living in retirement: the next phase of your life the golden years chapter 8
TRANSCRIPT
Living in Retirement:The Next Phase of Your Life
The Golden Years
Chapter 8
What to Expect from Traditional Pension Plans Reasons traditional pensions have never
provided so much support for the following reasons:– Many women work in the service sector and in a
small business where pensions are less common. Small retail organizations might fall into this professional sector – even more of a reason to invest in an IRA.
– Many women work part-time, which can be excluded from pension plans
– Many women don’t stay in a job long enough to qualify
– Many women earn less than men even when they are covered
How to Make the Most of Your Husband’s Pension Federal law requires that company pension
plans offer survivor’s benefits. Be aware of the pension payout plan that
you select. For example, electing a survivor’s benefit reduces the pension you and your husband receive during his life, but you would continue to get payments after his death. Conversely, you might want to NOT select this type of payout while you are alive.
Social Security: The shortest leg of the stool and its impact on income for women The demographics:
– For 77 percent of unmarried women (widowed or divorced) who are 65 and older – social security represents more than half of all income
– For roughly 30 percent of unmarried retirees, it is the only source of income
What does this mean? Women rely on social security which puts them in a particularly vulnerable position considering that they work less, are less likely to have a second income, and are less likely to have built up years in the “system”
Average payouts in 2006
For someone who retires at full retirement age, the maximum payout is $2053 per month or $24,636.
The average payout is considerably lower at $1,002 per month.
This amounts to about 43% of pre-retirement earnings for the typical worker
For the maximum worker the average payout will replace about 30% of income
Note: These figures haven’t even experienced the “great drain” from the “Baby Boomers”
What you are entitled to:
You must work and pay Social Security taxes for at least 10 years to qualify for retirement benefits in your own name. Working part time and being self employed can count towards benefits as long as you report them.
To calculate your benefit. The Social Security Administration takes into account your highest-paid 35 years of employment– If you have less than 35 years each year not
worked will be counted as zero and will adjust your benefits accordingly
What you are entitled to:
If you have never worked, you are entitled to 50% of your husband’s benefit.
If you have worked, you will qualify for the larger of the two – 100 % of your own and 50% of his.
You can qualify for benefits if you are widowed or divorced (10 years) of if you are widowed and have unmarried children under 18, they might qualify for survivor’s benefits.
Of note: retirement ages are creeping up Check out your annual social security statement that
the gov’t mails out each year to help you determine an estimate for what your income will be.
What You Can Count On – The Looming Question for Gen Xer’s If you’re 55 or older:
– You’ll be insulated from any major changes to the system. Plan on getting roughly what your Social Security benefits statement now indicated
If you’re 40 today:– You’ll still collect benefits. But you can expect
around a 10% cut If you’re 25 today:
– At the very least you should count it as a safety net. It’s not unreasonable to expect a 20% cut in projected benefits. The bottom line for Gen Xer’s – don’t count on it for primary income source--- only as an enhancement.
New Retirement
Retire on the House– Many Americans are taking out reverse
mortgages that let them borrow against their home equity and forgo repayment as long as they stay in the house
It Pays to Stay on the Job– Staying on the job just 2 years longer can
lower the amount you need to retire by about 25%
Your Talents Are Your Greatest AssetsAbout one-third of retirees return to the
paid labor force after an average of 18 months, according to a study by Putnam Investments.
It’s all about remaining connected, vibrant and useful.
A Simple Retirement Workout
Start Early Take a calculated risk Don’t cash our your retirement plan if you
switch jobs Open a self-directed retirement plan if you
have income from self-employment Open a spousal IRA if you’re a stay-at-home
mom Check your Social Security Record so you
know how much you are entitled to
A Simple Retirement Workout
Catch up when you can. Don’t give up your right to your husband’s
traditional pension – The magic number is 10
Make sure you’re the primary beneficiary Get your fair share after a divorce
– Make sure its on the table during a settlement Get your fair share after a divorce
– You can collect either your Social Security Benefits or half of your spouses
Claim widow’s benefits from Social Security in the event of your spouse’s death
Don’t Stop Now!
Learn the rules of your company pension plan so that you don’t inadvertently penalize yourself.
If you’re married, make sure you’re entitled to a share of your husband’s retirement benefits.
Double-check your employment history shown on your annual estimates of SS benefits
Consider a reverse mortgage Plan on part-time work or even a second
career after you “retire.”