Fund Mojo provides investors and financial advisors with in-depth mutual fund research and analysis, and a community and gateway to connect investors with peers and financial experts to help each other with investments and financial planning needs.
Know Your Retirement Income
You may not know how to retire, but that's not surprising. You've never done it before. Although many things change in your lifestyle when you retire, one thing remains constant -- you still need income. Where will the money come from?
Social SecurityGovernment programs, like Social Security, provide regular income for as long as you live. However, Social Security simply creates a base income, and was never designed to be your sole retirement income source. Economists predict that in the not-too-distant future, there will be more Social Security benefit recipients than contributors to support the system. Most likely, you'll receive some money from this government program, but benefit amounts and requirements change frequently. This is why it is so crucial for you to take responsibility now for your own financial independence tomorrow. It's amazing how many people never achieve true financial independence. According to Principal Life Insurance Company actuarial tables and a study of 1994 Department of Health and Human Services data, for every 100 people born, at age 65, 15 are dead, 15 have incomes below the poverty level (under $8,000 per year), 56 have incomes between $8,000 and $45,000 (with the median income of $19,500) and only 14 have incomes over $45,000. Your financial independence later depends on your actions now. You must consider everything - Social Security, pensions, annuities, life insurance and investments. A careful analysis of these and other areas will help you determine whether you have adequate reserves to retire comfortably.
Employer-Sponsored Retirement PlansEmployer-sponsored retirement plans are a good source of income. If you've moved or changed jobs, there may be confusion about how much you'll actually receive. The benefit booklet provided by your employer should tell you what requirements must be met, and what benefits you can expect. Don't forget to keep in touch with former employers. You may be eligible to receive benefits; however, they can't pay you if they can't find you.
Personal Savings and InvestmentsPersonal savings and investments such as annuities, stocks, certificates of deposit, life insurance policies, savings bonds, mutual funds, money market accounts, real estate, and personal property often define the difference between financial hardship and financial comfort in your retirement years. A financial counselor can help you make sound decisions about how to handle your assets and investments before and after you reach retirement age.
Additional IncomeYou may still be earning income when you retire. Many people who retire go right back to work, and some even pursue new careers. If you decide to work after you retire, it's a good idea to check how it may affect your Social Security benefits. Planning for your retirement is more important now than ever before. We tend to live longer and lead more active lives; therefore, retirement benefits may need to stretch over longer periods of time. With the future availability of Social Security benefits in question and related tax laws constantly changing, having your own "nest egg" may be a necessity rather than a luxury. Knowing your sources of income, what to expect from them, and how they work together will help you toward a financially secure retirement.
Free reviewCall Helen Hou from the Principal Financial Group for a no-cost, no-obligation review of your retirement plan investments.