Am I Ready for Retirement?

Today, more seniors are working in retirement due to lack of retirement income. While retirement planning is the key to a successful strategy and money management, those who haven't reached their goals may decide to stay in the work place until they have acquired more money. Here are some questions to ask when evaluating whether or not you are ready for retirement: · Have I reached my financial goals as laid out in my financial plan? · What will my expected income needed be for my retirement? · Have I put money aside for unexpected medical expenses? · Am I going to live a lifestyle that is unrealistic for my financial goals (traveling, dining out, vacationing) It is important to have a realistic expectation of your retirement financial needs so that you don't run out of your money

IRA or 401K: Which is Best?

Living in retirement successfully will depend upon making the right financial choices. Many people want to know if they should invest in a 401k plan or an IRA. The difference between the two is quite simple. A 401k plan is offered through your employer and an IRA is self-directed. Both plans have advantages because they are tax shelters. If you are working, and your employer offers a 401k plan, then you should take it. If you are not working or do not have a 401k, then you should begin your financial planning for retirement with an IRA. There are many different IRA plans; you should consult with your financial planner to determine which one is best for you.

Do You Need a Financial Planner?

A Financial Planner can help you with your retirement investment planning. If you have many investments, then you should also consider seeking the advice of an Investment Adviser. A Financial Planner may be registered with the Registered Financial Planner Institute. You may need a planner who can help with your estate planning, or someone who can help you with your stocks and bonds. There are many different planners, brokers, and advisers. Be sure to check the background of any planner that you are considering with the U.S. Securities and Exchange commission.

Am I Eligible to Establish a Roth IRA?

If you pay income tax and are a United States citizen, then you qualify for a Roth IRA. You can only fund your Roth IRA with the following tools:
· Your own personal contributions
· Your spouse's personal contributions
· Transfers
· Rollovers

You must go through a financial institution that has bee approved by the IRS to fund a Roth IRA.

Long Term Health Care Expenses and Insurance

Medicare and most health insurance plans will not cover long term health care expenses. This has left many seniors needing to find coverage for the expense of nursing home care as well as other residential facility centers (assisted living and adult day care centers). It has been estimated that it costs over $60,000 for just one year at a nursing home. The need for long term health coverage has led many financial underwriters to offer long term care health insurance. Not every long term insurance plan is the same, so make sure that you choose the plan that offers the desired benefits that you need. Many major insurance companies offer Long Term Care health insurance, for instance the Metropolitan Life Insurance Company offers a plan.

Accounting Methods For IRA Beneficiaries

If you have multiple beneficiaries for your IRA account, you can spare them from imminent hassle by establishing a separate account for each beneficiary. Many multiple IRA beneficiaries elect to use the life expectancy option, in which case distributions are allotted according to the life expectancy of the oldest beneficiary. Take the case of Ralph, age 63, Ellen, 45, and Richard, 25. Without separate accounting, all must accept the same total distribution of the oldest of the three, Ralph, whose yearly distribution amounts to $20,000. This means that Ellen and Richard will be subject to higher income tax than would be the case if their individual life expectancies were the deciding factor. With separate accounts, Ellen and Richard would have this option and pay less tax. This would give them more flexibility in financial planning and much longer periods to enjoy their IRA distributions.

Are Credit Cards Delaying Your Retirement?

Preparing for retirement involves careful planning, budgeting, and sticking to your goals. By working with a Financial Planner, you can use many retirement planning tools to help you create a plan and assess how much you will need when it is time to retire. It is very important to save enough money so that you will be able to retire when you are ready. One of the biggest areas where people often neglect to realize they are wasting money is through the use of credit cards. Many credit cards have astronomical interest rates that in the long run, drive the price of regular household purchases up. Now instead of spending a reasonable amount of money for groceries, you have spent a high price. These prices can hurt your savings. An effective way to save for retirement is to use a budget calculator, to stick with the plan, and to minimize credit card spending.

Pension Plans and Retiring Early

If you would like information regarding early retirement and its effect on your Pension Plan, then you will need to read your Summary Description Plan to determine the exact specifications of your Pension Plan. Every employer can set the limits in their company's Pension Plan but they must follow state and federal guidelines. Every company has a different plan, so it is imperative that you read and follow the requirements of your particular plan. The Summary Plan Description is required by law to be administered to you, so you should have no problem receiving it and reading it over. If you are unable to receive a copy of your Summary Plan Description, you can contact the Department of Labor and request a copy.

401k Plans and Matching Contributions

You're never too young to start retirement planning. Ask your employer what type of 401k plans they have to offer and if they have matching contributions. Your 401k plan is “pre tax” money and not considered your income. It will continue to grow and isn't subject to taxing until you withdraw your funds. There are limits however, as to how much you can defer or put towards your 401k plan.
For 2006, the limit is $15,000. However, if you are over the age of 50, you are given a limit of $20,000. You should make sure that your company is contributing or matching your 401k plan with cash dollars, sometimes they will match your plan with stocks. If you aim for cash in your retirement, then double check with your employer.

Health Care and Medicaid

One out of four Americans relies on Medicaid, and seniors are a growing number who use Medicaid to cover their long-term health care expenses in retirement. Unfortunately, many Americans who are receiving Medicaid were recipients of Health Care benefits at one time. Unforeseen circumstances such as divorce, death of a spouse, or loss of income can cause someone to lose their health care benefits as well as change their income to low or poverty levels. Medicaid benefits vary from state to state, however Medicaid will typically cover long term health care expenses, doctor's visits, and prescription medications. If you believe you may be eligible for Medicaid benefits contact your local health department for information on receiving Medicaid benefits.

Beneficiaries: Avoid IRS Penalties

If you are the beneficiary of an Individual Retirement Account (IRA) you should be alert to possible penalties that could be inflicted by the Internal Revenue Service (IRS). For example, if you are an IRA beneficiary and decide to use the Life Expectancy method for distribution of your share of the assets, your distributions must begin no later than December 31 of the year following the death of the IRA participant. If the full portion of the money due to you as of this date is not distributed to you, then you will be subject to what the IRS calls an “excess accumulation penalty.” This is quite punitive, amounting to a full 50 percent of the distribution amount. But you do have an important money-saving remedy. The penalty will be waived if the total amount of all the money due you is distributed to you by the fifth year following the death of your benefactor, in other words by using the Five Year Rule.

How can I Withdraw From my 401k Plan?

You may be able to apply for a loan against your 401k plan. Many people prefer this option because there are no penalty fees or taxes due, depending on the loan's purpose. If your 401k plan will not allow you to take a loan, you may be able to apply for a Hardship Withdrawal. The IRS has determined that the following categories constitute a Hardship Withdrawal:

· Down Payment for a Home

· College Tuition (for self or dependents)

· Unpaid Medical Expenses

· Preventing Evictions or Foreclosures



If you believe that your situation falls into one of these categories, consult with your Human Resources department or your financial services provider. You may be able to withdraw from your 401k plan. Every 401k plan is different and various companies have different rules and regulations.