Many consumers are worried about debt relief as they reach retirement age.  With news of Social Security and Medicare being tapped out within the next few decades, Americans are looking for other options to retire in comfort.  Fortunately, there are some jobs that still focus on pension plan guarantees.  Here are some industries that still support their retirees.

• Public-Service Sector workers.  Local, state and federal government positions are still highly attuned to retirement benefit payouts.  According to the Bureau of Labor Statistics, almost 80 percent of state and local government workers had traditional pensions last year. Olivia Mitchell, director of the Pension Research Council, stated “Police officers, firefighters, teachers and judges have always had pension plans.” She also noted that these careers are all putting more money into firming up their workers’ retirements to provide security for them.
• Large, private companies. Although pension plans are more difficult to find in the private sector, a recent study showed that 21 percent of private-sector entities had a plan for retirees. This is a huge benefit for employees who know they will have a guaranteed payout for their retirement years.  Consumers need to look for employment, but be aware of the retirement funding statistics. A recent poll showed that only 9 percent of companies with less than 100 employees and 34 percent of companies with more than 100 employees offer traditional pensions. Management and professional positions are also the most likely to offer  retirement plans, regardless of the size of the company.  Service-sector jobs are the least likely to have any retirement benefits.   Geographically, mid-Atlantic, Northeast and Pacific coastal regions are the most likely to have jobs with retirement benefits, in particular in their large metropolitan areas.
• Businesses with less than 10 employees.  Although most small businesses don’t offer retirement funding, exceptionally small offices normally do. This means offices with less than 10 employees, commonly doctors’ offices, law offices or family-owned businesses.  Author and expert on retirement Fran Hawthorne stated, “Very often, the owners of small doctor’s offices set up the pension plan because they want a tax-free way to put money aside for retirement. … The law requires that if you do this, you must provide the same pension for all your employees based on income.” This is encouraging news for Americans who want to work in the small business sector but still have a plan for retirement and debt relief in their elder years.

The key to success

Employees who are working for smaller businesses need to know that retirement funds are most beneficial when they stay with a company for an extended period of time.  Payouts are maximized based on time spent servicing a company.  It’s also beneficial to know that the sooner employees get retirement plans in place, the better they may fare at payout time.  Hawthorne added, “If you don’t get a job with a pension now, your (payout goes)  down every year because more and more pensions freeze each year.”

Planning for retirement

Planning for retirement is a number one concern of Americans today.  With unemployment running high, debt relief being sought and foreclosures increasing, people are wanting to store away money for the future.  There are still some ways to wisely handle the situation and live comfortably in the golden years.

For many retirees today, the golden years may less than golden (photo: creativecommons.org)

A retired couple sells the farm and moves to town to enjoy an easier life. They plan to travel and spend their golden years doing what they love. But as fate would have it, the husband dies a month after they buy the house in town.

The retirement annuity

A few days later the life-insurance agent arrives at the door with the settlement check in hand. The widow has $300,000 left in the bank after selling the farm and buying the house. The agent asks her how she plans to get by once her money runs out. Naturally, she doesn’t know, so the agent says, “What would you say if I could guarantee a lifetime income for you, tax free?”

The grieving widow welcomes the idea. She hands over her $300,000 nest egg, and the agent sells her an annuity as a means to safeguard her money. Now she now lives on $2,000 a month, and will continue to do so until she dies.

Considering the market today, that may sound like a fair deal. Or does it? Let’s take a closer look.

Annuities defined

Annuities are financial products marketed by insurance companies to provide lifetime incomes for investment or retirement purposes. Unlike whole-life insurance, annuities begin to pay out immediately, if desired. According to the insurance companies, buying an annuity is a good way to liquidate your assets.

If you are of retirement age and have accumulated a large sum of money, you can put it all into an annuity and immediately begin receiving monthly payments. If you have several years to go before retirement, you can pay into the annuity over time. Agents will tell you that you can accrue wealth this way, while being guaranteed a lifetime income once you retire.

What you really get

Agents earn larger commissions on annuities than they do on other types of insurance products, and are therefore motivated to sell them.  That self-interest leads agents to embellish the truth just a bit. They’ll tell you the truth, but they’ll also twist it, leaving you confused and leading you to believe that they are acting only in your best interest.

Am I saying that agents will lie to sell you an annuity? Not really. But I am saying that you need to look behind the curtain and see what’s really going on. Even quick payday loans can’t help you once you’ve been conned by slick marketing tactics.

Marketing vs. reality

Insurance agents tend to stress the positive features of an annuity in order to make a sale. To be fair, insurance agents aren’t the only people who do this: All marketing emphasizes positive features while minimizing negative aspects. But buying a junk financial product is a much more serious mistake than buying the wrong designer perfume. In fact, your future may depend on not getting caught up in the marketing hype of the financial industry.

The marketing ploy of annuities is that you are guaranteed to receive a lifetime income on your investment. The reality is that when you die, the checks stop coming and your heirs get nothing. You can, of course, arrange to have your heirs receive money when you die, but only if you settle for lower monthly payments.

Where’s your money?

What happened to your money? Where’s the principal you invested?

When you purchase an annuity, the insurance company invests your money in stocks and bonds. The money that will give you a lifetime of income is really just the interest and dividends paid on the stocks and bonds the insurance company bought with your money.

Your payments are not taken from the principal you invested. Your principal is never touched. After your death, unless you accepted lower monthly payments in return for a post-mortem pay-out, the insurance company does not pay the principal to your heirs. In fact, the company keeps it. And that’s why insurance companies that sell annuities make the big bucks.

Be smart with your money

How are the companies that sell annuities able to promise a lifetime income from your money without touching the principal you invested? They do something that you can do on your own: They purchase stocks and bonds, just like any other investor. If you were to invest your money yourself, you would still receive a lifetime income and you’d keep the principal for yourself and your heirs. (My next article will explain how to do this.)

Do your own investing

An annuity is nothing but another insurance product designed to take more money from you. With their obscure policy language, it’s easy for insurance companies to do just that. Your best bet is to do exactly what the insurance companies do: Invest in stocks and bonds and buy term life insurance. Don’t leave your heirs to pay for your funeral expenses with quick payday loans. Do your own investing, and leave your loved ones a true legacy.

Start planning now for your sunset years (Photo: wikimedia.org)

In this last article of the retirement series, you will learn how to create a sustainable lifetime income without having to resort to annuities or credit cards. You desire to live well and maintain your standard of living in your retirement years, but you do not know how to do it without depending on what may be shifty advice from a broker or financial advisor. It’s time to put some common sense into your retirement investing. Follow these strategies and you will be well on your way to creating the life you desire.

Start as young as possible

The younger you start investing in your retirement fund, the more you will be able to make in the long term. However, it is human nature to put this off until the last possible minute. This is not advisable…let me tell you why. Say you start investing when you are 25 years old, and you put in $10,000 in a retirement account with annual additions of $5,000. Your interest rate is a generous 6% compounded annually. In 40 years when you reach 65, you will have $923,095.60. Pretty impressive, right?

But what if you wait 10 years? At 35, you start with the same amount of principal, and the same amount of money added annually. Everything remains the same, except you only have 30 years instead of 40. Now, you would only have $476, 443.30. That is a LOSS of almost $500,000!! OUCH! And what a big loss!

The point is to start as soon as you can, so that you can save as much as you can by the time you are ready to retire, without the need to rely on credit cards consistently in your golden years.

No need for over-diversification

Warren Buffet once said about people who spread out their investments in an effort to diversify, “Only people who do not know what they are doing diversify.” And yet, financial advisors who are supposed experts tell you to diversify all the time in order to “spread out the loss”. Of course, in reality, you are spreading out the profits you could be making. The reason is that when you have more money in a stock, you own more shares. The more shares of a company that you own, the more money you can make when the share price skyrockets. Of course, the opposite can be true: The more shares you own, the less value those shares represent when the share price bottoms out.

Over-diversification means that you have a little money here, a little money there—all earning just a little money everywhere. However, if you put more money into fewer investments, your money has the potential to grow higher and faster. The key to success with this is to thoroughly research companies and hold on to your shares for the long term.

Buy low, sell high

You must buy when everyone else is selling, and sell when everyone else is buying. Basically, buy low and sell high. This is the logical way to invest.

When the market is in a downturn, you can buy more shares for less money when everyone else is losing out on a golden opportunity. When everyone else is thinking that it is the perfect time to buy shares as the market experiences its highs, this is the perfect time to sell or hang on to your shares. But never buy during this time! (You may regret it when you run out of cash and need to use your credit cards for basic survival!)

Don’t believe your broker ALL the time!

A man invested $10,000 in 1965, on the advice of his broker. Shortly after he invested, his broker suddenly dropped dead of a heart attack. Well, the man didn’t get any “advice” about when to take out his money, so he held on to his shares for about 35 years. At the end of those 35 years, his investment was worth over 2 million dollars! Imagine if his broker was still alive and told him to take out his money when the market had gone down during that time!

The point is, many financial advisers and brokers tend to go with the emotional flow of the popular sentiment, rather than applying logic to investing. Their clients then adopt this viewpoint. Not every adviser or broker does this, and you can get some pretty good advice from them occasionally. However, do not believe your adviser or broker all the time. Instead, take control of your future!

If you’re shopping around online for quick cash to tide you over until payday, retirement is probably the farthest thing from your mind. Emergency loans may get you through for now, but sooner or later, you’ll have to face up to your retirement prospects.

With home equities evaporating and many 401(k)s and IRAs down 40% or more, many people are being forced to put retirement plans on hold. Savvy investors with dreams of early retirement are resigning themselves to longer tenures in the workforce; others are struggling with the fear that they may never be able to retire. But the outlook may not be entirely bleak.

If you’re young, there’s still hope

If you’re in your 40s or younger, the disaster that has become our economy may actually work in your favor. Conspicuous consumption is on the wane and right now you can buy into the stock market at a relatively low point. With 20 or so years ahead of you before the traditional retirement age of 65, there’s still time to recoup your losses and build up wealth

If you’re not so young, there’s still hope

If you’re in your 50s, time is not on your side and you may not be able to retire as lavishly as you had hoped. But if you’ve owned your home a long time, you may still have plenty of equity. And the retirement catch-up provisions of the tax code may help you out. Talk to a tax professional about making extra pretax contributions to your retirement accounts.

The upside of the economy

The upside of the economic downturn may be a shift away from competitive spending and a return to more realistic values. No one knows when an economic recovery will come around or how strong it will be when it gets here. But according to some experts, this may be a good time to start investing.

In this economy it has become easier to save. Big-ticket items like housing, autos, and travel are considerably less expensive today than they were a year ago, and “keeping up with the Joneses” is fast becoming unfashionable. Mortgage rates are low right now, and refinancing your mortgage might allow you to pay down any high-interest-rate debt you have.

The downside of retirement

Dr. Ken Dychtwald is a psychologist, a gerontologist, and the founder of a company called Age Wave that caters to the maturing American workforce. There is, Dychtwald says, “medical evidence that working in retirement is good for your health and that early retirement can be harmful — particularly if retirement means a more sedentary and less intellectually stimulating lifestyle.”

“The bottom line,” Dychtwald continues, “is that extending your work life has its benefits, even if the decision to do so has been made out of necessity. Moreover, most folks are at or near their peak earning power in their sixties, and they don’t have nearly as many expenses — kids are out of college, mortgage is paid off, etc. — as they did when they were in their forties. As a result, it’s usually easier to rebuild savings in your sixties than in your forties.”

For the actively retired, like me, The Personal Money Store is a real godsend. It provides a whole extra range of activities to help me through the days, and some nights too. Shopping for a Personal Loan involves a great deal of computer activity and this is what the active retired community thrives on. Before I upgraded to my new employment status I considered web-surfing to be State-of-the-Art time wasting.

Web-surfing

Today it is a much respected occupation. There are not many of us who can spend an 8 hour day in cyberspace, surfing for important information, gliding from one link to the next, marveling at the endlessness of the information highway. This is an acquired art and is the result of hours spent in front of the computer.

Health hazards

My ophthalmologist, who I visit at 3 month intervals because she insists I can get glaucoma at any moment, warned me about excessive computer use and says that she sees a definite change on the retina thing at the back of my eye, the screen, as it were. “It has developed the format of a computer screen,” she noted two visits ago.

“At last!” I breathed thankfully.

My days

So my days are well taken care of. The mornings are crammed full of retirement activity. I browse the newspapers briefly; the news is always depressing: unemployment, swine flu, bad economy, swine flu, yucky job market, swine flu. Actually once you’ve read one paper, you’ve read them all. I do the NY Times crossword, check my miserable little portfolio for signs of renewed life, read the health tips, log into my bank account and take a fleeting glance at my overdraft, and by then it’s almost time for lunch.

After lunch things slow down considerably but an active retiree never forgets that he may be called upon at any time to take a grandchild or fetch a grandchild to some unheard of place miles from the nearest internet café or coffee shop.

My nights

Generally sleepless and I can vouch for the fact that there’s nothing to watch on the TV after midnight.

The internet as a workplace

I have been doing intensive research on the internet, following the ads that claim you can make $10,000 a month by sitting in front of your computer and not moving. This is simply not true. There are many sites where you can earn. As far as I can see on just about all of them you will sweat blood to pull in a few dollars. I spent the entire afternoon setting up a Google AdSense Account which I am sure will never bring in a cent. The instructions were impossible to understand and the information they required to get the account going was not available. Only after I managed to get myself to think like an eight-year-old did I understand what they wanted and completed the forms.

Having my own account is a highlight of active retirement. Most of my other accounts are being closed down. I may have to rely on this one.

According to an April 2009 Gallup poll, for the first time this decade, a majority of non-retired Americans, 52%, doubt they will have enough money to live comfortably once they stop working. We may be able to solve our money worries today with a quick payday loan or a debt consolidation. But what about tomorrow?

Research shows morale is low

For 19 years, the Employee Benefit Research Institute has been conducting a survey of Americans’ plans for retirement. This year’s poll, conducted in January, shows that workers’ and retirees’ confidence about retirement security is at a record low. Just 13% of those surveyed are very confident about having enough money to retire comfortably. That’s down from 18% in 2008 and the record high of 27% in 2007.

Gee, that sure is surprising (if you’re a troglodyte)

You’d have to be pretty reclusive to be surprised by these results. Do we really need a formal survey to find out how much confidence Americans lack in the economy? Can’t we get that just by eavesdropping on a random conversation in a local bar or a grocery store checkout line? The reasons for our lack of confidence are painfully obvious.

We’ve been warned

For years we’ve been warned that we will not be able to retire on Social Security. We’ve been warned that the system will run out of money. Our only remaining confidence is that those hefty deductions will continue to be made from our paychecks. We’ve known for a long time now that our retirement income will need to come from our own resources.

And our resources lie in tatters

The value of our resources, to the extent that they have been invested in stocks or real estate, has plummeted. This corresponds to some other insightful findings of the studies: Our reliance on 401(k) and other tax-exempt plans as major retirement income sources has dropped significantly. Our reliance on work-sponsored pension plans is at an all-time low. Our reliance on other income sources has not increased. And so, there you have it: the foundations for a formal survey pronouncement that we are increasingly concerned that we will never have enough money to stop working.

But at least we’re redefining retirement

A ray of hope: language is not static.  Retirement can be redefined as part-time work. And indeed, we are beginning to express an increased reliance on part-time work to fund our retirements. In 2001 only 10% of persons surveyed said part-time work would be a major source of retirement income. Today that number is 22%.

Still we cling to the stock market – or do we?

When asked to choose, people specified stocks as the most hopeful income stream for their retirement years. This suggests that confidence in retirement may increase as the stock market recovers. On the other hand, it may be that we will never again believe that our personal savings plans will grow inevitably and steadily. If we’ve learned something, it may be that we must continue to worry despite stock market trends.

What Should You Do Now?

Among those surveyed who have lost confidence in their ability to retire comfortably, 81% have cut spending, 38% are working more hours or have taken on a second job, and 25% are saving more. These are good ideas in the larger sense. But between now and retirement, why worry about the small stuff? Get it off your mind with a quick cash advance loan.  And then get back to work.

There’s good news and there’s bad news: both of them are: “we are living longer.”

The good news

On the good news side, it means that we have many extra years to enjoy ourselves with our friends and family, with our food and drink and with all our earthly pleasures. As long as we keep popping all the anti-cholesterol, anti-sugar and anti-high blood pressure pills, we keep going. We do all the blood tests every year, the doctor never gets out of his chair behind the desk, analyzes results, prescribes what we need and we keep going.

The bad news

The bad news, if the penny hasn’t dropped yet, is that our pensions, retirement plans and nest-eggs will all run out while we are still here. So it’s a race. Will we outlive our pension and end up poor and the miserable objects of state care, looking for personal loans, or will the pension outlive us and allow us to spend a respectable and pleasant old age in a retirement home?

Medical breakthroughs and healthier lifestyles are expanding our life expectancies and you simply can’t count on departing the way our parents and grandparents did.

What are the other plans?

Some retirees are returning to work, others are selling everything, buying a mobile home and roaming around the country. One friend exchanged his fancy apartment for a fancy yacht and is permanently moored in the some Mediterranean port. He never stops talking about the wine, the hot food and the hot women.

Pensions and Social Security

We still get these, but they buy less and less and if you venture outside the U.S. and you have to convert our dollars into anther currency, the result is frightening. For non-U.S. citizens, the social security checks in their country are a token only and have no meaning in the supermarkets.

What to do?

Now that you are faced with a longer retirement, you really have just two choices:

• Put off your retirement as long as you can.
• Plan better for your retirement more carefully, starting long before you retire.

As a final fall-back situation, there are always reverse mortgages after your pockets run dry in retirement.

Try and make your money immortal

We are surrounded by a giant conspiracy which is constantly trying to erode our nest egg, but the biggest retirement killer is our simple inability to maximize our retirement savings.

Retirement planning

Retirement planning isn’t a full-time job, but a full-time job is what many who fail to plan may face. Do you know how much you’ll need for a comfortable retirement? Have you lined up your future income and expenses to see if you’re sitting pretty or spooning down cat food? You’re not alone if you’re shaking your head. Last year’s 18th annual Retirement Confidence Survey indicated that less than half of American workers have taken the time to make basic retirement calculations.

Retirement services

There are retirement services which can help with tax planning and retirement account trends. They can suggest portfolios to help retirees achieve ideal asset-allocation strategies. Don’t wait until it’s too late! Seize control of your future by grabbing the wheel while you still can.

Many people have had to delay plans to fulfill their retirement dreams.

People who were once retired may be eligible for payday loans once again as more of them go back to work. After seeing their stock market investments and 401ks take big hits last year, some have no choice other than to start bringing in a paycheck again.

Big numbers

In the state of Washington alone, 71 percent of residents who were polled said they were worried about their retirement accounts, according to The Spokesman-Review newspaper. An AARP survey in the same state said 18 percent of retired residents were considering going back to work.

The good news is that people with steady paychecks are more likely to have the option of borrowing payday loans if they need extra cash.

Staying employed longer

Washington residents still in the work force are considering putting retirement off, and 60 percent of the people polled said they will do that if things don’t get better.

Trouble with 401ks

Last year many people stopped putting money into their 401ks. In fact, 25 percent of the workers surveyed in Washington said they had done that, and 14 percent actually paid penalties to pull money out of their retirement accounts.

AARP Advocacy Director Ingrid McDonald says it’s even more important than ever to put money into your retirement savings account. That may work for people who have money to save, but for some people it is too late.

Individual accounts

John Heffman, a 79-year-old Washington resident, is searching for a job right now through the WorkSearch program at AARP. He explains that he lost between $50,000 and $60,000.

Another Washington resident, Mara Greene, had planned to retire at 62. She is 62 now, but instead of retiring from her business running a retail store, she is looking for a job. Her plan was to sell her business and retire on the money she made from the sale, but she hasn’t been able to sell the place. She has been trying to sell it for two years, but  with the store shut down and no buyers, she’s seeking a job.

If Heffman and Greene do find jobs, they will have more financial options, like  getting payday loans, in case the economy continues to get worse.

Does debt have you bound up and feeling like a police officer bound up, not able to reach the donuts? Try consolidating your debt with a home equity loan. (image from flickr)

When struggling with personal debt, you may be tempted to apply for a personal loan, payday loans or try to borrow money from other sources from time to time simply to relieve the financial pressure you may feel weighing in upon you.

In this article we will attempt to address some of the advantages and disadvantages of the various debt payment options that may be available to you to pay down, pay off  and take control of the debts you owe.

Payday Loans

Payday loans, although a valuable service for emergency funds, are not the best option for paying off or consolidating debt. Payday loans are more a source of emergency funds for dire situations, such as when your car breaks down and you need money for quick repairs or if you want to avoid a late payment penalty with a creditor.

Because payday loans usually limit you to a maximum of $1,500, it is likely that a payday loan would not be sufficient to cover and or consolidate your debts anyway. There are better options available to you that can provide you with a lower interest rate.

Withdrawals On Your 401(k)

A lot of people resort to using funds that they have put aside in their 401k savings plan. This is a tempting but ill-advised approach to debt relief.

Remember, the funds that are in your 401k are reserved for your retirement years. Using these funds to bail yourself out of financial trouble today may cause another crisis for you several years from now. You may find at retirement you don’t have sufficient funds in the account to last through your retirement years.

Taking money out of your 401k will cost you more than you think. You have to take into account how much you will be taxed for on the withdrawal of these funds plus the total amount of interest these funds would have acquired between now and the age you retire. This adds up to be a significant sum.

Home Equity Loans

Home equity loans are usually the best option for consolidating and paying off your debts. Home equity loans are obtained by borrowing against the equitable portion of your home’s value. This gives you the advantage of lower interest rates than most other options. Plus, interest paid on home equity loans is tax deductible.

When borrowing against your home equity, be sure to remember defaulting on or failure to pay your home equity loan payments can result in losing your home.

Avoid Repeating The Cycle

The biggest thing to remember when paying off your consumer credit debt, regardless of the options you choose, is to avoid repeating the cycle again by running up your credit card balances that have been paid off.

If you find that your money spending habits are habitually putting you under financial stress, you may find it helpful to work with a debt counseling service that can help you manage your finances in the future. Click to learn more about debt consolidation.

It’s inevitable. We are all going to have to retire someday, hopefully by choice and not by illness and prayerfully we will have the necessary funds to do so – after all, you can’t rely on Social Security and payday loans alone for your retirement.

You may have heard that the age in which people are retiring is rising. Now this could be because work is so much more fun than it used to be, or perhaps advances in medical technology is allowing us to spend a couple extra years behind our work desks, maybe we have to work the extra years just to assure ourselves that our retirement will last until we retire from existence.

Is your money not worth what it you used to be? Thank inflation, the silent thief.

The answer is leaning towards the latter. We can stretch out our working careers through a healthy lifestyle and improve our wages at retirement through smart investing but one thing many of us don’t pay enough attention to is the rate of inflation.

What is inflation?

“Inflation is a rise in the general level of prices of goods and services in an economy over a period of time.”

The basic idea of inflation is this, you remember when a candy bar cost you 10 cents, well now that same candy bar will cost you close to a dollar if not more in some places. There was a time that many remember when a single income could provide for a whole household. Today it takes two incomes to provide for a household yet the assets maintained are not any more than they were six decades ago. Inflation rises at about two to three percent a year making a subtle impact on your finances that goes unnoticed by most people until they wake up one day and say “  I remember when a gallon of milk cost under $1″, and when hardly anyone had to get payday loans.

Unfortunately, Americas wages are not keeping up with the rate of inflation which means that each year your buying power is decreasing. If you make a $60k salary and inflation continues at the current rate of inflation which is 3%, you will need to be making $80K ten years from now just to maintain the same buying power that you have currently. The chart below was found on bankrate.com’s website and will give you a good idea of what your future earnings should be over the next few decades to keep pace with inflation.

What will you need to be making?

If you would like to play around with these figures a little more you can use the retirement calculator found at Bankrate.com.

It is astonishing to think that a $50K dollar salary will need to be at least $121K in thirty years. Not only do we need to save for retirement, we also need to make sure that our funds last through our retirement years.

Planning conservatively for our financial future is more important today than ever before. For those of us born after the baby boomers, we also have the added pressure that we may never receive our rightful dues from the Social Security System. Our future financial security depends largely upon our ability to invest successfully today, and not solely on payday loans for our financial security – we can’t anyway.

If you haven’t yet started an investment portfolio, the sooner you do so, the better off you will be. With the slumping economy it may seem to be a scary time to invest but then again, where there is crisis there is always opportunity. Now may be the perfect time to make up lost ground.