Category Retirement Planning

Jan 20 2024

Money in Retirement

Is your money going to run out in retirement?  If you don’t plan ahead you could face some financial challenges in retirement. The best way to make sure you have money for the long-term to live the life you want to lead in retirement is to get an early start by setting goals and creating a saving and investing plan that will help you achieve those goals. If you’re getting a late start, don’t lose hope. There are ways you can make up some ground.

Start Early

The earlier you start, the less money you’ll need to invest to reach your financial goals. And, there’s a great feature that really helps build wealth. Through the power of compounding, you can earn interest on the money you save and on the interest that money earns. You can watch your money grow over time even if you only put a small amount of money into savings right now.

Set Goals

Consider the lifestyle you want to lead. Here are some important questions to ask yourself as you plan your retirement:

  • Have you thought about major living expenses related to housing, healthcare, food, clothing, and transportation?
  • Do you like to spend money at will or are you the type of person who always lives within a budget?
  •  What types of leisure activities and hobbies do you hope to pursue in retirement?

Make a Plan

Now that you’ve considered your lifestyle and goals, it’s time to make a plan. Investor.gov has free financial planning tools and resources that can help. It’s saving and investing roadmap and Savings Goal Calculator can help guide you as you create a plan that helps you reach your goals. Whenever you’re creating a plan, it’s important to consider your risk tolerance, investment options, fees/costs involved in investing, your debt, and keeping money into an emergency fund.

Contribute to Your Employer’s Retirement Accounts

Contribute to your employer’s retirement accounts, such as a 401(k), 403(b) or 457(b) plan. Most importantly, if your employer contributes to these accounts, take full advantage of these matching funds. Suppose, your employer contributes 50 cents for every dollar you save up to five percent of your salary. If you make $50,000 a year, and contribute at least $2,500 to these accounts, your employer will add an extra $1,250 to that amount. That’s an immediate 50 percent return. Take advantage of the “free money” as no other investment will give you that kind of guaranteed return. Also, start your own Roth or a traditional IRA.

Make Up Ground

If you’re getting a later start, there are ways you can make up some ground. If you’re over 50, you can consider contributing more to your workplace and individual retirement plans. The IRS allows investors to contribute $22,500 per year to a workplace retirement plan, like a 401(k), but will allow you to make an additional $7,500 in “catch-up” contributions if you are over the age of 50. Similarly, you can contribute $6,500 per year to an IRA that you set up yourself, but investors over 50 can contribute an additional $1,000 per year. 

Enough Money

Starting early, setting goals, creating a diversified plan for the long term, making regular contributions to your retirement accounts, and sticking to your plan all adds up to helping to make sure you have enough money in your retirement to live the life you want to lead.

For More Information, click here.

Teaching Suggestions:

  • Have students suggest actions that can be taken at different stages of the adult cycle to have financially successful retirement.
  • Ask students to create a list of non-financial actions that a person can take to plan for a fulfilling retirement.
  • Create a list of factors that influence the spending patterns of retired individuals.

Discussion Questions:

  1. What financial and personal difficulties are associated with inadequate retirement planning?
  2. Why is an IRA still beneficial for retirement planning even for individuals who may not qualify for the contribution deduction?
Nov 11 2023

What is the Senior Medicare Patrol (SMP)?

The SMP is a national program to educate Medicare beneficiaries about Medicare fraud, errors, and abuse.  Medicare loses an estimated $60 billion each year due to fraud, errors, and abuse, though that number is sometimes impossible to measure. Every day, issues related to these problems affect people across the country, often costing them time, money, and well-being.

Medicare-related errors contribute to this annual loss even though errors can be honest health care billing mistakes. However, repeated errors by a doctor or provider could be considered a red flag of potential fraud or abuse if not corrected.

Some common examples of fraud, errors, or abuse could include:

  • Charging for services or supplies that were not provided
  • Misrepresenting a diagnosis, a person’s identity, the service provided, or other facts to justify payment
  • Prescribing or providing excessive or unnecessary tests and services

How to stop Medicare fraud?

If you are a Medicare beneficiary, start by learning how to read your Medicare statements! Read your Medicare Summary Notice (MSN) or Explanation of Benefits (EOB) in the paper form that is mailed to you, or go online to Medicare.gov and review claims digitally.

Caregivers, help by educating yourself and your clients or loved ones on how to prevent and detect health care fraud, errors, and abuse. Be on the lookout for things like boxes of knee braces (known as durable medical equipment, or DME) lying around the house. This is a common scam and may mean your client or loved one has been a victim. Remind your clients or loved ones to never give out their Medicare number or other personal information over the phone.

Families, help by talking to your loved ones about protecting their Medicare number just as they would a credit card number. Encourage them to check their Medicare statements for fraud, errors, or abuse and never give out their Medicare number over the phone for any reason. Help your loved ones create a Medicare.gov account to access their Medicare claims online or remind them to open and review their statements when they come in the mail every three months.

Partners and professionals, help by sharing SMP information on social media, referring clients and consumers to the SMP, and inviting the SMP to speak during a shared event. Identify ways to collaborate on mission-related topics and information.

Health care providers, help by talking to patients about health care-related scams such as those related to durable medical equipment, genetic testing, or new, plastic, or chipped Medicare cards. Reassure them that your office and their other doctors’ offices are not going to call to offer them services or equipment.

Lastly, as a community, help by looking out for your older neighbors. If you overhear someone talking about Medicare, don’t be afraid to give information about the local SMP and SHIP. Encourage those you know to talk to a trusted source about their Medicare questions and tell your neighbors about the most recent Medicare scams. Consider volunteering with your local SMP!

For more information, go to: https://smpresource.org/medicare-fraud-prevention-week-week

Teaching Suggestions:

  • Ask students to make a list of the common examples of Medicare fraud or abuse.
  • What are some actions all of us can take to stop Medicare fraud?

Discussion Questions:

  1. What is the Senior Medicare Patrol? How does it help in preventing Medicare fraud?
  2. How can Medicare beneficiaries, caretakers, families, partners, and professionals, healthcare providers, and the community help in preventing Medicare fraud?
Oct 28 2023

The Future of Social Security

In the annual Trustees Report, projections are made under three alternative sets of economic, demographic, and programmatic assumptions. Under one of these sets (labeled “Low Cost”) in the 2023 Trustees Report, the combined trust funds would be temporarily depleted before returning to positive levels by the end of the 75 year projection period. Under the other two sets (the “Intermediate” and “High Cost”) in the 2023 Trustees Report, the combined trust fund reserves become depleted within the next 15 years. The intermediate assumptions reflect the Trustees’ best estimate of future experience.

Some benefits could be paid even if the trust fund reserves are depleted. For example, under the intermediate assumptions, annual income to the trust funds is projected to equal about eighty percent of program cost once the trust fund reserves become depleted. If no legislation has been enacted to restore long-term solvency by that time, about three-quarters of scheduled benefits could be paid in each year thereafter.

The Trustees believe that extensive public discussion and analysis of the long-range financing problems of the Social Security program are essential in developing broad support for changes to restore the long-range balance of the program.

For more information, go to: ssa.gov/OACT/ProgData/fundFAQ.html

Teaching Suggestions:

  • Ask students if the Social Security and Medicare programs will continue to face significant financing issues.  How can these issues be addressed now to mitigate future problems?
  • Under current law, how are the Social Security and Medicare programs financed?
  • Research project: Ask students to research how large are the assets reserves currently in the trust funds.

Discussion Questions:

  1. What are the annual income and costs for the Social Security trust funds?
  2. Currently, do the Social Security trust funds have an annual surplus or deficit?
  3. How does 2023 outlook for Social Security compare to last year’s outlook?
Oct 14 2023

Planning for Retirement

Do you have a retirement plan? It is never too early or too late to plan for your future. Even if you don’t have a plan in place, taking small steps now can make a big difference for your future retirement. Benefits.gov can help you plan and find retirement benefits. This article will share tips for savings and benefits that may be able to help you through retirement.

What should I do first?

Start saving money. If your employer offers a retirement savings plan, like a 401(k), sign up and contribute what you can. If your employer does not offer a retirement plan, you can put money in an Individual Retirement Arrangement (IRA).

What are Social Security retirement benefits?

The U.S. Social Security Administration (SSA) manages Social Security retirement benefits. The monthly payments are based on how much you earned when you worked. Social Security payments can help in retirement, but it may not be enough to cover all your expenses. SSA’s retirement estimator tool can estimate how much you will get in benefits at different ages.

Am I eligible for Social Security retirement benefits?

When you work and pay Social Security taxes, you earn credits for Social Security benefits. The number of credits you need to get retirement benefits is based on when you were born. If you were born in 1929 or later, you need 40 credits. Usually, this is 10 years of work. If you never worked, you may be able to get spouse’s retirement benefits if you are at least 62 and your spouse gets retirement or disability benefits.

When should I retire?

Choosing when to retire is up to you and will depend on your financial situation. You will receive less in your Social Security benefits if you retire before full retirement age. Find your full retirement age in the retirement age chart.

Are other benefits available?

Supplemental Security Income (SSI) helps people with little or no income and who are 65 or older, blind, or have a disability. SSI benefits are paid monthly. The amount you get is based on your income, living arrangements, and other factors

You may be eligible for benefits from the Federal Employees Retirement System (FERS) if you are a federal employee.

To find out more about retirement benefits you may be eligible for check out the Benefit Finder.

For more information, go to:  Planning for Retirement | Benefits.gov

Teaching Suggestions:

  • Ask students to debate the issue–“It is never too early or too late to plan for your future”.
  • Ask students to outline steps they can take now to secure their retirement?
  • Should you take Social Security benefits before your full retirement? Why or why not?

Discussion Questions:

  1. How can taking small steps now make a big difference for your future retirement?
  2. What steps can you take to save your retirement if your employer does not offer a retirement plan?
  3. Who is eligible for Social Security benefits?
Sep 2 2023

Retirement ahead? Think about your insurance

If retiring is in your near future, congratulations!

Before the cake is cut, ask some questions about your insurance to make sure you have the coverage you need.

#1) Will you have health insurance?

There are several ways you can get health insurance after you retire:

a. Through your employer.

b. Through your spouse’s employer.

c. Medicare if you’re 65 or older or have a disability.

d. Buy your own plan from an insurance company or HealthCare.gov.

#2) Do you have retirement and savings accounts?

Ask your employer for a statement of any accounts you’ll take with you. These could be retirement accounts, annuities, life insurance, or long-term care insurance.

#3) Do you need life insurance?

If you have life insurance, consider whether you still need it. If no one is relying on you for income, maybe you can sell your policy or stop it. If your policy has cash value, you can get the money you built up. Ask about any charges or fees before stopping or selling a policy.

#4) Do you need long-term care insurance?

Not everyone needs long-term care insurance. It’s usually a good idea if you have significant assets you want to protect. Premiums get higher as you get older, so don’t wait too long to buy it if you want it.

#5) Keep your family or a trusted source informed

Share your insurance policies and cards with anyone who is – or who is planning to – help manage your money as you age. This ranges from health, long-term care, and life insurance to car and home insurance policies.

For more information, click here.

Teaching Suggestions:

  • Ask students if life insurance is needed during retirement. If so, under what circumstances life insurance might be needed?
  • Ask students if long-term insurance is as important as health insurance. Why or why not?

Discussion Questions:

  1. What are several ways you can get health insurance after you retire?
  2. What might be cheaper options for funeral expenses?
  3. Why is it important to keep your family or a trusted source informed about your insurance policy and insurance cards?
Jul 22 2023

Saving for Retirement

Retirement requires a lot of planning and consideration. In addition to finances, you need to think about when and where you’ll retire. Experts advise that you may need as much as 80 percent of your pre-retirement income to continue your current standard of living. The exact amount will depend on your individual needs. 

Questions To Ask Yourself before Retiring

As you plan retirement, consider these important questions:

  • At what age do you plan to retire?
  • Can you participate in an employer’s retirement savings plan? This includes 401(k) plans and traditional pension plans. 
  • If you have a spouse or partner, will they retire when you do?
  • Where do you plan to live when you retire? Will you downsize, rent, or own your home?
  • Do you expect to work part-time?
  • Will you have the same medical insurance you had while working? Will your insurance coverage change?
  • Do you want to travel or pursue a costly, new hobby?

Tools to Help You Prepare for Retirement

To begin planning for your retirement:

For more information. Click here.

Teaching Suggestions

  • Ask students if they have considered saving for retirement yet? If not, encourage them to start saving at least 20 percent of their income towards retirement.
  • Do you know what sources of income will be when you retire? How much to expect from each source, and when?

Discussion Questions

  1. Why is it important to start planning for retirement while you are still in college?
  2. What are the easiest ways to boost your retirement savings?
Mar 18 2023

Annuity or Lump Sum?

Many people with a retirement plan are asked to choose between receiving lifetime income (also called an annuity) and a lump-sum payment to pay for their day-to-day life after they stop working. An annuity provides a lifetime steady stream of income while a lump sum is a one-time payment.

Deciding which option works best for you takes careful consideration because there are many factors to think about, such as your health, cost of living, assets and savings, and any other income you may have.

Why is this important?

Your employer may ask you to choose between an annuity and lump sum. For example, your employer may ask you to make this choice (1) if you change jobs, (2) when you stop working, or (3) even after you have begun to receive monthly annuity payments.

When making this decision, explore the benefits and risks because whichever option you choose will affect your financial future.

What are the benefits and risks?

 AnnuityLump Sum
BenefitsYou will receive a steady income for the rest of your life, like keeping a part of your paycheck for life You may be able to provide a lifetime income to your spouse or to another beneficiaryYou can use the money to pay off large debts If you don’t spend all of the lump sum, you can pass it on as an inheritance
RisksAnnuities may give you less financial flexibility and may not pay benefits to your survivors If you are in poor health, an annuity may not provide enough money to cover medical billsYou may outlive your retirement funds It’s your responsibility to manage the money to provide you with future income

Factors you should consider:

  • Your health (and your spouse’s)
  • Your investment skills (and your spouse’s), and how they may change as you age
  • Your living expenses (now and future)
  • Your savings (and your spouse’s)
  • Other steady income (Social Security, pensions from other employers)
  • Debt (mortgage, car, credit cards, student loans, child support payments)
  • Taxes on the annuity or lump sum
  •  

Are there online tools that can help me calculate my lifetime income?

Yes. The Department of Labor has a lifetime income calculator that allows you to estimate the amount of monthly income you will receive when you stop working and start receiving monthly payments.

The results shown are estimates, not guarantees, of the level of the account balance or of the lifetime income streams of payments.

For more information, click here.

Teaching Suggestions:

  • Ask students to make a list of benefits that an annuity may provide.
  • Ask students to interview their parents or relatives if they had to make a choice between an annuity or a lump sum option.  If so, which option did they choose and why?

Discussion Questions:

  1. What are the benefits and risks of choosing an annuity or a lump sum payment?
  2. What sources are available if you need assistance in making a decision to choose annuity or lump sum option?
  3. Why is it important to discuss all of the possible options with a financial advisor or an insurance agent?
Mar 4 2023

Are Americans Financially Educated on Retirement Savings?

Financial education helps people learn about savings, credit, and loans. It also helps prepare people for life changes and to face the unexpected. This knowledge is essential when planning for retirement. So, how prepared are U.S. adults for their future retirement? According to a recent poll conducted by the National Endowment for Financial Education:

  • Eighty-five percent of respondents confirmed some part of their personal finances was causing them stress. For 31% of respondents, that concern was “having enough saved for retirement.”
  • In that same poll, 70% said they made financial adjustments due to the COVID-19 pandemic. Of that group, 27% increased contributions to their emergency savings, retirement savings, or other savings or investments. In comparison, 21% tapped into emergency savings—or borrowed against retirement savings.
  • About financial education mandates, 80% of U.S. adults said they wish they were required to complete a semester- or yearlong course focused on personal finance education during high school and 88% think their state should require a semester- or year-long course for high school graduation.
  • In that same poll, 84% of those approaching retirement age (60+ years old) said “spending and budgeting” should be taught in schools.

People who champion financial education typically live by the mantra “the earlier, the better.” It’s also important, though, that people keep learning throughout their lives to ensure they have the knowledge they need to make the best financial decisions.

Lifetime financial education can be a helpful tool in preparing for retirement. This includes understanding Social Security retirement benefits and making the most of retirement income.

For More Information, click here.

Teaching Suggestions:

  • Have students discuss the statement, “Financial education in high schools should be mandatory for graduation.”
  • Ask students how a financial literacy course is helping them to better manage their finances?

Discussion Questions:

  1. Why is financial literacy knowledge essential when preparing for retirement?
  2. Do students feel more prepared for financial challenges of adult life after taking a personal finance course? Explain.
Sep 10 2022

The Future of Social Security

In June 2022, the Social Security Board of Trustees released its annual report on the financial status of the Social Security Trust Funds. The combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) Trust Funds are projected to become depleted in 2035, one year later than projected last year, with 80 percent of benefits payable at that time.

The OASI Trust Fund is projected to become depleted in 2034, one year later than last year’s estimate, with 77 percent of benefits payable at that time. The DI Trust Fund asset reserves are not projected to become depleted during the 75-year projection period.

In the 2022 Annual Report to Congress, the Trustees announced:

  • The asset reserves of the combined OASI and DI Trust Funds declined by $56 billion in 2021 to a total of $2.852 trillion.
  • The total annual cost of the program is projected to exceed total annual income in 2022 and remain higher throughout the 75-year projection period.

“It is important to strengthen Social Security for future generations. The Trustees recommend that lawmakers address the projected trust fund shortfalls in a timely way in order to phase in necessary changes gradually,” said Kilolo Kijakazi, Acting Commissioner of Social Security. “Social Security will continue to be a vital part of the lives of 66 million beneficiaries and 182 million workers and their families during 2022.”

Other highlights of the Trustees Report include:

  • Social Security paid benefits of $1.133 trillion in calendar year 2021. There were about 65 million beneficiaries at the end of the calendar year.
  • During 2021, an estimated 179 million people had earnings covered by Social Security and paid payroll taxes.
  • The cost of $6.5 billion to administer the Social Security program in 2021 was a very low 0.6 percent of total expenditures.
  • The combined trust fund asset reserves earned interest at an effective annual rate of 2.5 percent in 2021.

For more information, click here.

Teaching Suggestions

  • Ask students if they or their family and friends are concerned about the future of Social Security?  If so, what are their concerns?
  • Ask students to make a list of documents they will need to establish their social Security account.

Discussion Questions

  1. What might be some reasons for the asset reserves to decline by $56 billion in 2021?
  2. Do you agree that Social Security will continue to be a vital part of the lives of 66 million beneficiaries and 182 million workers and their families during 2022?  Why or why not?
  3. What percent of individuals age 65 and older would live in poverty without Social Security benefits?
  4. Would it be better for you to start getting benefits early with a smaller amount for more years, or wait for a larger monthly payment over a shorter time period?
May 21 2022

Digital Investments in Retirement?

Your retirement savings represent years of hard work and sacrifice. The assets held in retirement plans, such as 401(k) plans, are essential to financial security in old age – covering living expenses, medical bills and so much more – and must be carefully protected.  That’s why plan fiduciaries, including plan sponsors and investment managers, have a strong legal obligation under the Employee Retirement Income Security Act to protect retirement savings.  These fiduciaries must act solely in the financial interests of plan participants and adhere to a high standard of care when managing plan participants’ retirement holdings.

In recent months, some financial services firms have started marketing investments in cryptocurrencies as potential investment options for participants in 401(k)s.  At this early stage in the history of cryptocurrencies, however, the U.S. Department of Labor has serious concerns about plans’ decisions to expose participants to direct investments in cryptocurrencies or related products, such as NFTs, coins, and crypto assets.

President Biden’s recent executive order on ensuring responsible development of digital assets highlights the significant financial risks digital assets can pose to consumers, investors and businesses in the absence of appropriate protections. 

Cryptocurrencies can present serious risks to retirement savings, including: 

  • Valuation concerns.
  • Obstacles to making informed decisions.  
  • Prices can change quickly and dramatically. 
  •  Evolving regulatory landscape.

Based on these concerns, the United States Department of Labor has issued a compliance assistance release for plan fiduciaries focused on 401(k) plan investments in cryptocurrencies.

For more information, click here.

Teaching Suggestions

  • Ask students if they, their friends or relatives have 401(k) plans.  If so, has anyone invested in Cryptocurriencies in their retirement plans and what have been their experiences?
  • Ask students to prepare a list of potential dangers in investing in cryptocurrencies or other digital investments.

Discussion Questions

  1. Why is the U.S. Department of Labor concerned about people investing in digital assets for their retirement plans at this time?
  2. Should the federal government prohibit 401(k) plan providers from investing in cryptocurrencies in participant’s retirement plans?  Why or why not?