Tag Archives: retirement planning

May 3 2025

Tapping Your Nest Egg

Consider how and when to take money out of your investment accounts.

Consider whether rolling over a retirement account makes sense for you. For example, it might make sense for you if you want to consolidate multiple retirement accounts for convenience but it might not make sense if you will pay more in fees after rolling over your account. Rolling over money from one retirement account to another is a very specific process. If you don’t follow the rules, you may end up having to pay taxes. Visit the IRS’s website to learn more about rollovers at Rollovers of Retirement Plan and IRA Distributions.

When you need to take money from your account – called decumulation – consider how much you need to take out and when to take it out. This can include any RMDs (required minimum distributions). Be thoughtful regarding which assets you sell. Consider how selling those assets will affect your account’s diversification and whether you will need to rebalance your investments. Also consider any tax consequences, especially when taking money out of a tax-sheltered retirement account.

Never Stop Learning Tip: Create a plan for how and when to take money out of your investment accounts. Revisit and review the plan each year after you prepare your taxes.

For more information, click here.

Teaching Suggestions:

  • Refer students to the Retirement Planning chapter:  Dipping into Your Nest Egg.  Ask students when and how should they draw money from their nest egg?
  • Is dipping into your account wrong?  Why or why not?

Discussion Questions:

  1.  Why is it important to revisit and review your plan each year?
  2. How do you decide which assets to sell?  Why is it an important consideration?
Feb 1 2025

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.

Because this decision will affect your financial future, here is some information to help you make an informed choice. 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
Benefits-You 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 beneficiary		-You 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
Risks-Annuities 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 bills		-You may outlive your retirement funds
-It’s your responsibility to manage the money to provide you

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

For more information, click here.

Teaching Suggestions:

  • Ask students what type of annuity would best fit their financial situation and what payout option would they choose.
  • Ask students to discuss all of their possible options with an insurance agent.

Discussion Questions:

  1. Why should you consider your health in making a choice between an annuity and a lump sum payment?
  2. What are the possible benefits and risks of making “annuity versus lump sum” decision in your own financial situation?
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?
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?
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.
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?
Apr 9 2022

Lost Your Social Security Card?

Consider whether you really need to get a replacement card. Knowing your number is what’s important, after all. You’ll rarely need the card itself — perhaps only when you get a new job and have to show it to your employer. If you really must replace your card, go to www.socialsecurity.gov/ssnumber before visiting your local Social Security office.

The first step is to learn what documents you need. The Social Security Administration requires a U.S. driver’s license, a state issued non-driver identification card, or a U.S. passport to prove your identity. Sometimes you may also need to prove your current U.S. citizenship or lawful noncitizen status with a birth certificate or passport.

All documents must be either originals or copies certified by the issuing agency. The Social Security office won’t accept photocopies or notarized copies of documents. They also can’t accept a receipt showing you applied for the document.

Once you’re clear on what documents you’ll need, the second step is to print and fill out the Application for a Social Security Card.  Finally, the third step is to bring or mail your application and original documents to a Social Security office. Then, the online process will take you to a screen where you can find the address of your local office.

In some areas, you can request a replacement Social Security card using your online my Social Security account if you meet certain requirements. Simply access your account and follow the instructions to replace your Social Security card. It’s safe, convenient and secure.

You can replace your Social Security card for free if it’s lost or stolen. Avoid service providers who charge you a fee to get your replacement card. You’re limited to three replacement cards in a year, and 10 during your lifetime. Legal name changes and other exceptions don’t count toward these limits. Changes in immigration status that require card updates may not count toward these limits. Also, you aren’t affected by these limits if you can prove you need the card to prevent a significant hardship.

The Social Security office will mail your card as soon as all of your information has been verified. Your replacement card will have the same name and number as your previous card.

For more information, go to:

So You’ve Lost Your Social Security Card

Teaching Suggestions

  • Ask students if anyone has lost his/her Social Security card.  If so, did they replace it?  Why or why not?
  • Under what circumstances should you replace your lost Social Security card?  Explain.

Discussion Questions

  1. What steps must be taken to replace a Social Security card?
  2. Why must all documents be original to be submitted to Social Security?
May 30 2020

What You Should Know About Applying For Retirement

Approaching and preparing for retirement can be a daunting task, but Social Security makes it as easy as possible. Social Security has eliminated the forms, signatures, wait time, and appointments. The agency has now made it easy, convenient and secure to apply. You can complete online retirement application in as little as 15 minutes from your preferred location, at a time most convenient for you.  However, before you apply, consider how you’ll like to receive benefits, your health, and whether anyone else in your family can get benefits on your record.

The age you choose to retire affects the amount of benefits you receive and when you can start receiving them. If you start them any time before your full retirement age, Social Security reduces your monthly benefit. Depending on your year of birth, your full retirement age is likely between age 66 and 67. You may start receiving benefits as early as age 62 or as late as age 70.

If you elect to receive benefits before you reach full retirement age, and continue to work, it can affect your benefits. The Retirement Estimator  calculates a personal estimate of how much your benefit will be at different ages and “stop work” dates. You can use it to find the best combination for your situation.  You can read about other things to consider before you make your decision about when to begin your benefits. If you’re ready to apply, you can do it online.

For more information, click here.

Teaching Suggestions

  • Ask students to debate the statement, “It is never too early to begin planning for retirement”.
  • What information will you need when you apply for retirement?

Discussion Questions

  1. Why is it important to start retirement planning when you are still young?
  2. Would it be better for you to start getting benefits early with a smaller monthly payments for more years, or wait for a larger monthly payment over a shorter time period?