amounts go up by $1000 for
each age group. Married couples can both contribute to an IRA even
though one of them had no earned income for the year as long as the
working partner makes enough to cover the IRA contributions for both
of them.
Roth vs. Traditional
The two most common types of IRAs are the traditional IRA and the
Roth IRA. All earned interest, capital gains, and dividends are tax
deferred until the money is withdrawn with the traditional IRA. With the
Roth IRA the same is true, only if you meet certain requirements.
How to Plan Your Retirement Successfully
A traditional IRA is an individual savings plan. Money invested in the
traditional IRA, and the interest earned, are subject to income taxes at
the time of withdrawal. Money can be withdrawn without penalty once
you are 59 1/2 years of age. You must begin withdrawing from your
account when you are 70 1/2 years of age.
The Roth IRA is also an individual savings plan, for the most part.
Individuals are able to contribute up to the limit, but this money will not
be tax deductible as it is on a traditional IRA. You can begin
withdrawing funds at the age of 59 1/2, as long as the funds have been
in the IRA for at least 5 years. This IRA differs from the traditional IRA
in that you can continue contributing even after you are 70 1/2 years of
age.
How to Plan Your Retirement Successfully
Chapter 5 – About The 401K
There are many people contributing to a 401K retirement plan who do
not understand how the plan works or exactly what a 401K is. Many
companies offer a 401K retirement plan, which gives you an
opportunity to select investments available for your investment and
what percentage of your wages you wish to invest. This investment will
be deducted form your paycheck before taxes.
Each employee is allowed to contribute up to a set percentage of their
wages to a 401K and many times an employer will match your
contribution, or a percentage of what you put in. These funds cannot
be touched until you reach the age of 59 1/2. With each withdrawal you
will need to pay any income tax on the amount. You will be exempt
from taxes while the money is in the 401K. You can withdraw money
from the 401K at a younger age, but you will need to pay a penalty with
each amount you withdraw and pay the taxes.
What the 401K is
A 401K is a retirement plan that is sponsored by an employer and falls
into two categories, defined benefit and undefined benefit. The defined
benefit 401K, is a plan where the employer makes a commitment to
pay a predetermined amount to those who meet certain requirements.
This plan defines the amount of contribution an employer may make
and does not define the benefit amount the employee will receive at
the time of retirement.
How to Plan Your Retirement Successfully
A defined benefit plan uses the benefit amount and the amount of
service, and is based on average salary. It is easier to figure out the
amount of monthly income the employee will receive when they retire.
There may be a choice of taking a lump-sum instead of monthly
payments.
The defined contribution plan is not defined. A monthly benefit cannot
be predicted at retirement. If an employee decides to leave the
company, they will usually receive the amount in the plan in a deferred
or current annuity or lump sum.
The company can not touch the money in the 401K. If the company
should file bankruptcy, and you have money in a 401K that is invested
in their stocks, You will probably loose that money.
How Can I Fix My 401K Balance?
If the balance on your 401K doesn’t seem to be going anywhere, you
may need to take a closer look at how your money is being invested. If
most of your contributions are in the stock of the company you work
for, you may need to change this and move some of the money to
other available investments. You may also want to change the amount
of your contribution to make the most of contribution limits. It may be
wise to contribute the maximum amount to your 401K every year, as
these limits usually raise yearly. How old you are and the policy of your
company will be the deciding factor in the amount you should be
contributing to your 401K. Those who are over 50 will have less time to
fix their retirement plan than a person of 30.
How to Plan Your Retirement Successfully
How to Balance a 401K
There are three life cycles or stages that dictate how you will contribute
to a retirement plan.
1. Aggressive: For people with more than 35 years before
retirement.
50% – Large Cap Stocks
15% – Bonds
15% – Mid Cap Stocks
10% – International Stocks
10% – Small Cap Stocks
2. Moderate: For people with about 20 years until they retire.
35% – Bonds
35% – Large Cap Stocks
10% – International Stocks
10% – Mid Cap Stocks
10% – Small Cap Stocks
3. Conservative: For those with only ten years until
retirement.
40% – Bonds
30% – Large Cap Stocks
10% – Cash
10% – Large Cap Stocks
10% – Mid Cap Stocks
How to Plan Your Retirement Successfully
401K plans are an excellent choice when you plan for your retirement.
You will need to keep a close eye on your investment portfolio and
make sure your investment choices are wise.
How to Plan Your Retirement Successfully
Chapter 6 – Making The Most Of Your 401K Plan
When preparing to make a retirement plan, you will need to find out
when you will be eligible to begin participating in a 401K plan where
you work by talking to your benefits coordinator. When you become
eligible to sign up, you will be furnished a list of funds in which you are
able to invest. The maximum you were able to invest in 2005 was
$14,000, and a maximum of $15,000 in 2006. The maximum amount
goes up around $1,000 every year. If you are over 50, there is an extra
amount you can invest each year to ensure you will have the proper
amount to live on when you retire.
The contributions will be taken from you wages before withholding
taxes. This money is then invested into the funds you have selected
from the sponsors list, any employer contributions are put in at the
same time.
Fund sponsors will usually have a web page to access your account,
change your investments, and keep your account information up-to-
date. You will receive a statement of your account at intervals during
each year. This will tell you how well your investments are doing, and
how much your plan is worth. Keep an eye on these statistics to make
sure your investments are making a profit.
The first step in making the most of your 401K is to start participating in
a plan. Once you have enrolled, you should contribute the maximum
affordable amount up to the limitations set by the government, or at the
minimum contribute an amount that will get matching funds from the
company. Consider these payments as your future and the matching
funds as a bonus. Of course, the earlier you start a retirement plan, the
How to Plan Your Retirement Successfully
more money you will have when you retire. You should learn
everything you can about the investment funds before you choose one,
and keep up the research to make sure you are making a profit. If you
find that one of the investments is not making a profit you should
change to another.
Each company has their own process for investment, and you need to
know just what you are invested in. The vesting schedule will tell you
how much you have invested, how much the company has contributed,
and how much your earnings are, any time you wish to view them. You
already know that if you leave the company before you are fully vested,
that you will lose some of the earnings in your plan.
Some 401K plans allow you to make withdrawals when you have a
hardship. When you have a hardship that is qualified and withdraw
funds from your 401K, the withdrawal is taxable and you will be
suspended from contributing to the fund for six months. If your age at
the time of withdrawal is under 59 1/2, you will also need to pay a
penalty of 10%, unless you are using the money because of medical
emergencies or disability.
There are 401K plans that allow you to borrow against your retirement
plan. You are usually allowed to borrow up to half of your invested
assets up to $50,000. The loan must be paid within a 5 year period and
will be taken out of your earnings. You may repay the loan in full at any
time. Discover the loan policy of your 401K plan by talking to the
benefits coordinator.
How to Plan Your Retirement Successfully
Make sure you balance your investments regularly. Companies usually
offer a yearly period for open enrollment. This is the time to talk to your
plan sponsor about any goals you have. Once the goals and the risks
are defined, you can make sure you have the correct balance of your
investments.
A 401K retirement plan is very important. You should gather as much
information as possible on investments, matching funds, and
contribution limits. Research all available information so that you know
what type of investments you have and how they are making money
for you. You can also ask for assistance if you want to change your
options and are not sure how.
How to Plan Your Retirement Successfully
Chapter 7 – The History Of Annuities
Annuities have been in existence since Roman Times. These were
known as annua, meaning annual stripends in latin. Roman Citizens
would pay a one-time payment and received lifetime payments every
year.
In 17th century Europe, government was always looking for ways of
funding battles with other countries. A tontine was created, and any
who purchased shares would be paid back over an extended time
period. Participants would purchase a share for £ 100 from the UK
government, and receive an annuity during the lifetime of the person
nominated. This was usually a child so that the annuities would last a
longer period of time. As each nominee passed away, the remaining
nominees would get a larger share of the annuity. This would continue
until there were no nominees left.
The 18th century saw the beginning of annuities in America. In 1759 a
group of ministers and their families formed a company in
Pennsylvania. The ministers contributed to the fund and would realize
lifetime payments. In 1912 annuities were offered to the public. The
Pennsylvania Company for Insurance on Lives and Granting Annuities
was the first American company.
From then on, annuities grew at a steady rate, and they became quite
popular in the late 30s. Insurance companies were seen as stable
institutions that could make payouts promised during the Great
Depression. During this trying time many changes came about and the
focus was on saving for a rainy day. The New Deal program introduced
by FDR contained many programs encouraging each individual to save
How to Plan Your Retirement Successfully
for their retirement. Group annuities for corporate pension plans were
first developed.
The first modern annuities were quite simple then. The investor was
guaranteed a return of the principal, and a fixed rate of return during
the period of accumulation. When the annuity matured, there was a
choice whether to take fixed income for a lifetime, or receive payments
over a set number of years. The most attractive fact, when it came to
annuities, was their tax deferred status. Because insurance companies
issued the annuities, they could accumulate without the money being
taxed every year.
The variable annuity was created in 1952. Variable annuities assigned
interest based on several accounts inside the annuity. Owners of these
annuities were able to choose what type of accounts they wished to
use.
Other features were added to annuities, as the years went by. Some
accounts allowed funds to be accessed by checkbook. Other annuities
offered higher bonus rates, shorter periods of maturity, and guaranteed
death benefits if the owner died. Variable accounts caused a boost in
the popularity of annuities. Over the past 20 years, mutual funds have
seen a surge in popularity. There are now nearly twice as many mutual
funds than there are stocks.
Annuities are as popular as they ever were, with annual annuity sales
over $200 billion. Annuity contracts usually have higher commissions
and fees than other investments. Millions have been able to use the
structure of the annuity to their advantage.
How to Plan Your Retirement Successfully
Chapter 8 – Take time to Review Your Retirement Plan
It is very important to completely review at intervals throughout the
years. Your retirement plan is a top priority because it will take care of
you when you are no longer working, and is one of the most important
financial choices you will make in your lifetime.
1. Your Personal Finances: Has your income increased since
you started your retirement plan? Is there a source of extra
income from a second income or from the wages your spouse
earns? Have you had financial problems or had to make major
purchases in the past few years that affected your retirement
plans? Have you withdrawn money from your retirement plan for
personal or emergency use? The financial outlook of your life
will definitely affect the amount you will be able to put into your
retirement account.
2. Your Life Changes: Have your original plans for your
retirement goals changed? Do you still plan on retiring at the
same age as when you first started your retirement plan? Are
your investments the right ones to assure you have enough
money for your retirement? It is a good idea to look over your
retirement plan, and even set new financial goals now and then.
Your life is constantly in a state of flux and there are bound to
be changes.
3. Your Spending: Maybe the way your money is spent has
changed since you set up your retirement plan. You may have
gotten married or divorced, changed jobs, purchased a home,
How to Plan Your Retirement Successfully
had a child, made high ticket purchases, or had other
circumstances that have kept you from saving money for your
retirement. It may be wise to look at your budget and see if you
may have any extra money to put in your retirement fund. There
is also a chance that you could be putting too much into your
retirement plan and you may want to
4. Your Portfolio: It is important that you look closely at how your
portfolio is balanced so that your investments will earn enough
so that your retirement is comfortable. The amount you should
be investing is dictated by your age, how close you are to
retirement and what your current income is. Any time there is a
change in your circumstances, you need to reevaluate your
retirement plan to make sure it is adequate.
How to Plan Your Retirement Successfully
Chapter 9 – Is Retirement What You really Want?
While we are in the workforce, many of us are dreaming of the day we
are able to retire and live a life of leisure. The closer we get to
retirement the more our thoughts turn toward what we want to do when
that day comes. Will retirement be all that you want it to be, or will you
feel unfulfilled when you are not working.
There have been times when your job has gotten under your skin, but
are you really ready to leave it all behind? Many people retire from one
job and start a new career because they were not happy with
retirement life. Some people think of others they work with as a part of
their family, and find that they miss them when they are no longer
working.
With the day of retirement close at hand, you may want to ask yourself
a few questions.
What is my definition of retirement?
This is a question that you will need to answer with honesty.
You should really ponder this carefully before you answer.
Will I have enough money to retire?
Your retirement could last for up to 40 years, you need to keep
this in mind when figuring out your needs after retirement.
How to Plan Your Retirement Successfully
What will I do with my retirement plan?
Once you retire or leave your job’ and have full access to your
retirement plan, you need to decide what you want to do with this
money.
What can I expect from social security?
Most people work all of their life and want to be comfortable
when they retire. You should really have a retirement plan as well as
social security, but social security can be a good addition to your
retirement income.
What if I want to work after retirement?
Some people feel the need to keep working beyond the age of
retirement. You will need to decide what is right for you and your
lifestyle. Weigh the pros and cons before you make a decision.
Where will you live?
Do you plan to stay where you are living now, or will you retire
to some exotic tropical island in the south pacific? You will need to
determine how much it will cost to live where you desire, and how
much you will need in your retirement account.
How to Plan Your Retirement Successfully
Chapter 10 – Whether to Work Full Time, Part Time, or Retire
Many working people look forward to retirement. Some of them are so
close they are counting down the days. These people are looking
forward to retirement. Others see retirement as an endless parade of
empty days where boredom will be the most exciting thing happening.
These people enjoy working and interacting with others on a daily
basis.
Many people today are trying something new. One spouse will retire
and the other, though at retirement age, has chosen to stay in the work
force for the time being. When you reach retirement age you will be
faced with whether to continue working, retire and work part time, or
give it all up and retire.
You need to look at what you have to lose. Going from full time to part
time may affect your benefits in the workplace. Many companies do not
offer health insurance so you may need to activate your Medicare and
sign up for your social security benefits. If you don’t feel you can
completely leave the working world.
Your decision to retire fully, work part time, or full time, will be
dependant upon your previous plans for retirement. Will you be
traveling or relocating, and will you have enough money to live on
when you decide to retire? These are a couple of the questions that
you may want to ponder when making this decision.
How to Plan Your Retirement Successfully
Chapter 11 – How Will Having A Job Affect My Retirement Income?
Now that you have reached retirement age, you may want to work part
time. You will need to review the rules of social security and your
retirement plan to make sure you will get your full amount of both even
though you are still working on a part time basis.
If you retire at the age social security says is your full retirement age,
you will be able to work part time while retired, and still draw your full
social security benefits. If you retire before the full retirement age, your
benefits could be lessened or cut completely dependant on how much
you make.
If you retire before full retirement age, you will have $1 deducted for
every $2 you earn over the annual limit set by social security. If you are
working in the year you will be of full retirement age, $1 will be
deducted for every $3 you earn over other limit. It is a good idea to go
to the Social Security website to gain more information.
The Railroad Retirement has very similar rules, but there are two
differences. Any month you work for the railroad or any other railroad
labor organization, you will not be able to draw on your pension. If you
work for the job you held that is not a railroad job, your benefits may be
less even if you are of full retirement age.
If you take a job after you retire you will certainly more money, and will
keep you socially active. Your employer may offer health insurance
and there may be a chance that you will be able to open a new 401K
and start saving all over again. Basically there is no problem with
How to Plan Your Retirement Successfully
working after retirement. After careful consideration you are free to
choose full retirement, or working as much as you desire.
You will also need to consider that your pension could be affected by
your wages after retirement. You will want to check with your company
to see just how your retirement will be affected as each company has
its own policy.
You should also be aware that working after retirement may put you in
a higher tax bracket. This would mean that when you withdraw money
from your IRA or 401K you would be paying more taxes than you
figured. If you are bringing in too much money a bigger chunk of your
social security benefits will be subject to taxes.
How to Plan Your Retirement Successfully
Chapter 12 – Ways to Help You Prepare for Retirement
As the years go by, you are increasingly looking forward to relax and
get away from the working world. Like countless others, you probably
know exactly the life you want to lead after retirement. You are very
serious about your goals and will need to begin planning your
retirement right now and not put it off, if you want to enjoy a carefree
retirement.
Review your goals for retirement
Take a pause to ask yourself what your retirement goals really
are. Will you continue to live in your present home, or move to a
retirement community? Do you plan to pack up and move to a warmer
climate, or is frequent travel part of your plan? Of course you are
always free to change your plans in the future, but you should definitely
have a place to start so that you will know about how much money you
will need to get you through the retirement years.
Take a good look at your finances
As long as you know where you stand, you can figure out where
you will be at retirement age. It is not too late to start socking money
away in a retirement plan. If you are in debt up to your hairline, there is
a good chance that you will need to take care of this if you want to
have a happy retirement. By the time you intend to retire, you will need
70% to 90% of what you are making now to maintain the standard of
living you enjoy now.
How to Plan Your Retirement Successfully
Taking care of yourself
By the time you retire, you will still want to be active and
healthy. Start working on a health program to keep you fit and ready to
go. As we age we are prone to health problems and unless you do
something to combat them now, you may be spending your retirement
being unable to get around. A healthy lifestyle will assure that you are
going to enjoy every minute of your retirement.
Your spouse and retirement
Those who are married should talk to their spouse about the
retirement plan they participate in. You both need to understand the
particulars of the plan and figure what part the plan will play in your
retirement. Both of you should understand what legal papers you will
need to sign before your spouse retires.
Keep track of what you own
When you are participating in an employer sponsored retirement
plan or pension, ask for a summary of what your plan offers. If you are
confused, ask your plan coordinator to explain it to you. You need to
know how much you are able to contribute, and how much your
employer will contribute in matching funds. You should also ask about
what type of investments your plan is involved in.
How to Plan Your Retirement Successfully
Open an IRA
Almost anyone is able to open an IRA as long as they or their
spouse have earned income. You can either open a Roth or traditional
IRA. Your financial institution will be able to explain how an IRA works
and whether you are eligible to open one. After you open the IRA you
should try to contribute the maximum allowed each year, whenever
possible.
Keep an eye on your benefits
Your employer will most likely provide an Individual Benefit
Statement at intervals throughout each year. This statement will show
how the plan is working for you and the amount you own. You need to
review your plan completely review each statement, and if you find
details that you don’t understand or do not agree with, you need to see
your plan coordinator right away.
Talk about retirement plans with your family
When you are close to the age you will retire, you will need to sit
down with your spouse and discuss your goals after retirement. Each
of you might have different ideas about what you want when you retire.
You will need sort out the differences and come to a compromise.
Other members should be in the loop about your plans if these plans
may affect them in any way.
How to Plan Your Retirement Successfully
Check out your social security statement
Every year you should be receiving a social security statement a
few months before your birthday. This is a statement of what you have
earned and what you have paid in social security taxes. It also contains
an estimate of the amount you may receive from social security.
What you will do after retirement
You definitely do not want to be bored after retirement. There
are plenty of activities you can become involved in to keep yourself
busy and productive. You can choose to take another job, travel,
pursue a hobby, volunteer, or any number of activities. It is important to
know that you will still lead a fulfilling life and making a tentative plan
will make you feel better about retirement.
Your life insurance
You should determine whether you have enough life insurance
before you retire. You may not need life insurance but you should at
least look into the benefits of having a policy. This is especially true for
younger people who have a family who would be left without a source
of support should you no longer be there. It is up to you whether you
want to be insured or you think you can do without.
Long term care insurance
It is difficult to think about a time when we may need to be taken
care of by others. We need to admit that it could be a possibility in the
How to Plan Your Retirement Successfully
future. Long term care is very expensive and it would be wise to have a
policy that will assure you will be taken care of if the need arises. This
should simply be a part of your retirement planning.
How to Plan Your Retirement Successfully
Chapter 13 – Your Retirement and Debt
You are thinking of retirement but have quite a few outstanding debts.
Many people are finding themselves in the same situation, especially
when it comes to credit card debt. You don’t want to carry that debt
over into retirement. You will need to use careful planning to bring this
about.
There are several steps you can take to assure that your debts will be
paid before you retire. The sooner you start clearing up your debt, the
sooner you will be able to retire completely or nearly debt free.
1. Your Budget
You will need to go over your budget and see where you will be
able to shuffle enough money to pay these debts off as soon as
possible. Try to keep from buying things that are not a necessity when
possible.
2. Your Credit Cards
It is very easy to accumulate debt when you are using credit
cards. It is so convenient to use a card when shopping, there are times
we don’t realize just how much is being spent until the bill comes. If
you really want to get out of debt it may be wise to get rid of the cards
and borrow money to pay them off. A mortgage to pay off your debts
will give you a lower interest rate and make it a bit easier on the
How to Plan Your Retirement Successfully
budget. If you must keep one credit card do so in case of emergency
only.
3. Contribute Extra
When you find you have extra money in your hands that does
not need to be spent on something else, pay all or part of in on a debt.
This way you have paid ahead and lower interest rates, depending on
the debt.
4. Bonuses from work
Don’t count your bonuses as a way to pay debt. Until you
actually have the money it should not be counted in the budget. While
this money is great, it might be a good idea to earmark a portion of this
money to pay off debts. Don’t ever count on this money to pay
everyday expenses.
5. Keep to the plan
Once you have figured out your budget and a plan for paying off
your outstanding debts, stick to the plan faithfully. Even at times when
you are feeling a bit of a crunch, you need to stick to the plan you have
made or your debts will not be cleared by the time you want to retire.
There will always be rough times in your life, but the ability to see them
through without steering away from your plan. This is not to say that
you should have some of the things you want in life, just try not to go
too far overboard with your spending. If you keep track of everything
How to Plan Your Retirement Successfully
you purchase by writing it down you will soon see that saving to pay
your debts will become as automatic as wearing a seatbelt while riding
in the car.
How to Plan Your Retirement Successfully
Chapter 14 – About Early Retirement
Since nearly every company is prone to downsizing in today’s business
world, there are times when an employer will offer some of the older
workers an early retirement package. This may seem to be quite an
attractive offer, you will need to look it over completely before you
accept the terms.
The early retirement package
An early retirement package is an offer of money to take retirement a
bit earlier than you normally would. Most businesses will include
severance pay that is based on your current wages and how many
years you have been with the company. Life insurance and health care
may or may not be included.
Should you take an early retirement package?
Before you accept the early retirement package, take a long look at
your financial situation, the needs of your family, and if this amount of
money is enough to support all of this for the next few years. If you
were going to retire at age 65, and you are now 55, will you have
enough to see you through the next 10 years?
Health Insurance
Most employees do not offer health insurance that will continue after
your retirement. You may be able to pay for COBRA for 18 months
How to Plan Your Retirement Successfully
after you leave the job. There may also be a possibility that you will be
covered under your spouse’s health insurance.
Life Insurance
You may be offered life insurance in your early retirement package but
it is usually limited and you may need to keep up the premiums
yourself. If you find you need life insurance and your company doesn’t
offer it to you, you will want to shop around to find a policy to fit your
needs.
Your Pension
If you have a 401K or other pension plan through your company, you
can’t usually draw from it until you reach a certain age. The longer you
can leave the money in the 401K, the more money you will realize in a
monthly check after your retire. In the case of early retirement, you
may be able to start receiving payments at age 55 without penalty. You
will need to check and see what your company’s policy to find out.
Your Bottom Line
If you decide to take an early retirement you can make a smoother
transition if you have a definite plan before you retire, pay off large
debts, and replace any money borrowed for emergencies. You should
also keep credit card use very low and live within your means.
How to Plan Your Retirement Successfully
Chapter 15 – Full Retirement Age According to Social Security
The policy used to be, the full retirement age for everyone was 65. The
criteria has changed, full retirement age is now dependant upon the
year you were born. You may retire at 62, but the benefits will be
reduced according to how long you have until you are of the full
retirement age.
The chart below shows when you can expect to retire at full retirement
age according you your year of birth.
Full Retirement Age at Year of Birth
1937 or before 65
1938 65 and two months
1939 65 and four months
1940 65 and six months
1941 65 and eight months
1942 65 and ten months
1943 – 1954 66
1955 66 and two months
1956 66 and four months
1957 66 and six months
1958 66 and eight months
1959 66 and ten months
1960 and later 67
How to Plan Your Retirement Successfully
Chapter 16 – Retiring With Only a Social Security Income
It hasn’t been that long that we have been able to retire from working.
Social security was created during the depression. It was designed to
pay the breadwinner of the family with a retirement amount to afford
them to quit working when they reached the age of 65. At that time,
benefits were given to retirees in a lump sum, until 1940 when it was
changed to a monthly benefit amount.
Social security has been a great savior for those who will not have any
other income after they retire. At the beginning of the 19th century the
head of the family worked until they became too old or ill to go on. If
the breadwinner died the family would usually move in with other family
members. If this was out of the question, the remaining family lived in
poverty. There were places called poor farms where poverty stricken
families where people went to live when they could no longer make a
living.
While the majority believed it was, social security was not designed to
take the place of a paycheck. It was brought about to be an additional
amount to add to whatever they had saved for the time they were able
to retire. Over the years social security has become the only source of
income for many retirees.
Today, retirement life has changed, and the definition of retirement is
more than stopping work and sitting around. Now retirement is looked
at as a time to relax and enjoy all of the things you didn’t have the time
to do when you were in the workforce. Now that we demand a more
exciting and active retirement, we must find a way to pay it.
How to Plan Your Retirement Successfully
The cost of living is ever on the rise and the only way you will be able
to enjoy the type of retirement you desire, is to invest your money in a
retirement plan. Social security is not nearly enough for you to retire on
by itself. Those who retire on only social security live a very sparse life
with far less money than they had while working. There will also be a
possibility that they will need to supplement their healthcare as
Medicare does not pay the full amount of certain medical procedures
and medications. When you are on only social security, you will be
unable to afford to pay for more insurance. There are those in this
country who cannot pay for life saving medications, and many put off
seeing a doctor because they really can’t afford the co-pays.
It is vitally important for each individual to begin putting money away
for the day they plan to retire. Otherwise they will find that what once
was a comfortable way to live has turned into a life lived beneath the
poverty level. This is the biggest reason everyone needs to pay
attention to a retirement fund and start contributing to it at as young
age as possible.
I know it is very easy to put off starting a pension fund when you are
young and vital, with no aches, pains or ailments. If you get nothing
else out of this ebook, burn this into your brain: IT IS VITAL THAT
YOU START A RETIREMENT FUND, AND START IT AS SOON AS
YOU READ THIS!
How to Plan Your Retirement Successfully
Chapter 17 – What to Do Just Before You Retire
Even if you have been contributing to a retirement fund for many years,
there will be more to accomplish once you get close to retirement age.
This is the time to make your final decisions and tie up any loose ends
when it comes to actually retiring. If you feel you do not understand
some of the aspects of your retirement, you may want to consult a
retirement coach. They can tell you how everything works, and help
you to decide whether you want to continue working part time, full time,
or completely retire. The closer you get to retirement age, the less time
you will have to save for your retirement. Get excited you are almost
there.
How to Plan Your Retirement Successfully
Chapter 18 – Is Retirement Coaching For You?
With so many baby boomers on the verge of retirement, there will be
many people retiring almost at once. Baby boomers have made huge
changes in the way we do things today. This generation is responsible
for fast food, credit cards, rock and roll, and equality, to name a few.
These people want a better retirement than their parents, many are
deciding to take the advice of retirement coaches to make the most of
their retirement investments.
What is a retirement coach?
A retirement coach is one who helps you to search for the perfect
retirement solution for each individual, according to their needs.
Retirement coaches will also help you through the process of
discovering all of the aspects of your retirement from start to finish.
They will also help you to plan the retirement of your dreams from start
to finish. They can also coach you on how to make the transition from
working to retirement a less painful experience. A retirement coach can
a may also assist you in preparing and maintaining a budget that you
can live with.
What a retirement coach does not do
A retirement coach does not usually advise you when it comes to
investments, or offer legal services of any sort. You should speak to
someone who provides these services if you have any questions in
that area.
How to Plan Your Retirement Successfully
How to choose a retirement coach
When choosing a retirement coach, you will need to act as you would
when choosing any other professional. Retirement coaches have no
formal credentials so you will need to ask for references and what
experience they have. You may want to ask friends and family for
referrals of coaches they have used and had good experience working
with. You should also find out exactly what services are offered, how
much you will be charged, and how long it will take to learn to manage
your own retirement fund, and if there is an opt out clause. Many times
this
coaching can be conducted over the phone so you are able to work
with a coach who lives across the country if need be. Some retirement
coaches will offer their advice by conducting a seminar so they may
reach more people at one time.
How to Plan Your Retirement Successfully
Chapter 19 – Retirement Plans For Self Employed and Small Business Owners
Retirement plans are not only available through corporations, but they
are also available for those who are self employed, or owners and
employees of small business ventures. You are able to set up tax–
advantaged retirement plan for yourself, and your employees. There
are many retirement plan options for any type of business and for the
self employed.
A SEP – IRA is one retirement plan available to small businesses and
individuals who are self employed. When this plan is set up for a small
business, the owner will need to furnish a written agreement to provide
benefits to eligible employees. The SEP – IRA must be set up for each
employee and each must receive full information on the plan.
A SEP – IRA is quite easy to set up and maintain, and offers a very
lucrative way to save for retirement. This plan is controlled and owned
by the worker and the business owner will make contributions to each
plan.
The simple IRA
This is an employer sponsored plan that allows the employer to set up
individual employee. The IRS form 5304–SIMPLE – or 5305–SIMPLE
is used to set up a SIMPLE IRA. The form used is dependant upon
whether the plan is set up by the employee, or the financial institution.
The contributions are tax-deferred and are higher than a traditional or
Roth IRA. Simple IRAs are usually available for companies with less
How to Plan Your Retirement Successfully
than 100 employees and want to provide a qualified profit sharing plan.
The SIMPLE IRA can be set up between January first and October first
of any year. A SIMPLE 401K plan can also be set up in a manner that
is very similar, but the employer has to meet a certain criteria for the
SIMPLE 401K.
Payroll Deduction IRA
Created in 1997, the payroll deduction IRA is another option for
employers to offer their workers a way to save for retirement. Once the
employer sets up the plan, there is nothing further to do but forward the
amounts are deducted from the payroll to the financial institution. The
employee decides how much will be deducted from his wages, and the
employer is responsible for making payments to the IRA on time.
There are many retirement plans available so that small business and
the self employed will no need to worry about the future of their
finances. With a bit of research, small business owners and those who
are self employed will be able to find the right retirement savings plan
that is right for them.
How to Plan Your Retirement Successfully
Chapter 20 – How to make the change from work to retirement
How you feel about retirement will play the biggest part in how easily
you will make the transition from being in the work force to living a life
without having to be at that 9 to 5 every day. When one retires their life
should be a life of relaxation, enjoyment, and freedom. Retirement is a
time in your life when you should look forward to taking charge of your
life and doing the things you have put off for years.
You have worked your entire life socking away money so that you
could have a comfortable retirement. Your retirement will not be all it
should be if your feelings about retirement are not positive. If you are
not ready for retirement, you may find you are quite bored in a very
short time. Take time to examine your feelings about your retirement,
and make a plan for the things you want to do when you are free from
the chains of a job.
A huge consideration is the way your spouse feels about your
retirement. They may have been home all day alone for years, and
suddenly they will need to adjust to having you with them almost
constantly. Both of you need to sit down and discuss what each of you
do and don’t like about how life will change after your retirement. There
should be plans made collectively about how you will spend your
retirement together. There may be a bit of comprise involved, but a
collective decision is possible if you both work on it together.
Circumstances may be that your spouse will be still be working after
you retire. You will need to come to a decision whether it would be
okay for you to make travel plans or engage in other activities without
How to Plan Your Retirement Successfully
them. You will be home all day, every day and if you do not have a
plan to keep you active, boredom will soon set in.
Once you have worked out the big issues with your spouse it is time to
look at things you would like to do to keep boredom at bay. Think
about the things you always wanted to do or the things you had only
limited time to do when you were working. Look for other hobbies and
activities that you had not thought about before but would like to try. It
is up to you to fill up the void that not working has made in your life and
make your days an exciting continuation of your early life.
If your retirement fund is adequate to keep you and yours comfortable,
and you don’t need to bring in anything more, you may want to
volunteer your time at the local hospital, nursing home, or a worthwhile
charity. If you find you need a bit more money you may want to think
about a part time job. If you find you are miserable because you just
can’t find anything to that is as fulfilling as working was, you may even
want to consider a new career.
Another option after retirement is to start your own business. If you
have always wanted to own your own business you now have the time
for you to look into the many business opportunities that you can start.
You can also start a business doing something you are good at, like
woodworking, sculpting, or sewing, to name a few. You could make
furniture and open a little showroom to sell your items, or maybe you
could make and sell hand sewn quilts or sew custom made clothing.
Anything you love to do as a hobby, you can turn into a fulfilling
business venture. If you can dream it, you can do it.
How to Plan Your Retirement Successfully
Thousands of retirees plan to travel after their working life is a thing of
the past. If this is what you and yours have planned to do, you may
want to sit down with everyone concerned and make plans on where
and when you will travel. You can choose to travel the US or around
the world, you can make plans to go anywhere you wish and use any
form of transportation you want. Happy trails!
The transition from the working world to a life of leisure can be smooth
or bumpy, the choice will be up to you. Retirement is a major life
change and change is never as easy as we think. People who have
worked all of their lives have spent many waking hours at a job.
Someone who has worked for twenty or thirty years at the same job,
will find that they feel a bit sad when they are not taking part in this
activity anymore. They may even feel depressed after retirement and
have a harder time adjusting.
It is for this reason, if for no other, retirees will need to make sure they
keep busy so that they are not bored. Many people will take a bit of
time just to relax, as if being on a vacation from work. This is fine, but
you should not be idle for too long of a time, get out and do something
even if it’s wrong. Remember, your life is your own now and you are
making the choices of how you will spend your day. Whatever you do,
enjoy your retirement to the full extent.
How to Plan Your Retirement Successfully
Chapter 21 – How To Be Happy After Retirement
Here are some tips on how you can be happy in your retirement years.
Happy is merely a state of mind, and we have the power to be happy in
our lives. As I mentioned before it can be tough to make the transition,
but I would like to add (or restate) a few tips that can help you have a
happy retirement.
1. Do your planning early
You should start planning early, not only for your finances after
retirement, but also for the things you will do after retirement. In
addition, you should make a second set of plans in case there is a
problem with carrying out the first. This strategy will assure that you
are not confused about what to do next.
2. Consider your options
Think of everything you love to do, and those things that you have
always wanted to try but did not have the time in the past. Make a list
of all of these things and figure out how you can incorporate them into
your retirement plans. This will give you something to look forward to
and keep you focused on the day you retire.
3. Include your spouse
Since your spouse will be beside you throughout your retirement years,
all plans should be discussed together. There may be some options
How to Plan Your Retirement Successfully
that you will disagree on. When this happens you will both need to
reach a compromise to make your retirement a happy one. Another
thing to remember is the fact that the best laid plans can go awry. Any
number of things may happen during the years you are waiting for your
retirement to roll around. Divorce, death of a spouse, or even a change
in goals can come up. It is wise for you and everyone involved in your
retirement, to sit down periodically and compare notes on whether
there has been a change in how anyone feels about the plans for
retirement.
4. Retirement and your health
It would be useless to make plans for an active retirement if you are
not healthy enough to enjoy it when the time rolls around. Watching
what you eat and getting moderate, regular exercise, will help you
remain healthy throughout your life. You should also see your doctor
for regular medical check-ups to catch any unforeseen health problems
before they become a major concern.
5. Keep up the good work
After retirement, you should keep active to fight off disease and keep
you young. Exercise can be as simple as taking a walk, playing golf, or
shopping with friends. Don’t lead a sedentary life if you want to stay a
happy, healthy retiree.
How to Plan Your Retirement Successfully
6. Don’t let yourself get depressed
If you just sit around without anything to occupy yourself, you will surely start
feeling sorry for your situation, no matter how well off you are. Our happiness
does not hinge on someone or something else, we are responsible for the
happiness in our lives. Get out of the house and meet new people, join a club,
start a hobby or a business. The bottom line is to keep active and don’t allow
yourself to get into a depressing, unproductive route.
You should take advantage of this time in your life as it should be the best part
of your life. You should also try to do some of the things you always wanted to
and never had the time to do, enjoy every day to it’s fullest extent, and last of
all, take time to get to know the real you now that you do not have to work and
perform for someone else. Why not try to meet a new person every day.
All The Best,
Master Trader Team
http://mastertrader.online/tms_harmonics_ph/