Make your Retirement Money Walk With You

Planning for retirement is a project that you do for virtually your entire adult life. The earlier you start putting money back for retirement, the better your golden years will be. And if you have been faithful in participating in your employers 401K plan, you can start to some serious money begin to build up as you realize the vesting of the employer matching funds and you continue to make your contributions month after month. It can get pretty exciting when you get those statements and you see your retirement fund really start to take shape.

But your career in business can take a lot of twists and turns along the way. And sometimes you change jobs for a lot of reasons. But the question comes up then, “What happens to my 401K money if I leave before retirement?” The good news is that you don’t lose it. The 401K program is federally monitored and once those funds go in there, they are yours if you are vested in them.

But if you move jobs several times during your career which is very common in the modern business marketplace, if you don’t take some action, you can end up with retirement money scattered over all of your last jobs which is messy and makes for a nightmare to keep track of. It would be better if you can make your retirement money walk with you so you know where it is and you can keep all of your retirement planning funds in one place so you can take advantage of them all at once when you are ready to retire.

When you first leave your employer to go to another company you are given a couple choices of what to do with your retirement funds. One option is to leave them behind to catch up with them decades later when you are ready to retire. In addition to wanting to keep this important asset with you as you travel from job to job, you have no idea if that employer will even be in business when you are ready to retire. You don’t need that kind of uncertainty when it comes to your retirement money.

Another option that is offered to you is to cash out your 401k and withdraw the results. While this may be attractive if you are between jobs, it’s really a bad idea. For one thing, the laws governing the 401k call for you to pay a large penalty if you withdraw them before retirement age. Not only that, once you take that money out of your retirement funds, it’s gone and your retirement planning will suffer a serious set back.

A very good option that is available to you is to roll your current 401K over to your new employer. Now if you left the last job without a new employer either through termination or leaving to start your own business, that may not be an option. If you are looking for a new job and think you will have one in the next year or so, you can leave your 401k money where it is and transfer it later though. In that way, your 401k continues to accumulate as one fund, not many.

But a third option is to roll the 401k money into a tax sheltered privately owned retirement fund. You own this account and you usually have an investment management company helping you with the investment and protection of that money until it is time for you to retire. This is an outstanding option because that investment company works for you so you call the shots about your retirement money. And if you use this option, you can still start with a new 401k fund at your next employer knowing you have a place to put the funds in the event of another change of jobs. And that puts you in the driver’s seat which is a very good feeling when it comes to retirement planning.

Can Your Parents Retire?

Not everybody is as good about getting ready for retirement as others. When you are growing up as children, you always had trust that mom and dad always had good control over their finances. But as we grow older, the roles of child and parent are often reversed.

When you and your brothers and sisters grew up and moved out of the house, it was natural that you would become absorbed in your new lives of raising families of your own and getting your careers established. You may know that there is coming a time when you will take on the responsibility to help your parents make that transition to retirement.

Sadly, as much as you would suspect that they did prepare for retirement, you should not take that for granted. The trials of raising a family with all the financial demands can take its toll on any budget. So it’s appropriate to ask the question, can your parent retire? And if there is any doubt, you should begin looking into how you as their children can help them.

This is a natural first step toward you and your siblings being more involved in mom and dad’s life as they age. Many times the toll that aging takes makes older people less able to plan and perform financial maneuvers with the same skill they had when they were raising you. Be sensitive when you are around them to find out if they can speak intelligently about their retirement and the next step along the way of living a full and rich retirement lifestyle.

One service you can offer to your parents that may be more welcome than you could imagine is for you to start helping them plan their finances and organize their money. It might be true that in many ways, your parent has already started that path into retirement. If dad has stopped working or Social Security is starting to be collected, they may be in that category. But they need some help to lay down the worries of adult life and make the transition to a lifestyle where life’s worries are not such a burden and they can relax and enjoy their golden years.

You might take advantage of the sibling with the strongest financial skills and start to move the handling of your parent’s accounts to a child so they can let that area of worry go. This is where you would work with your parent to get that child the Power of Attorney so they can sign on their account, pay bills and do business on behalf of their parents. And once that is all in place, an organized evaluation of your parent’s retirement preparations can be most revealing.

By helping your parents simply organize the assets they may already have, they may be able to step into a much more worry free life and really start enjoying the fun and relaxed lifestyle that retirement can really mean for them. Along with organizing their finances, there is a lot the kids can do to help mom and dad get ready to become retired people not just in a financial sense but in terms of lifestyle. The biggest transition they will go through and the one they will be the most resistant about will be giving up the house and moving into an assisted living center or retirement community. But as your parents continue to age, having them somewhere that they can get care if it is needed will give everyone more peace of mind about their future.

The best approach to helping mom and dad transition to this move is to put it in the most positive of light. If they are experiencing some physical decline, they may already aware of the danger living alone in that old house might pose. You can use that to get their interest in living in a place where there is always someone to come running in the event they fall or have a medical problem.

But also emphasize the social side of living with other seniors and enjoying their company. By helping them see that retiring in every respect possible is the best thing for them, they will eventually embrace the change. And when they are happily “retired” and enjoying that life, you will know that you kids did the right thing taking good care of your parents the way they took good care of you.

On How to NOT Screw Up Your Retirement Planning

Planning for retirement is something grown ups do. So as soon as you can when you settle into your adult life, if you can get your retirement planning moving, you will benefit from the wisdom of moving on this early in life when its time for you to retire. Too often young people live in a fantasy world that they will never grow old. But short of the worst case scenario of an early demise, everyone is going to get old and its far better to do so with a plan then to “let it sneak up on you.”

This is something you don’t want to screw up. Is it possible to screw up retirement planning? Of course it is. If you speak to senior citizens who did not start planning in advance and got to their senior years with nothing to fall back on and no funds to use so they can step out of the working world and enjoy a more leisurely retirement lifestyle, that is an example of people who screwed up their retirement planning. So it’s good to know the common mistakes people make so you can avoid them.

Probably the biggest mistake that you can make in your retirement planning is to wait to start it until you are pretty close to retirement. If you want to retire at 60 and you don’t start getting ready until you are 55, you will not have nearly as well prepared a retirement package as if you had started when you was 25 or 35. By starting early, you can set back a small amount each month and put it into an IRA, your employer’s 401k or some other retirement vehicle. Then just let that money continue to accumulate and grow and before you know it you are sitting on top of a pretty substantial nest egg.

Speaking of sitting on top of a nest egg, the second big mistake people make is not leaving that nest egg alone. When that retirement investment fund starts to get big, it is really easy to look at it as a way to get you out of credit card debt trouble or to borrow against for some new plan or possession you want. Above all, resist this temptation. If you lose that retirement fund due to foolish use of the funds in your middle age years, you are back to square one with nothing to show for your years of hard work developing that retirement nest egg.

The plan of setting up withholding from your checkbook or a direct deposit to your retirement account of retirement savings allows you to go about your busy life knowing that your retirement planning is underway. This is step one but its not a good idea to never go back and review your retirement plan and see if how you are going about getting ready for retirement well in advance. Make it a regular ritual to sit down and review what is going on with your investment funds. Look at the way your investments have been performing and if you are not getting a good return on those money, make some changes. Remember, just because your retirement funds are being managed by the company you work for doesn’t mean the money belongs to them. It’s yours so be responsible and manage it.

Starting early and staying proactive about your retirement is your best approach to retirement planning and one that will result in a much bigger retirement fund for you to start your golden years with. And by taking good care of your retirement before you need it, you are guaranteeing that it will take good care of you when its time to depend on that fund for a happy and prosperous retirement lifestyle.

Insurance for Your Retirement

If you are like me, it’s easy to get fed up with constantly paying insurance premiums. Writing a monthly check for car insurance alone will drive you crazy. Not to mention the direct withdrawals from your paycheck for health insurance and the hit to your mortgage for home owners insurance and you have a lot of money going out the window to pay for disasters that might not even happen.

But if those disasters do happen, you will be very glad you had insurance. But there is one big life event that is coming that you want to do all you can to prepare for financially and that is old age and retirement. While there is no “old age insurance”, you will find as you do your retirement planning that there are some very valuable insurance policies that are absolutely critical to a retirement life that is enjoyable, safe and prepared for.

We may or may not think of life insurance as part of retirement planning. After all, the benefits of life insurance, at least on the surface are for those who survive you after your death which doesn’t do you a lot of good when you are living and breathing. But you can invest in life insurance that also serves as a long term investment as well. These policies which are sometimes called “whole life” allow the funds you put in to be invested and to build a cash value that you can cash in on when you retire.

So you may want to carry $100,000 insurance when you are in the working world, paying a mortgage and trying to get the kids through college. But if you can then hit retirement, cash in on the investment value of that insurance and spend your golden years with just enough insurance to cover some protection for your spouse and funeral expenses, that is a better way to organize your insurance programs.

Another layer of insurance that a lot of people are taking advantage of is Medicare supplement insurance. Medicare is a great program that benefits a lot of people. But Medicare can only go so far. Those corny commercials for Medicare supplement insurance are goofy but they are on target that you need to have another safety net in the event you find yourself needing more extensive medical coverage than Medicare can provide. If you took the time to set up this kind of insurance early in your retirement planning, it will pay you big time when the need is there during your golden years.

A level of insurance that can be one of the biggest blessings if you become ill in your elderly years is in home health care insurance. Many times illnesses that you endure due to old age are not the kind of thing you would want to get through in an expensive hospital room. You will recover more quickly in your home but you still need someone to make sure you get your medications, take care of the little life details that you cannot tend to when you are poorly and be there if you take a turn for the worst.

This is where the care of an in home nursing service can be so valuable. This insurance can enable you to have care with you right in your home which will give you the care you need and take a lot of worry and work off of your family. And since all senior citizens need medical care at some point in their retirement life, in home health care insurance is a must.

By setting up these different specialized insurance policies early enough in your working life, you can get some value into them when the time comes for you to retire. Then you can you enter retirement with confidence knowing you have policies with reliable insurance providers to take care of the needs that you expect to come up during your golden years.

Heading off the Dreaded Nursing Home Nightmare

When you are looking down the road to retirement, the images that spring to mind can vary from the pleasant and fun to those of fear of the unknown. The image we get from the front cover of AARP magazine is one we want to envision for ourselves for our golden years. That idea of retiring in luxury to a life of golf, maybe roving the country in an RV or pretty much living on cruise ships is fun to look forward to and let it bring a smile to your face even if retirement is a ways off.

But many people in those years leading up to retirement also have to be of assistance to aging parents and you see the realistic side of the golden years as well. So that changes how you think about retirement and how to prepare for it. On the darker side of thinking ahead to retirement and the years of decline, there is one dread that outweighs all the others pretty much universally. That is the dread of ever having to go to a nursing home.

The concept of the horror of a nursing home has not been helped in our modern times by stories of nursing home abuse and horrible experiences older people have in those institutions. So the idea that we all might end up in such a place can be quite terrifying and create a lot of anxiety about ever retiring and letting someone take over your care that might put you in a nursing home.

Many of the terrors of nursing home life are the result of myth and stories and the media who love to portray nursing homes as torture chambers, But if the fear of a nursing home gets you in the mode to prepare for retirement and start doing your research well in advance, then that is a good fear because it is mobilizing you for doing something good for you and your family.

The good news is that a lot has changed maybe even since you had to deal with nursing homes when your own parents were aging. There are a lot of new formats for where an elderly person might go live once continuing to live alone in their house stops being an option. It is no doubt the surge of elderly people into the system caused by the graying of the baby boomer generation that has fueled a revolution in elderly car. Now there are all kinds of levels of care and the kinds of places you can look forward to spending your golden years in may resemble an apartment complex or resort more than a nursing home.

You can do a lot to reduce your anxiety about retirement by starting now and going to visit some of these retirement apartment complexes, assisted living centers and senior centers. You will be pleasantly surprised at how nice and comfortable the options are out there that you can look forward to taking advantage of in your retirement years.

But there is another important change in how you view retirement that looking into alternatives to nursing homes will bring about as well. That is the area of planning to finance these kinds of retirement options. There are many forms of retirement insurance and you may already have started paying on a policy that would provide care for you in a nursing home or a place where medical care was available in the event you had a medical decline in your golden years.

By getting a good idea what kind of facility you might prefer once it is no longer feasible or desirable for you to keep a full house going, you can anticipate preparing for that move financially as well. You can check on your insurance and if the funding you have set aside for retirement will not help out with assisted living centers, make those changes now so that insurance can accumulate value for you.

The administrators at assisted living centers can help you prepare for your move to their facility. They will be thrilled to meet someone thinking that far in advance about your future needs and because these folks are in the business of helping people like you and I move comfortably into retirement, they can help you know about programs, financing and other ways you can prepare so you are fully ready to go to a wonderful future.

The Hidden Dangers of Retirement

We can all remember a time when we took the children to some event or theme park that was supposed to be “totally awesome”. Then when the kids get there and see that Mickey Mouse is a guy in a suit and that the rides are about the same as the local Six Flags, an inevitable let down and disappointment sets in. And that is no fun for the parents on the trip home when all of those expectations did not come to pass when the kids came face to face with reality which did not line up with their dreams and hopes.

But sometimes even adults can be guilty of letting dreams and images of a golden time ahead get the best of us. We often develop a mythology of how retirement will be when we get there and when that retired life actually starts, there are some real, down to earth adjustments that need to be made. So if you can know some of the hidden dangers of retirement in advance, it is so much better to go into retirement with your eyes open and have realistic expectations.

There are two negative reactions to the sudden shift of lifestyle in retirement. They are loneliness and boredom. Even if you are going to be home all the time, there is no question that once you stop going to an office or having regular responsibilities, you can often feel a sense of loss and grief because you miss the people, the regular human contact and the fun of being out and that can result in loneliness that can get pretty chronic.

For men especially the feeling of boredom can also set in pretty fast when the challenge of the work world goes away. In a lot of cases, men live for their jobs and when that world goes away, there is a sense of disorientation and not knowing what to do with themselves that is disconcerting for the family and for the retired man himself. You may have been looking forward to a less stressful life only to find that it was the stress that makes you tick and without it, you feel adrift in life with no direction or goals.

Both of these problems can be addressed by not letting your retirement life be to idle, at least not at first. You can fill your life up with volunteering, getting busy with family or by getting involved socially with other retired people. One area of volunteering that can go a long way to replace the gratification of the work place is to work with habitat for humanity to help build homes for people who cannot afford a home any other way. Both retired married partners can find ways to pitch in and it gets you out with people doing things that are worthwhile.

Give yourself time to get used to the idea of retirement and to the new lifestyle. It should be a simpler lifestyle because your responsibilities are reduced and you have more time on your hands. Be aware that if you and your spouse are suddenly around each other every day and every hour of the day, that is going to create new stresses which can also qualify as a hidden danger of retirement. By being aware that this is not the fault of either spouse but a natural reaction. The best response is just to get out and do things separately and create that natural space you are both used to more often.

There will be a natural down time when you first retire and treat the first month like vacation. But don’t stay on vacation. Let your ambition and zeal for life find new outlets. It will be fun and exciting to see where it takes you and that is what retirement is all about.

Conquering the Skill of Saving for Retirement

There is no magic to getting financially ready for retirement. We all wish we could come up with some amazing way to put money back for retirement such as the famous genie in the Aladdin’s lamp. But if that genie came up and we asked him for a way to get ready financially for retirement, his answer would be short and to the point – “Start Saving!”.

But for millions of people in the working world, it’s hard to save. You need every dime you have to pay the bills, get the kids through their dentist bills and clothes for school and have a little left over at the end of the month for matinee movie with a small popcorn. So how can we ever find a way to put money back for retirement under these circumstances?

The key to savings is to take advantage of changes in your income to start a savings program. For example when you start a new job with a new salary. Before you get used to that paycheck, set up a direct deposit of a small amount of money into a tax deferred financial fund such as an IRA. The money goes straight in there and you never see it in your paycheck. The funny thing about how we all think is that you live up to the level of money you are getting. So if you never see that $50 or $100 in your paycheck, you will adjust your lifestyle accordingly and suddenly you have a program in place to save for retirement.

You can apply the same principle to payments you may have automatically deducted from your account. If you are paying a car payment or you have a health club due taken directly out of your account, when those things come to an end, think about whether you want to see those direct withdrawals stop entirely. If you are not used to having that money in your budget, you may be able to have your bank direct deposit some or all of that amount directly into your retirement account.

Just think how great it would be if you could put a car payment a month into retirement savings. You would see a very significant amount of money build up in that account in no time. And when you start seeing the financial reports start coming in from your bank or whoever is managing your retirement funds and you see it really start to build up, the vision of a secure retirement future for you and your spouse will begin to become a reality for you.

Another fun way to build up that retirement account is to make a project of it. You and your spouse could take on the challenge to do some form of contract or temporary work every month or so and put all of that money into your retirement fund. Maybe he can go out with friends and cut wood and sell it around town for firewood. Maybe she could use her artistic skills to make original art works and sell them at the local crafts fair or flea market.

There are lots of ways each of you can find odd jobs or part time employment just to build up that fund. You can work department stores at Christmas time or sign on with Manpower and go on one day assignments every once in a while. You can even find ways to make money on the internet if you have technical skills. Tap your talents and find that work and the amazing thing is that it will be fun because this is not working extra because you are in financial trouble. It is building for a secure retirement together and making it a challenge and a game is a way of putting your creativity into the process.

Getting a Professional into the Act

Do you see planning for your retirement as your responsibility or something someone else should do for you? That is a pretty shocking question isn’t it? It is the kind of question that makes it sound like if your retirement funds are under the care of your employer, that you are not being a responsible person.

Of course that is not the purpose of the question. If you have taken the step of participating in your employer’s retirement program or 401K, then you are definitely showing plenty of personal reasonability for your retirement planning. But when you think about it, what happens to your 401K funds once they are given to your employer? Most of us don’t know. We know that we get statements that show that what we invest is gaining in value and that the principle is safe and for us, that is often enough.

But it is easy to trust your employer that the funds are being managed well and that it all will be there when the time comes for you to use that 401K for retirement. The truth is that your employer probably has nothing to do with how well your retirement portfolio performs once the funds are taken out of your paycheck. In most cases, your employer hires a professional retirement planner who invests those funds to give you at least a modest return on investment. And that service is also taking a fee from your funds which is something that is done without giving you the chance to evaluate if they deserve the money they are making.

You have some rights when it comes to your retirement funds. So part of your rights is to see that people that work for you, such as a retirement planner, know what they are doing and are held accountable on a regular basis for the outcome of their financial management of your retirement funds. At the employer level, you probably won’t fire the financial planner. But you can demand to meet with them and communicate your financial plans. You can get a name of is responsible for what happens with your money. And if you find out who they really are, you will have more success in getting them to be accountable to you.

But you may also find yourself engaging a financial planner for funds that fall outside of employer 401K plans. For example if you leave a job, you can roll your 401K into a private IRA account and engage a financial planner to invest that money so it continues to grow steadily until you need it at the time of retirement.

Develop some standards by which any retirement planner you engage must be judged. A good way to pick a good financial planner is to use people you know and trust to give you guidance. If family members or close associates already are using a good financial planner, get that person’s name and phone number and schedule an interview. You can also find out if your bank, insurance company or credit union provides this service. They already work for you the good reputation of these trusted financial services people can pay off when you use them for financial planning for retirement.

Put some time and effort into researching if the retirement planner you are considering is capable and has a good reputation. They should have no trouble giving you references and documenting their success to show you that they can be trusted to take good care of your retirement funds. And if you do some up front due diligence, in the end you will be able to entrust this important resource to them knowing they are good stewards of the money that is going to give you a happy and peaceful retirement life.

Avoiding Retirement Shock

Have ever talked to someone who when speaking on the subject of retirement acts like it is a death sentence? For many the idea of not working and stepping down into the life of retirement with fewer daily duties is frightening and something to dread. That is why a big part of retirement planning involves getting emotionally ready for retirement so there isn’t a huge shock when all of a sudden you are a man or woman of leisure.

There is a term from the world of scuba diving that refers to a medical problem that happens when a diver returns to the surface to fast and the shift from high pressure to lower pressure of the world above the water is too fast. It’s called “the bends” and it’s a serious medical moment. Well, we don’t want to get “the bends” when we leave the high pressure world of work and achievement for the low pressure world of retirement and a life of ease.

So to avoid retirement shock, you should start well ahead of you retirement party getting ready for that lifestyle. The worst thing you can do is wake up on the first day of your retired life with nothing to do and that feeling of emptiness and loneliness because you miss your old life and have no plans for how to fill the hours and days that lay ahead in your life as a retired person.

One way to avoid retirement shock is to do a bit of daydreaming about all the things you want to do once you are retired. Many of us put off creative interests and adventures we might have pursued except as a member of the working world, a parent an active participant in school, church and civic groups, there is just no time for that before retirement. But now that you have laid down so many of those responsibilities, give yourself permission to throw yourself into a creative hobby to let that side of you out to grow and mature.

Another great coping mechanism so the shock of moving into retirement isn’t so severe is to continue to work at a reduced pace. If your employer values your decades of experience and devotion to duty, they may put you on in a part time capacity to come in and help the young people learn the ropes and learn the lay of the land of the business world. You know that landscape well so you can be of real value to make that transition a success.

Retirement is also a time when you can travel and spend more time with family and friends. If you always wished you could be available to baby-sit the grandchildren, now is the time. Your kids not only will love having free child care while they go about dealing with their busy lives but you will enjoy getting to know your grandkids and maybe being a kid with them for an afternoon as well.

Volunteering is another great way to fill all of that extra time you now have on your hands. By keeping busy helping worthy causes, you keep your self esteem because you are making a real difference in the lives of others and for your community. You can meet so many wonderful people while volunteering and the social side of it keeps you young and overcomes loneliness which is a big problem when you first enter your retirement years.

By laying out plans to enjoy a hobby, continue to work part time or volunteer when retirement starts, you can get rid of that sense of dread that you may have about your upcoming retirement. Instead start to get excited about this new phase of life and the new life that lies ahead of you in retirement.