Planning For Retirement

Frequently Asked Questions

1. QUESTION:
   For people planning retirement: What is for you either appealing, or scaring, about retiring in Mexico?
   And how important is for you a location by the sea? Would you consider to retire in an inner mexican city?

   • ANSWER:
     We have been travelling to Mazatlan for the past 25 years and although not planning to retire there – we love our Candian summers – we will be going on extended (3-4 months) visits annually when I retire in 2 years.

     We rent in a quiet residential neighborhood about 6 blocks from the beaches and find the neighbors friendly and welcome us back when we return every year.

     We have been going in February and it is normally dry and sunny every day; the ocean breezes cool in the evening (after 4:00 pm).

     MZT is a thriving urban area and most goods that we get in canada we can get here.

     We can shop at supermarkets or the local green grocer (for fruits & veggies).

     The climate has changed somewhat to more moderate – not hot and sweaty in the evenings – Dec/Jan/Feb now cooler (highs 25-28 lows 13-16 C)

2. QUESTION:
   What is the right time to start ‘Retirement Planning’ ?
   When should one start planning for retirement years and what is the best retirement plan?

   • ANSWER:
     Start as soon as you start your job. Find out what kind of retirement plans the employer offers.

     The three major elements of your retirement portfolio are benefits from pensions, savings and investments, and Social Security benefits.

     Each year the Social Security Administration sends you your personal Social Security Statement, which gives you an estimate of the monthly benefit amounts you and your family may qualify for now and in the future.

     Once you’ve reviewed your Statement, you may want to explore a variety of retirement scenarios using a range of assumptions about your future earnings or when you stop working.

3. QUESTION:
   How to transfer the US-based 401k account balance to a 2a or 3a retirement planning account in Switzerland?
   The company I worked for in the U.S. is closing down the 401k plan. I moved back to Switzerland and would like to transfer the funds from this US-based 401k account back to a retirement planning account (so called 2a or 3a) without incurring taxes. HOW DO I DO THIS?

   • ANSWER:
     You cannot. That 401(k) is pretax money and sooner or later you will have to pay U.S. income tax on it.

4. QUESTION:
   Retirement planning for American expats?
   When Americans live in other countries (and work for foreign companies), what do they do for retirement planning?
   The U.S. has tax treaties with many countries that avoid double taxation on incomes up to (about) ,000, so assume it is one of those tax treaty countries.

   • ANSWER:

5. QUESTION:
   Retirement planning and options at age 26?
   I’m 26, Single, Male earning about 3 lac p.a. in Delhi, India

   I wish to start planning and investing / saving for retirement ASAP.

   Can someone guide me with best retirement plans that I can consider and various other options that too should be included for a safe and healthy retirement corpus.

   Consider me not doing any investment right now and give your answers for a starter in Job.

   • ANSWER:
     You are someone in the initial years of your career. I am glad that you are asking these questions now. There is nothing like starting early, in your investing life and use the power of compounding to your advantage. To understand power of compounding, consider this excellent article at http://www.valueresearchonline.com/story/h2_storyView.asp?str=4007

     Next, you can invest in a mix of the following strategies, depending on your investing risk profile, as indicated below. Invest only those funds that you do not need. Get in the habit of saving 30-35% of your salary regularly. Create an emergency fund, roughly equal to 4-6 months of regular monthly expenses. Once this is covered, you may have funds that you will not need say for next 3-5 years for regular or emergency expenses. Use these funds to invest wisely. You need to remain invested for the long term, since you want capital growth.

     Conservative Risk Profile (you seem to be of this type; someone who wants his principle to be secure and is looking for a decent growth over the long term)

     1. PPF (Public Provident Fund) – account can be opened with any State Bank of India branch. This gives you a compounded 8% return per year, is currently tax free, and is the safest instrument available. Invest 50% of sparable funds in that

     2. A Balance fund like HDFC Prudence Fund – This Mutual Fund invests in both equity (65%) and debt (35%) instruments. This is one of the safest funds with a great track record of over 14 years, and has been giving a compounding return of around 20-25% per year. This fund has one important virtue: it manages to lose less than the category average in periods of downside. Couple this with its tendency to top charts & you get a safe & sure fund in HDFC Prudence. Invest 30% of the funds in HDPC Prudence.
     check out HDFC Prudence fund analysis at

     http://www.valueresearchonline.com/funds/fundanalysis.asp?schemecode=600

     3. Equity Diversified MF -like SBI Magnum Contra, Reliance Growth.
     These are funds having a very good long term record in delivering great returns with low to average risk. They have figured among the top fund ratings for a very long time. Invest the balance 20% in funds like these
     Check out more on the top rated funds at http://www.valueresearchonline.com/toprated.asp

     Moderate Risk Profile (someone who can take a little more risk with some of his money)
     PPF -40%; HDFC Prudence -30%; SBI Contra or Reliance Growth fund -30%

     Aggressive Risk Profile (someone who can take higher risks with some of his money)
     PPF-20%; HDFC Prudence -30%; SBI Contra or Reliance Growth – 50%

6. QUESTION:
   I am planning retirement, is my social security taxable income?
   I will be 65 and there is no one hiring, I do have a part time job @ 9.00 hr for a total of 22 hrs a week

   • ANSWER:
     It depends on the rest of your income.

     For some people, none of the SSA benefits are taxable.
     For others, up to 85% is included in their income.

     The formula for singles is 1/2 of theSSA benefits plus all other income. If the total is less than ,000, none of the SSA benefits are taxable.

     If you are under full retirement age for the entire year, we deduct from your benefit payments for every you earn above the annual limit.

     For 2009, that limit is ,160.

7. QUESTION:
   What should i be looking into for retirement planning?
   I have to write a retirement plan for my gerintology class and i have no idea where to start.
   The plan is for myself at retirement, I am now 27 and expect to retire at 70.

   • ANSWER:
     Are you writing your own plan? I would divide it into the following categories:

     1) Financial: How are you going to save and plan for retirement. Hint: 401(k) plan, home ownership, personal savings, social security. How much do you think you will need to live comfortably?

     2) What age do you think you will retire, and how long will you live in retirement. If you are in your 20′s, and female, you will most likely live to be 100, so if you retire at 65 or 70, you will need to fund your lifestyle for up to 35 years. Most people in the future will work part time or have home based businesses, or will volunteer if they have the resources.

     3) What will you do in retirement? What activities, how will you keep yourself engaged in life?

     4) Healthcare: are you healthy, how will you maintain your health, what are your concerns and plans about this? Many people purchase long term care insurance to protect loved ones in case their health fails.

     It is never to early to start planning for retirement.

8. QUESTION:
   What are the financial consequences of retirement planning and taxation in PA?
   Should I just focus on the money that will be paid into these retirement accounts even though they will eventually become liquid at retirement? Also, how do PA and federal law differ?

   All I can really think of with consequences is, like i said, the fact that you have to pay into the accounts/have your employer take money from your paycheck and put them into the accounts.

   Thanks in advance for the help

   • ANSWER:
     Your thoughts are wandering all over the page getting me confused. I suggest you consult a local tax professional or financial planner because it sounds like you need that instead of the quickie answer you will get here.

9. QUESTION:
   HOW WILL I SELECT MUTUAL FUND FOR RETIREMENT PLANNING?
   Assume that you are planning for retirement. Select any mutual fund that is offered in Canada and discuss why this mutual fund fits your investment profile (in terms of your goals, timehorizon, liquisity needs and risk tolerance)

   • ANSWER:
     Dear Friend,

     I recommend you to sign up for the Free Weekly Wealth Letter to discover the simplest possible way to make money in the stock market by investing in Top Mutual Funds.

     Gain FREE lifetime access to the Weekly Wealth Letter which gives you list of Top Performing Mutual funds to invest and make money in the stock market

10. QUESTION:
    What are the best steps to take in retirement planning? Given today’s economy how safe are IRA’s?
    My wife and I are both 31 years old, and we want to start saving for our retirement. We’re interested in starting a Roth IRA, but with today’s economy, we really don’t know if that’s the best choice, or with which company to go with. Basically we just need some advice.

    • ANSWER:
      IRA’s in and of themselves are not inherently safe or unsafe, it depends what investments you put in them. You can buy US Treasuries which are totally safe, but have terrible returns. In the long run, stocks and stock mutual funds provide the best return. If you’re concerned about current conditions, don’t buy stock or stock mutual funds. But if you wait for times to get better, you’ll be buying both at much higher prices. The best strategy is to buy slowly over time. That way you buy more shares at a lower price and fewer shares at higher prices. Dollar cost averaging. http://www.investopedia.com/terms/d/dollarcostaveraging.asp

      Whatever you do, best of luck to you. Saving for retirement at 31 is a great idea.

11. QUESTION:
    Planning retirement..need suggestions on how to eliminate truck payment?
    I have a truck payment of 4. I owe K and the truck is worth .5K. Are there any options for me other than paying the note down to the 18.5K and selling, or letting it go back to the finance company?

    • ANSWER:
      other than paying it off than no, no other options.

12. QUESTION:
    who would i talk to about opening a IRA or planning for retirement?
    my husband and i work for places that don’t offer ira or any kind of retirement plans. We have been saving some money in a normal savings account for a little while,but i want to move on to something better. My husband says to keep it in the normal savings account, i told him maybe a ira or investing may be better. i told him that there are many more ways of making more money than a normal savings account. We don’t know where to start or who to talk too. any suggestions?

    • ANSWER:
      I recommend Primerica Financial Services, A Citi Company. I open my Roth IRA there. The agent did a thorough job of explaining what a mutual fund is and what an IRA is and was able to answer my questions. In the IRA application, it ask me some questions to find out what type of investor I am. It turned out I’m an investor who wants high growth, no matter what happens in the short term.

      From there, he recommend me what mutual funds I should pick and how I should divide my investment into each fund. My Roth IRA currently has an average rate of return of 14%. I think the agent who pick these mutual funds for me did a good job.

      Now I work at Primerica and I changed the agent on my IRA account to me. Every time I invest into my Roth IRA, I now earn commissions. lol. I didn’t join Primerica for that reason. I joined because I wanted to help people and educate people about finance.

      If you have debt, Primerica can give you solutions on how to get out of it for free. If you have life insurance and would like to lower your premiums, Primerica can show you a life insurance plan to do that. That way you would have more money saved.

13. QUESTION:
    How to start planning for retirement at 22?
    I have no knowledge about retirement except that I’d like to find a way to get 6% annual returns on whatever I invest in for retirement.

    PS: Yes I know 22 is early to start planning, but I don’t want to put it off.

    • ANSWER:
      Good for you for starting so early. My favorite book for young people is “your money or your life” by Joe Dominguez. Your library might have a copy, if not it is on Amazon often. It is a very different perspective on how to manage money with the goal of being able to retire early.

      If you really want to “invest” now, start with investing in your education about retirement planning and financial planning. The financial planning association website (www.fpa.org) has some very good information. So does vanguard.com. So does www.ricedelman.com. The certified financial planner program has a terrific certificate-course that if you really wanted a comprehensive education about these matters might be worthwhile to you (it’s a little pricey though – tuition about ,000 for the whole program).

      Start with the books recommended here, stay out of debt (!), learn how to budget and plan for your future, and then, when you have some education behind you, begin to look into investing.

      Also, always remember, if it sounds too good to be true, it is probably not. Especially when money and investing is concerned. There are lots of “investments” out that that promise 8%+ returns but they often turn out to be scams.

14. QUESTION:
    What software do you recommend for retirement planning?
    What formula should be used to ascertain if your investments will hold out and how much to budget for retirement?

    • ANSWER:
      There are many on-line calculators that can help you with this. In the August 2007 issue of Kiplinger’s recommends that you use one that is based on a Monte Carlo simulator. They reviewed 5 different ones. I’ve used the ones at Financial Engines and MoneyChimp and found them very helpful. As the name implies a Monte Carlo simulator, does not give you a fixed answer but rather it gives your odds of success and, in the case of MoneyChimp, shows a graph of the number of years into retirement your IRA/401/etc should last. MoneyChimp also explains, in more detail than most of us would want to know, why a Monte Carlo simulator is required and how it works. These details are likely only useful to those with higher mathematical interest.

15. QUESTION:
    I am 26, should I start planning for retirement?
    I want to know what exactly is a retirement plan and is it government funded or..
    Is it , for example, you put into the retirement fund every month and at the end of , lets say the year , you have – 0. ??

    If that’s the case then why should I even have a retirement fund. I can just put it in my savings account can’t i ? Am i wrong. Please help me.

    • ANSWER:
      retirement plans are basically accounts that are designed to grow and keep up with (or exceed) inflation. You put money into it as you go, and it grows that way, but it also accumulates interest. Most retirement accounts also include stocks and bonds that grow with the economy (or shrink with it sometimes), so it’s like continuously making a little extra money in the background.
      Most IRA’s (individual retirement accounts) are tax-deferred. This means that you don’t have to pay taxes on the money that you put into it… yet. The difficulties are that 1) you don’t get immediate access to the money – in fact, you are hit hard with penalties if you try to withdraw from it before you are officially retired, and 2) when you retire, then when you draw money from the account, you are taxed in a high bracket – as if the money in your account is your annual income (which means you could be in the 50% tax bracket if there’s a lot in there). It’s great for getting to keep more of your money now and also being able to have enough money to live off of when you retire, but if that’s where all of your money is going, then you are going to get creamed on taxes later on.

      There are also other retirement account types, including Roth IRA’s and 401(k)’s. Those you get taxed on now, but there is little or no penalty for early withdrawal and you don’t pay taxes on it when you withdraw in retirement. The downside to those? There’s a limit to how much you can put in those.

      Then there are pure stocks and investments, not part of IRA’s. The only difficulty with those is that you are taxed 15% of how much they grow (it will be 30% if Obama has his way).

      The government funded retirement plan is called Social Security. The Social Security system is incredibly flawed (have you ever heard of a Ponzi scheme? Look it up. Social Security is the biggest one ever, and it’s mandatory). When you get old enough, the government pays you to be retired. The amount, though, is really not very good. You can only live off of it if you also have other retirement income.

      The reason you would want a retirement account is because those grow on their own, faster than inflation. Putting your retirement into a regular old savings account, the money will not grow fast enough to keep up with inflation, and you are therefore by default losing money instead of actually keeping it. Now don’t get me wrong, you do need a regular old savings account because you need a backup stash of money that you can get at quickly (whereas retirement funds you can’t get very easily until you are retired). But to have a savings account as your retirement plan is not a good idea.

      If you start it now, then you’ll have more when you retire.

16. QUESTION:
    Where do I start with learning about investing and retirement planning?
    I have been an assitant to a financial advisor for 6 months and I am not satisfied with just knowing how to fill out forms and where to send them. I would like to know the meaning behind most of the financial world’s jargon (ETF’s, IRA’s, SIMPLE Plan, etc.) and also how to go about researching stocks. Where would I start? I really don’t have any knowledge of these things besides tid bits I picked up around the office. Any book suggestions for a beginner or any links?

    • ANSWER:
      It’s actually a little surprising that your employer isn’t providing you with more answers. Have you asked him/her? Expressed an interest in learning more? Not only for your own benefit, but it may help you with your career in that office too.

      Another place for assistance may be your own bank. Many banks have financial advisors that help their customers gain a better understanding of the programs they offer. (Granted, they’ll probably be geared toward making you a client – but if you explain how you’re looking for information before making any commitment, they’re usually pretty accomodating.)

      The last alternative, which may cost you a little money, is to check your local community college or continuing education programs. Many local high schools and such will offer evening (or weekend) seminars that offer basic instruction. (Sometimes these are partially funded by local branches of various financial institutions – so be on the look out if they try to push their products.)

      If none of those are options, take a look online. Some companies like Fidelity or Edward Jones may have “tutorial” sections on their website that could help give you some basic information.

      Good Luck!

17. QUESTION:
    What role does Insurance play in providing for the family and retirement planning?

    • ANSWER:
      Life insurance is “Love Insurance”. In other words, you buy life insurance to protect the ones you love, to provide food, clothing, and shelter, in the event you are taken out of the picture. It’s to keep you family “in their own world”, financially speaking, if you should die.

      Life insurance is an integral part of retirement planning. It provides for the family if you don’t live to retire, and can’t leave that retirement nest egg for your wife and kids.

      Also, included in your retirement planning should be a savings vehicle, such as a 401K at work, or other retirement. In addition to that, you should invest in an IRA, and possibly another annuity, whether it be fixed or variable. A local agent can explain the differences.

      To properly plan, ask an agent to do a Financial Need Analysis for you. This will help you determine what you need to do to plan for the protection of your family, and for retirement. This will help you to plan against the possiblity of living too long, or dying too soon.

      In addition to the above, I recommend that you purchase a disability income policy. If you get injured or ill and can’t work, it will provide a monthly income while you are off from work, after a pre-selected elimination period in the policy. This could pay the mortgage, put food on the table, and provide for the necessities of life.

18. QUESTION:
    Should I consider an immediate annuity for retirement planning.?
    I am years from retirement, but an immediate annuity appears to offer a higher withdrawal rate than I can guarantee on my own. If I plan for an annuity it can help me achieve my goal. Is that a good strategy?

    • ANSWER:
      I don’t like annuities.
      Some charge as high as 5% – all this to give you a check each month.
      Do not go through an advisor for this.
      Annuities are the biggest money makers for them – that’s how they buy their Lexus’s.

      If you like annuities though – Charles Schwab offers a super low cost ones.
      Fidelity Investments probably have some good ones also.
      These discount brokers are not out to get you.
      Go the schwab website and spend a little hour looking around and compare.
      If I wanted an annuity that’s the way I would go.
      Don’t get ripped off – also google annuity cons, and read, read, read.
      I would also like for you to go to the bookstore and get a book on the subject.
      The fees run in the thousands a year for some annuities – the least you can do is spend on a book.
      I think Schwab has an annuity that automatically buys laddered cd’s.
      Be careful with high returns in variable annuities in a volatile market – you can lose it all.
      Schwab and Fidelity have been around for 30 years – trust them.
      /

19. QUESTION:
    Is it possible that Rand Paul’s senate run is just part of his retirement planning?
    If elected, he gets a lifetime pension, benefits, great parties, writes a book, tons and tons of lobby money, a pile of office staff to do the work for him, fame, fortune, and an increased sense of self worth.

    What does America get?

    • ANSWER:
      anyone who thinks you can balance the budget by giving tax breaks is a clown.

20. QUESTION:
    Is anyone else worried about retirement planning?
    I am young, but I am always told if you invest $X each month for so many years at 8% average return then you will have enough to retire. I’ve been contributing 12% of my income to my 401(k) since I was 23 and as of right now I have lost money. Are those models going out the window with the economy in the crapper? It is starting to worry me since I’m not counting on SS being there when I retire.

    • ANSWER:
      This is a rough patch in the market and we have all “lost money” (at least on paper). But you need to remember a few things. The stock market, like most things, is cyclical in nature. It goes up and it goes down. BUT historically after it goes down, even in a large downturn like now, it comes back up and surpasses it’s previous high. Even during the Great Depression there has never been a 10 year period where the stock market lost value. Individual stocks, yes. The market as a whole, no. This is a period of “sale prices” on the stocks of good and great companies whose share prices has been dragged down by the market at large. So this is a great time to buy the stocks of sound companies. Do you really expect that Microsoft, Pepsi co, Coca Cola, Radioshack, Conocco Phillips, General Mills, and Budweiser and all of the other strong companies are going to go out of business?
      I suggest that you read Ready, Set, Retire by Ray Lucia. It really changed how I look at my retirement savings. I no longer view it as one lump called retirement. Now I have made some different choices and I really haven’t worried too much about this downturn at all. Because I have confidence in my plan and in the market and the American economy.

21. QUESTION:
    looking for professional retirement planning software?
    I am a CFP looking for reasonably priced professional retirement planning software that does estate planning, income tax planning life insurance needs analysis and investment planning. I found a 30 day free trial at www.execplanexpress.com of a comprehensive retirement planning software for only 9. Has anyone tried it or knows of something else that they have used

    • ANSWER:
      Hello Bob,
      I have used and demoed NaviPlan, MasterPlan, Moneytree, Financial profiles and a few other Retirement Planning software packages They each have their strengths and weaknesses. Some do actual income tax analysis and year by year cashflow, some are simply goal based and not really appropriate for Fee only planning. And they all will cost you more than 9 and require annual renewals. You might find more info at the AICPA or FPA websites

      Hope this helps.

22. QUESTION:
    ING Direct Retirement Planning?
    I’ve had a savings account with ING Direct for almost a year now and have always been very pleased with them. I just recently started looking into retirement planning and discovered that they also offer Roth IRAs with very low startup requirements. Has anyone heard anything about this service, good or bad? Does anyone use them for retirement planning? I hear it’s not always the best idea to do retirement planning through a bank because it’s not their real speciality.

    • ANSWER:
      Summary of my response: it’s a good place to start, and you won’t be married to the account. If you decide to seek greener pastures later, then you can rollover the retirement account into your newer better account. Just make sure to ask about account closure fees (which are typically to due to their paperwork involved in rolling out your account and closing it).

      More details: The heart of your question has to do with the end where you are worred that “it’s not always the best idea to do retirement planning through a bank because it’s not their real specialty.” Getting into the details of your concern, there are two areas of investigation in terms of retirement account suitability:
      1) Housekeeping: does the company know what its doing (in terms of keeping the paperwork together), and is the your account access (such as online) to your liking.
      2) Does the retirement custodian offer the type of investment options that are to your liking.

      Regarding ING, as a retirement account custodian, I am sure that they are fine on point one, and that they are probably fine on point two as well. I have a retirement account through ING which allows a selection of mutual funds.

      Where banks typically have a weakness is in step two, as banks typically offer only savings accounts, money market accounts, and CDs as “investment” options through a retirement account. For people who want to invest in things like mutual funds, banks are indeed too limiting.

      Without knowing your details, I’d still be inclined to say that ING is a good place for you to start.

23. QUESTION:
    What is the best advice for planning my retirement?
    I’m in my early 30′s and have already started a 401k plan with my company. I’m currently investing 5% and my company matches an additional 5%. I’m looking at other ideas to invest some money but don’t know where to start. Any info or advice would be greatly appreciated.

    • ANSWER:
      You should be saving 15% for retirement in total.

      Roth IRAs are great, as the money compounds tax free. When you retire your not charged any taxes, when you withdraw the cash.

      The 401k is good if you have it working with deferred taxes. When you retire you pay the taxes, as you withdraw the cash.

      If i was in your shoes, I’d do the minimum to get the full employer match and concentrate on the getting the Roth up to speed. After the Roth was fully funded, I’d go back to my 401 and increase to the full 15%.

      Stay away from insurance company programs, that try to do an investment vehicle wrapped with insurance. If you look at the fee’s they impose, it’s a wonder that anyone makes any money (other than the salesman) from those programs.

      The ultimate advice I can give is to make an appointment with a FEE ONLY financial advisor. These guys dont get any kickbacks or commisions from setting you up on a good program.

      These guys have your best interest at heart as their not pressured to sell you anything. They get paid the same weither you get on a program or not.

24. QUESTION:
    Best way to start planning for retirement on a budget?
    I am mid 20′s and don’t want to be 70 before we can be “retired”

    Loking for ways to make a little money grow a little over time either through smart purchases or some type of plan, or I don’t really know. Some people I know are getting realestate for rentals, maybe I can do that later, but am short budgeted now.

    • ANSWER:
      The BEST thing that you can do is to start saving. Whether it is .00 a week or 0.00 or more. No amount is too little and it is never to soon to start. Building wealth takes time. In this age of instant gratification that is sometimes hard to grasp. in a bank account doesn’t seem like much right now, but saving is a habit, and it takes discipline, like going to the gym. Once you get into the habit, the dollars will take care of them selves.

      For now, just put it in the bank. When you accumulate a little money then you begin to think about the best places to put it to work.

      Good luck…I wish I was in my mid 20′s again!

      Ed

25. QUESTION:
    Assume that you are 30 years old today, and that you are planning on retirement?
    Assume that you are 30 years old today, and that you are planning on retirement at age 65. Your current salary is $ 45,000 and you expect your salary to increase at a rate of 5% per year as long as you work .to save for your retirement, you plan on making annual contribution to a retirement account .your first contribution will be made on your 21 st birthday and will be 8 % of this year’s salary .likewise you expect to exposit 8% of your salary each your until you reach age 65 . Assume that rate of interest is 7%

    • ANSWER:
      Assuming that you meant 31st and not 21st birthday, you would have 8,901.90 when you retire at 65. But that’s assuming you will be making 6,400 when you are 65.

26. QUESTION:
    which is better for retirement planning- SIP or ULIP?
    SIP- is systematic investment planning that is in MUTUAL FUNDS and ULIP is Unit Linked Insurance Policies

    • ANSWER:
      depends on risk tolerance. Some people want the monthly annuity check that is purchased and provided with the insurance policies. They are willing to pay the higher fees to be able to sleep at night. Others are more risk tolerant and want to be able to invest how they see fit and can be a little more structured and take out their own distributions….they have no need for the annuity and thus the lower cost mutual fund approach is better.

27. QUESTION:
    is there a good overview of retirement planning options and resources?
    Fixed annuities, variable annuities, Simple plans, Roth vs. Traditional IRA’s — I”m looking for an unbiased source of information and comparison

    • ANSWER:
      Try www.ricedelman.com Ric Edelman is a personal financial advisor in the DC area and has an excellent web site along with several good books.

28. QUESTION:
    What can I do if I got a late start planning for retirement?
    How do I get started? I do not have a huge income?
    I am in my early thirties, and have some debt.

    • ANSWER:
      That is an awesome question. The second source book below will help you get to your answer. It’s going to explain how money is made, created and kept. I commend you on getting this information early on. The world has changed; it’s no longer “go to school, get a good job, and that job will take care of you for the rest of your life.” Ask the senior citizens and the baby boomers how that is working……….it’s not! We see seniors at fast food restaurants and wal-mart stores working when they should be enjoying their golden years. We are in the information age, the rules have changed. You’ve asked the most important question that ANYONE could ask.

      The great news is we are just entering the information age (12-13 years now). With great change comes great opportunities. The second source book below will help you come to a decision. Just do your homework, if people can’t source it, their information is probably just an opinion and everyone has one of those. All that is going to do is waste your time and money.

      IN THE INFORMATION AGE SUCCESS BEGINS WITH THE CORRECT INFORMATION SOURCE.

      Be careful who you listen to, they may be broke (financially or thinking). Don’t get information from people that don’t live or have the lifestyle you want to live or have.

      Good Luck!!

29. QUESTION:
    This question is for teachers. I am new to this profession and I am curious about retirement planning?
    I am in my second year of teaching. I know that teachers have a retirement plan, as it comes out of our checks.

    Many companies visit our school trying to sell insurance, other plans, etc. I am interested in knowing whether or not I need to do an additional 401k plan. I was approached last year by a person at out school offering 403 plans. This year it was 401K. Do I need to take part in these plans? What do teachers really need? I have heard from retired teachers that their retirement was enough without these types of plans, but I know that times have changed. Any input would be greatly appreciated.
    Thank you.

    • ANSWER:
      Here in Texas, a teacher’s retirement was always the best incentive to be a teacher. But now they have raised the retirement age and basically lowered how much salary you base your retirement on. Who knows what will be next. If you can, start your own 401. Teachers can have 403b plans, but a 401 is the same. Actually, it seems like you have more control over a 401. 403b’s are only sold by insurance companies and they only offer a few funds to invest in.
      Hope you have a good year. Remember, be ready for the year before it starts. Not that you always can, but it helps to try. Good Luck!

30. QUESTION:
    When should i start planning for retirement?
    i don’t currently have a pension and i can’t really afford to save. i earn 24.5k a year. any advice?

    • ANSWER:
      If you cannot afford to save now what makes you think it’ll get any easier as you get older? The simple answer is that the earlier you start doing something about your retirement years, the less painful the journey. State Pensions and benefits aren’t going to become more generous and we must face up to the fact that we’ve got to do something about it ourselves. In the days when employees could join a firm, have a job for life and join the pension scheme you could expect to retire on around half your final salary (a fifty percent pay-cut on retirement). But the cost to you and the employer for this income in retirement would have been perhaps 12 – 15% of salary each year.

      Disclaimer:
      The answers above are for guidance only and should not be acted upon without you receiving independent financial advice relevant to your circumstances. To find and IFA please go to http://www.unbiased.co.uk

31. QUESTION:
    How do i start planning for retirement at age 40 knowly fully well that the economy is not friendly.?

    • ANSWER:
      Okay…numbah one…I got a little ” grammar” problem with your question…Do you mean ” How do I start planning at 40 ? ” or do you mean ” How do I plan to retire at 40?”
      If you want to retire at 40 you can’t use IRA’s etc…it’s just outright save and invest every penny you can find between now and then…give up all luxuries with that ” 40 goal” in mind… but bear in mind…even if you make great investments between now and then, you’ll be giving a lot to the politicians to ” play” with ( TAXES)
      Now…on the other hand…if you ARE 40 and you want a plan…it’s almost the same…save and invest, save and invest…BUT in your case you can make those investments in a ROTH IRA… make THOSE wisely and it’s ALL YOURS…when you’re 60…
      At forty, you’re playing ” catch-up” so make some of your investments in the sectors that are currently “high-flyers”…
      hoping for returns in the high teens, low 20′s…forget about bonds and safety for about 7 or 8 years…. a good international fund could be part of your catch-up…and maybe some ETFs in agriculture, energy… MOO, DBA, USO OIH.
      BUT, those are things you have to keep abreast of…and be ready to move to what gets ” hot” maybe this Christmas season…certain retailers..maybe ” tech” in general…REITs could even be making a come-back by then.

32. QUESTION:
    What do you think is important when planning for retirement in terms of financial planning?

    • ANSWER:
      Having no mortgage.

      First google retirement calculator.
      Schwab.com and Fidelity both have comprehensive excellent ones.
      The worst: Any one from your local bank that will lead you to believe you will never have enough so you can buy their retirement products.

      Make sure you max out your 401K and your IRA’s and ROTH IRA’s.
      This will also help you send your children to college at a lower cost.
      Since non-taxable investments are not reported on the FAFSA.
      /

33. QUESTION:
    What’s a good way to start financial planning for retirement, savings bonds, certificates, stocks…?

    • ANSWER:
      Your retirement plan and investment portfolio really depends on your time horizon (i.e. age) and your risk tolerance. After you answer those questions…you could start a proper plan.

      A good Investment Advisor will be your best bet. Good luck!

34. QUESTION:
    What is a reasonably conservative real % yield on investment capital to use for retirement planning purposes?
    Real % yield is net of inflation. So a 5% total yield with 3% inflation would be a 2% real % yield.

    • ANSWER:
      With judicious investments in equities, you should expect long term returns of 8% conservatively. That is based on historical trends. Many good mutual funds have returned better than that. Some as much as 16% for long periods of time. But I doubt that in the future that will be the case unless one looks to overseas and developing markets. Some of those however can hardly be considered conservative. A mixed portfolio of 30-40% debt and 60-70% equities is considered more conservative than one of 100% equities. Interestingly enough, studies have shown that such a portfolio will outperform an all equities portfolio over a long period of time with reduced risk.

      That of course is all based on historical data. That data might not be appropriate for future investment returns.

35. QUESTION:
    looking for a retirement party planning website Martha Stewart like?
    I haev to plan a retirement party for my boss. I want t to be realy nice.. Looking for a Martha Stewart Type Ideas. I looked on her site she doesnt have antying for retirement partys. I am looking for the whole shabang….From decorations to Menu’s… Any ideas would be helpful also….As far as my boss he was into antique Cars specifically 56 chevy….Space…Planets.. Please help
    Thanks

    • ANSWER:
      One thing that comes to my mind is that your boss’ interests of antique cars, space & planets may not necessarily be the Martha Stewart type of a party. Meaning, Martha Stewart tends to guide her parties to a more formal side, and for a retirement party, it shoudl be more relaxed and informal.

      Have you checked out Party City or a local party store? There are retirement decorations and paper goods there-plates, cups, napkins, etc. I would stick to a classic car theme because that is probably more fun to decorate. Get a bunch of cheap posters off of www.posters.com of all kinds of antique cars to help decorate. Then the boss can take the posters home, perhaps frame some of them. Check your local bakery for a car cake theme, and NOT the movie CARS. Make the menu simple. Have the local deli prepare deli trays of meats and cheeses so guests can prepare their own sandwiches. Include the usual lettuce, tomato, mayo, cole slaw, potato salad, etc. If your boss is older (assumingly he is since he is retiring) try to play the ‘oldies’ music from his era-most likely the 50′ & 60′s. Classic car & driving tunes. At Toys R Us and KB Toys you can find models and jigsaw puzzles of cars. Pick up a few of them and maybe some of the guests would be inclined to tackle a model or a puzzle set up on a few card tables. There are lots of documentaries about classic cars from the History or Discovery Channels, and similar networks. If you can acquire a few, throw them on a continuous loop for guests to watch in the lobby or somewhere in a smaller area than the main party hall. If you want to try a party game, see if you can find some kind of car trivia game, since there is trivia on just about every imaginable topic out there. Hmmm, can;t think of any more, but if I do I’ll edit my answer.

      Good luck to you!

36. QUESTION:
    planning retirement question?
    An engineer planning for her retirement will deposit 25% of her salary each year into a stock found. If her salary this year is ,000 (end of year 1) and she expects her salary to increase by 10% each year, what will be the present worth of the found after 20 years if it earns 5% per year?
    Answer
    Question 9 answers
    A. 0,952
    B. 1,905
    C. 4,210
    D. 7,105

    • ANSWER:
      this begs you to use an excel spreadsheet to determine the answer.

      hints: she deposits 20k at end of this year. she deposits every year for 20 years, ergo, the amount of her deposits total at least 0,000.

      if her salary actually goes up 10% per year, in 20 years it will be about six times her present salary [with compounding]. it follows that her average salary may prove to be as much as three times her present salary and therefore that she’ll actually deposit more like 1.2 million.

      answer — none of the above

      ***
      i think you copied down the problem incorrectly

37. QUESTION:
    What are considerations to think about when planning for retirement?
    A.) Time to retirement
    B.) Planned quality of life
    C.) Current savings
    D.) All of the above

    • ANSWER:
      Simple answer- D!!! All are equally important.
      Time to retirement allows adjustments to be made, whether you are talking about adding or subtracting what you are saving, supplementing your income so that you can retire earlier.
      Planned quality of life- what are you gonna be doing? If you sit around you won’t live as long as if you are active. Own, rent, or move to retirement community.
      Current savings- are you saving enough and is your savings earning the highest rate of return possible? Do you also contribute to an employer sponsored savings plan?
      One thing you forgot about is Inflation! What will your nest egg support ten, fifteen, twenty and more years down the road? Your lifestyle could, significantly effect your nest egg.

      Each and every one of these must be taken into account if you want to be sure that you have enough to support you during retirement. Hope this has helped.

38. QUESTION:
    How to market a personal financial planning and family budgeting, investing service on the net?
    Hi,

    I want to offer a personal financial planning service for young families, covering analysis of present financial condition, budgeting, investment and insurance planning, retirement planning etc.

    Would welcome suggestions on marketing this service on the internet and also other media. My client base will be in India.

    Considering social networking sites, groups, blogs, twitter etc.

    Marketing costs to be minimal, as this will be a very low fee service.

    • ANSWER:

      http://www.boddunan.com/component/content/article/6-other/260-financial-planning-and-its-requirement.html?directory=3

      FINANCIAL PLANNING AND ITS REQUIREMENT
      Business & Finance

39. QUESTION:
    im 18 but i want to start early planning for retirement whats the way to go ?
    any and al info appreciated which way what plan whtever you got

    • ANSWER:
      My goodness I wish there were more people like you out there. So many people think it’s their right to rely on welfare when they are old!!!

      I’m 24 and I contribute extra to my superannuation. Each pay I contribute an extra . in Oz if you do this the government match what you pay as well, which is a great incentive. Its also great tax wise.

40. QUESTION:
    what do they mean by rate of return in retirement planning work sheets?
    working with my retirement advisor work sheet to figure my retirement goals and needs and they ask for rate of return

    • ANSWER:
      they are asking you what you expect to return on your investments. For example, 5% or 10%.

41. QUESTION:
    how long does it take to study for the CRPC(Chartered Retirement Planning Counselor)certification?

    • ANSWER:
      I think about 3 years

42. QUESTION:
    planning an retirement luncheon?
    Ok so i have to plan a retirement lucheon for a co worker but have no idea what to do but dont want to tell my boss trying to look good lol so i dont have a buget but i am chaning each person 20 per head that for food and gift need help on what type of food Decorations

    • ANSWER:
      find a local restaurant with a party area that you can use or a special room they have for parties, they should have a special party menu also that you can choose from.
      you can do a Bon Voyage theme- get some balloon arrangements and streamers to match, some centerpieces for the tables, check out a local party store.
      Have everyone write in a book a special memory about that person with fond wishes farewell- nice memento for the retiree!

43. QUESTION:
    How are you planning your retirement since statistics state?
    that women will be a widow for 15 years or more. How are you preparing?
    Does this plan help you when your husband is dead

    • ANSWER:
      My husband is retired, and is 11 years older than me, so I guess that its a high possibility that I’ll be a widow for some time. We are fully aware of this, and have planned accordingly. We live in a very convenient apartment, near to everything ,so we can walk (or use a motorised scooter !) to all amenities. His pension goes straight to me if he goes first, and mine will go to him .

      If I was widowed, I’d stay right where I am. We belong to a couple of clubs, and are volunteers as well as me working, so I think I’d have some support in the community if I was alone. My son lives fairly near, so I’d have family support, too.

      We have both worked very hard all our lives, and have put money away in a sensible manner, so we’ll never be in dire straits. Barring some sort of major disaster, I think we will be OK.

44. QUESTION:
    Jonathan is planning ahead for retirement and must decide how much to spend and how much to save while he’?
    please help me with my economics homeworks..

    Jonathan is planning ahead for retirement and must decide how much to spend and how much to save while he’s working in order to have money to spend when he retires. When the substitution effect dominates the income effect, an increase in the interest rate on savings is likely to
    Answer

    A.increase saving.
    B.decrease saving.
    C.have no effect on saving.
    D.All of the above are possible.

    • ANSWER:
      Substitution Effect—the change in demand resulting from
      a change in the price ratio, leaving utility unchanged.

      Income Effect—the change in demand resulting from the
      change in purchasing power (movement from the initial
      indifference curve to the final indifference curve), leaving
      the price ratio unchanged.

      All substitution effect; income effect is negligible. It is
      not that people will save a chunk of money. Rather,
      changing prices provides the incentive to save more.

      I would think that the answer would be A.

      Hope this helps.

45. QUESTION:
    What do you take into consideration when planning for retirement, besides…..?
    recreation, location and date of retirement?

    • ANSWER:
      Before retirement save as much money as you can because of the cost of living that keeps going up.

      Pay off your car,

      pay off your home if possible.

      Pay off or pay down your credit cards. Have only one credit card and gasoline card.

      It would be good to sell your house and move into an apartment. Save the money. In apartment living when something goes wrong all you have to do is pick up the phone and call the maintenance department.

      Try to live as close to a hospital as possible.

      It would be good to live close to a grocery store in case you are not able to drive, you can walk.

      Check Medicare to see if you have chosen the correct plan…make sure you have the one with in house nursing care.

46. QUESTION:
    Mrs. Miller is planning for her retirement, so she is setting up?
    Mrs. Miller is planning for her retirement, so she is setting up a payout annuity with her bank. She wishes to receive a payout of 75 per month for 20 years. How much money must she deposit if her money earns 8% interest compounded monthly?

    • ANSWER:
      Based upon your question Ms. Miller would need a present value of 5,658 in order to draw ,875 for 240 periods [i.e. 20 years] at 8% interest compounded monthly

47. QUESTION:
    When doing payroll how do you deduct for simple plan retirement?
    I need to know if this deduction is tax exempt, or if I need to deduct this money before I deduct taxes?

    • ANSWER:
      Yes, retirement plans are pre-tax deductions.

48. QUESTION:
    Retirement planning?
    I am 27 years old and want to start saving and planning for my retirement. I have never researched anything like this before so all this investment talk and stuff is like another language to me. Can anyone help me understand this stuff so i can make an intelligant decision for my future.

    • ANSWER:
      It is very good to start early when planning for you retirement. If you have a job the easiest way to start planning for retirement is through your 401k or 403b (403b is for educational and government employees I believe).

      How a 401k and 403b works: you tell your employeer to take a percentage of your pay check, however much you want, and they deposit that percentage PRE-TAX it into a retirement account called a 401k or 403b. From there you can choose from professionally managed mutual funds where to put your money. At your age, your risk tolerance should be fairly high, so maybe 25% in a growth fund, 25% in a value fund, 10% in a bond fund, 10% in fixed income fund, and maybe 30% in a international/emerging market fund. As you get older you will want to reduce the percentage in the international/emerging markets fund and increase the others. The best part is that the money they take from your pay check doesn’t get taxed until you start to withdraw it when you are old and retired. This means that while your money is in your 401k or 403b account growing the government will not tax you for any money you make in that account which leave more money to make more tax free money, and the cycle repeats. Once you retire you will most likely be at the lowest tax rate possible and very little of what you withdraw from your retirement account will be taxed.

      If your company does not offer a 401k or 403b plan then you can open up a ROTH IRA account at any online or full service brokage firm (UBS, Smith Barney, Fidelity, etc).

      Here is how a ROTH IRA works: A ROTH IRA is similar to a 401k, however you have to manage it yourself. Also you can only put in a maxium of 4,000 dollars (they raise the maxium from time to time). If you have a job and only make ,000 of TAXABLE income per year, income you declare as taxable during tax time, then you can only invest ,000. The great thing about the ROTH IRA is that once your money is in the account it will NEVER be taxed again, PERIOD!! you make 20 million dollars off some crazy IPO in your retirement fund then you have 20 million dollars for you to retire on. A great tool for people to plan retiring because they don’t have to guess what the tax rate will be in 30 or 40 years. Even dividends you make in a ROTH IRA can not be taxed!

      My suggestion is check your company about the 401k policy, because usually companies will match your contribution up to about 5%. which means if 5% of your annual salary is 3,000 dollars, and you put 5% of your pay check into your retirement account or 401k, then your company will match that 5% or 3,000 dollar in this case. Thats like free money! Also since you have mentioned you aren’t the most investing savy person, letting a mutual fund managers manage your money would remove ALOT of stress. Good Luck, send me a message if you have questions

49. QUESTION:
    retirement….?
    why it is important to begin planning for retirement early?

    • ANSWER:
      If someone contribute 0 a month for 10 years in a investment that earns 8% and waits 20 years, he or she will have 1,081.45. If someone else waits 10 years and then invests 0 a month for 20 years, he or she will have 5,608.17. If you start early, you will have time to accure more money.

50. QUESTION:
    How do I choose a company to use for my retirement plan?
    I plan to open a 403(b) in August. I have been told that mutual funds are better (and cheaper) than annuities, and so that is what I want to put my money. (I don’t intend this question to be a mutual fund vs. annuity debate). My school district sponsors 20 retirement planning companies, and their websites don’t seem to distinguish the competition. Some companies include Fidelity, Primerica, Vanguard, Metro Life, Equitable, Putnam, etc. How do I choose which company is best for me whether or not I end up getting mutual funds or annuities?
    I teach in Florida. We have the Florida Retirement System (FRS). My school district puts money into that, which I can choose either to be a pension (with benefits after 6 years of service) or an investment plan (with benefits after 1 year). I choose the investment plan because I don’t know if I will be in teaching in the long-run or if I will at least be in Florida for 6 years to get the pension benefit. According to everyone, the FRS will not be enough, so we have the option of opening up a 403(b) plan with one of these companies to supplement the FRS money. There is no matching in this 403(b).
    I am 23 years old.

    • ANSWER:
      Mutual funds are definitely the better way to go.

      Of the list you gave, my two favorite companies are Fidelity and Vanguard. Vanguard has by far the lowest expenses, and Fidelity has pretty good expense rates, but a wider selection. You can’t go wrong with either of these two.

      Also, to set your mind at ease a bit, study after study has shown that, in the mutual fund world, WHAT you invest in is not nearly as important as HOW you invest. As long as you’re starting early and making regular contributions (and increasing your contribution rate every time your income increases), you’ll be in great shape for retirement, regardless of which funds you choose.

      I don’t know your age, but if you have 10+ years until retirement, you should be at least partially in stock funds (generally, the farther you are from retirement, the more aggressive you should be, within your comfort level).

      I hope that helps!