William Penn Life, 2016 (51. évfolyam, 1-12. szám)

2016-02-01 / 2. szám

Moneywise with Bob Bisceglia, Notional Sales Director

Retirement saving strategies

for Baby Boomers

THE BABY BOOMER GENERATION (those born roughly between 1946 and 1964) are entering into the next phase of their lives: retirement. This group of retirees will seek an unprecedented amount of adventure, travel, creativity and, quite often, new business pursuits. While these boomers attempt to redefine traditional retirement and aging, will they be able to finance these adventurous plans?

Many people find themselves financially unprepared for retirement and shouldn't count on working longer to make up the difference. According to a recent study by the Employee Benefits Research Institute (EBRI), more than one-fourth (28 percent) of all workers over the age of 50 say they have less than $1,000 in savings and investments (not including traditional pension plans or their primary residence), and over half (57 percent) stated that they have less than $25,000 saved.

Often, people say they will continue working until later in life, but the survey also found that half of retirees actually left the workforce earlier than planned due to health reasons or changes in their company, such as downsizing or closure. In fact, two-thirds of workers say they expect to work during their retirement years, but only about 23 percent of retirees report that they have ever worked during retirement.

If you are in this age group and find yourself facing the possibility of having an underfunded retirement, it's not too late to take charge. There are plenty of things you can do right now to get on the right track. Here are some thoughts:

• What's it going to take? First, estimate how much income you will need in retirement, taking into account any changes in your lifestyle that may occur. The study revealed that 60 percent of workers spent eight hours or more last year planning their vacation, while only 34 percent said they spent that much time planning for the longest vacation they will ever take—retirement. Many planners say that you'll need 60 to 75 percent of your current income to maintain your lifestyle, but each person's needs are unique and different.

After figuring out how much income you will need, deduct any income that you will have available, such as social security, company pension plans and savings designated for retirement. Multiply this number by your life expectancy and you'll come close to your total need (don't let that number scare you).

• Create a plan. Examine your spending habits and make a budget to allocate more income towards your retirement goal. Saving as little as $20 additional per week will go a long way toward helping you reach your goals.

• Pay down debt. A little more than half of working Americans over age 50, and nearly a third of retirees

KStöS» vJSr***

WWmqs . cafV

'•«a securwWoJl5 /

indicate that they struggle with savings due to their high levels of debt. Make every effort to enter retirement free of non-essential debt.

• Use all available sources of retirement savings. If your employer offers a retirement plan, such as a 401k or 403b, contribute as much as possible. The contribution limit for 2016 is $18,000, and those over the age of 50 can contribute an additional $6,000. Many employers will match your contributions up to a certain limit, so be sure you take advantage of the maximum employer match.

One effective strategy is to start with whatever you can afford to contribute this year, then increase your contribution by one percent (or more) each year. The difference in your take home pay will be so slight you'll barely see any difference.

• Take the initiative. No employer plan? Consider contributing to a traditional IRA, Roth IRA or a "non-qualified" annuity. You can open one of these with William Penn Association for as little as $10 per month. Traditional and Roth IRA contribution limits for 2016 are $5,500 if you're under age 50, and $6,500 for those over age 50.

Your WPA agent can help explain the differences and, as always, consult your tax advisor for tax advice.

With all of the above options, time and compounding of interest will be on your side. Each year that your savings remains untouched gives them more time to compound and grow. With a few steps in the right direction, starting this year, you can have the resources available to help redefine traditional retirement as we know it.

Still think it's too late to get started? Call your WPA agent to start planning for your retirement today. It's never too early...or too late. Don't have an agent? Call the Home Office, and we'll have one assigned to you.

4 0 February 2016 ° William Penn Life

Photo © Can Stock Photo Inc./kbuntu