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Archive for the ‘Retirement’ Category

Forum: Consider optional retirement at 55 for uniformed officers – The Straits Times

Posted: March 5, 2020 at 12:47 pm


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Home Affairs Minister K. Shanmugam told Parliament that the retirement age of uniformed officers would be raised gradually to 58 by 2030, up from 55 currently (Retirement age for uniformed officers to be 58 by 2030, March 3).

Presently, the mandatory retirement at 55 years of age is a waste of the experience and expertise acquired by uniformed officers over many years.

According to Mr Shanmugam, extending the retirement age has two benefits:

It would enable the Ministry of Home Affairs (MHA) to tap the enormous experience of the more mature officers.

It would help the officers secure another job as a meaningful second career.

Perhaps the Government could consider giving MHA uniformed officers the option to retire at 55 years, while making the mandatory retirement age 60.

The chances of them securing a job after they leave the force would be greater if they were to retire at 55 than at the age of 58.

As for officers who might not be interested in looking for another job after leaving MHA, the proposed mandatory retirement at 60, instead of 58, would provide them with two more years of employment.

Pavithran Vidyadharan

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Forum: Consider optional retirement at 55 for uniformed officers - The Straits Times

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March 5th, 2020 at 12:47 pm

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Trump to award Medal of Freedom to retired Gen. Jack Keane | TheHill – The Hill

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President TrumpDonald John TrumpAs Biden surges, GOP Ukraine probe moves to the forefront Republicans, rooting for Sanders, see Biden wins as setback Trump says Biden Ukraine dealings will be a 'major' campaign issue MORE will award the Presidential Medal of Freedom to Jack Keane, a retired four-star Army general and senior strategic analyst for Fox News, the White House said Wednesday.

Trump will award the medal to Keane next week, White House press secretary Stephanie GrishamStephanie GrishamTrump to award Medal of Freedom to retired Gen. Jack Keane Kim Kardashian West making another visit to White House Trump donates quarterly salary to HHS for coronavirus efforts MORE said in a statement. The award represents the U.S.'s highest civilian honor.

General Jack Keane is a retired four-star general, former Vice Chief of Staff of the United States Army, and a well-respected foreign policy and national security expert, Grisham said.

General Keane has devoted his life to keeping America safe and strong, and he has earned many awards, including two Defense Distinguished Service Medals, five Legions of Merit,two Army Distinguished Service Medals, the Silver Star, the Bronze Star, and the Ronald Reagan Peace through Strength Award, she continued.

Keane, who retired from the military in 2003, is a frequent presence on Fox News who often defends the presidents foreign policy decisions. He has been known to advise Trump on military decisions with respect to Syria and reportedly twice turned down an offer to be Trumps Defense secretary.

Keane is also the chairman of the Institute for the Study of War, a national security policy think tank.

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Trump to award Medal of Freedom to retired Gen. Jack Keane | TheHill - The Hill

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March 5th, 2020 at 12:47 pm

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50% of Adults May Be Making This Devastating Retirement Mistake – The Motley Fool

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Saving for retirement is challenging enough as it is, but it can be particularly difficult if you're unsure about how, exactly, to invest your money. It's tough to ensure you're doing everything possible to save enough for retirement, andthat's especially true you don't have a strong grasp of financial language and concepts.

Asset allocation refers to the specific stocks, bonds, and other assets you're investing in when you contribute money to your retirement account, and it can be a confusing topic. But there's one simple error that half of Americans may be making that's related to asset allocation -- and it could potentially wreck your entire retirement plan.

Image source: Getty Images.

According to a recent survey from J.D. Power, approximately 50% of Americans aren't sure whether it's safer to invest all your cash in a single company's stock or invest in a mutual fund. Around 10% of those respondents believe it's safer to invest in a single stock, while the other 40% said they don't know which option is safer.

The problem with investing in a single stock is that you're essentially putting all your eggs in one basket. If that stock performs well, you could potentially stand to see lucrative investment gains. But there's also always a chance that a stock will perform poorly -- and there are many reasons why a company might underperform. If your life savings are invested in a single company's stock and that business goes under, you could lose a lot of money.

However, when you invest in index and mutual funds, you're diversifying your investments and limiting your risk. Index and mutual funds are essentially large collections of stocks and bonds. So by investing in a single fund, you're actually investing in dozens or even hundreds of different stocks at once. That means if one or two of those stocks within the fund takes a nosedive, it won't cause your entire investment portfolio to tank.

Although asset allocation can quickly get to be a complicated topic, understanding a few general allocation principles is crucial if you want to ensure you're investing your money in the right places. If you're not diversifying your investments enough, your retirement fund could lose a lot of value in a short amount of time. But by using smart investment strategies, you can limit your risk while still reaping rewards.

One of the tough parts of deciding how to invest your money is that the answer won't be the same for everyone. There's no one right way to invest, so what works for one person may not work for another.

A major factor to consider when determining your strategy is your tolerance for risk. Although it's not a good idea to invest all of your cash in a single stock, you may choose to weight your portfolio more heavily toward a collection of individual stocks rather than investing in bonds. Certainly, you may see higher returns when you invest in stocks, but the downside is that stocks are also more susceptible to volatile ups and downs.

Investing heavily in stocks is generally a better idea when you're young and still have decades until retirement. Although you'll have good years and bad years, in general, the stock market does tend to provide positive returns over time. So in the early years of your professional career, the potential rewards often outweigh the potential risks.

As you get older, it's oftentimes a good idea to start allocating more of your money toward bonds. You'll still want to invest in stocks to some degree, but the closer you get to retirement age, the more you'll want to avoid the roller-coaster ups and downs that you may see by investing mostly in stocks. Bonds typically have lower rates of returns than stocks, but they also don't carry as much risk.

Once you have an idea of how you want to invest your money, how, exactly, do you get started? It's easier than you may think.

When you invest in a 401(k) or IRA, you may not have to choose which specific index or mutual funds you want to invest in. Rather, your plan may simply ask about your risk preferences and then invest your funds accordingly. From there, all you have to do is start saving. That said, it is a good idea to check in on your asset allocation occasionally to make updates as necessary. As you get closer to retirement age, for instance, you may want to play it a little safer with your investments. Or if you realize you've been too safe with your money and still have plenty of time left to save, you may want to take a more aggressive approach.

Many retirement plans also offer target-date funds, which is a type of fund that automatically adjusts your asset allocation based on the year you plan to retire -- what's considered your "target date." As you get closer to your target date, the fund will adjust your investments to be more conservative. There are advantages and disadvantages to using a target-date fund, but one of the major perks is that you can take a hands-off approach while still knowing your investments are properly diversified.

Asset allocation may not excite you, but it's important to at least understand the basics to make sure you're setting your investments up for success. The better you're able to manage your risk versus reward, the more likely you are to build a solid nest egg that will last through retirement.

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50% of Adults May Be Making This Devastating Retirement Mistake - The Motley Fool

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March 5th, 2020 at 12:47 pm

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This Is How Much These Finance Experts Saved By 30 To Retire Early – Forbes

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Fueled by the news of ballooning student loans and pernicious credit card debt, a small but growing group of Americans are taking control of their money.

Part of the financial independence, retire early or FIRE movement, they are committed to saving money from their corporate jobs and even taking on side hustles to build additional income.

Aiming to save money - oftentimes 60% to 70% of their incomes - a group of Americans are taking ... [+] control of their personal finances, and participating in the financial independence, retire early movement.

Their goal? Build a substantial nest egg and then retire. Although many end up working in what they call retirement - running blogs or taking care of kids - the idea is to achieve financial independence, whereby they can choose their activities, rather than be tied to a workplace for a paycheck.

Inspired by the 2008 personal finance book Your Money or Your Life by Vicki Robin and Joe Dominguez, they promote what many Americans would consider to be unusual tactics to cutting costs from driving 30 year old cars to living in 52 square foot room.

And while every FIRE practitioner takes a different tact, here are three of the bigger names in the movement on how much theyd saved by 30, as well as a tactic they used to up their savings rate.

Fidelity recommends that the average American to have one year of their salary saved for retirement by 30. So if you make $50,000 a year, you should have $50,000 in a retirement account. Heres how these money experts in the financial independence, retire early movement compared.

Jillian Johnsrud of Montana Money Adventures

Saved (with husband) : $375,000, plus a pension valued at $400,000

Jillian Johnsrud and her husband saved nearly half a million dollars in order to fund their ... [+] Financial Independence, Retire Early lifestyle with five children.

My husband and I committed to saving half our income when we got married. Because we never earned six-figures that meant driving older cars, having a roommateeven after we had kids and finding low cost meals. I was passionate about travel, so we accepted a duty station in Europe and were able to travel frugally by driving and camping. We also opted to buy a home that needed a lot of work and slowly learned how to fix and upgrade it ourselves, which came in handy in the rentals we bought next.

Julien Saunders of Rich And Regular

Saved: around $20,000

By 30, Julien Saunders had saved over $20,000 in order to reach financial independence, retire early ... [+] by his late 30s.

In 2010 I was 30, and I had about $20,000 saved, between a savings account, a traditional IRA carried over from my twenties and one year of contributions to a 401k. It was during this time, I realized how little joy I got from cable and decided to cut the cord for good.

I then took it a step further and downgraded my cable internet to a high speed DSL service which was significantly less expensive and worked just as well for my needs.I've not had cable TV since and didn't regain cable internet until 2018. Every little bit helps!

Steph and Cel of Incoming Assets

Saved (together) by 30: $211, 658

Vancouverites Steph and Cel love to travel, and thanks to their frugal lifestyle they can visit far ... [+] flung destinations, while still working towards their financial independence retire early goals.

The only expense we ever really curtailed was lifestyle inflation. When we first met our income was very low and our spending reflected that. Then as we went from poverty-level income to normal income, we just kept our spending the same. Early on we did cut out a weekly home grocery delivery service that we had been using for a few years, though that was also inspired by their warehouse getting a nasty aphid infestation.

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This Is How Much These Finance Experts Saved By 30 To Retire Early - Forbes

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March 5th, 2020 at 12:47 pm

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Provo legacy business and its owner retire the same day – Daily Herald

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Mark Harmon is not sure if hell be riding into retirement sunset in his GMC truck, or on his favorite horse. Whichever one he chooses, his retirement is going to be a new road he is looking forward to traveling.

Until last Friday, Harmon was the dealer/operator of Harmons Buick, Cadillac and GMC Trucks in Provo. He is the third generation of Harmons to run the dealership that began with his grandfather Clarence and great uncle Ap Harmon in 1936.

In 1967 his father CJ Harmon took over the business, and in 1978 Mark Harmon and his brother Brant Harmon bought their dad out. Brant retired six years ago leaving Mark Harmon to keep the family dealership running.

From Cadillacs, Pontiacs and Oldsmobiles, to Subarus, GMCs and Buicks, the Harmons dealership has been a backbone business of Provo for more than 70 years.

It started at 100 West and University Avenue, Mark Harmon said. It burnt to the ground a few years later.

By the early 1940s the dealership had moved to its current location and over the years has expanded on 100 North on the 300 and 400 West blocks in downtown.

Because its been a family business for so long I felt an extra need to continue the business even when it wasnt making much, Mark Harmon said.

Mark Harmon said he wanted to honor his grandfather and father. Theres nothing magical about the success of the business, its just hard work.

Mark Harmon worked 12 hours a day six days a week all those years, said Robin Harmon, his wife.

The dealership consumed most of his time and energy. He felt a tremendous amount of responsibility to his employees, she said.

Mark Harmon was a quiet doer; he served on boards and committees around town. Sundays were a different kind of rest day for him as he served in several callings in his church.

He also served as a basketball coach for kids. He was never home before 7 p.m., Robin Harmon said. He had 10 to 12 hour days and he never missed a day.

Besides his family, Mark Harmon says he loves trucks and he loves his family ranch up South Fork in Provo Canyon. He intends to spend a lot of time with all of them in retirement.

Mark Harmons son Tanner Harmon said he has countless memories of watching his dad at work.

One of the most impressionable stories was when I was a little boy watching my dad handle a situation with a single mother one evening, Tanner Harmon said. I dont recall why I was at the dealership that evening, but I do remember what happened. A young mother with little kids parked her old, barely-running, tan-colored car in front of the dealership entrance. She walked in and asked to speak to dad. She told him that she would give her car to the dealership if he would give her money to buy groceries for her family.

Tanner Harmon said he remembers his father treating the lady respectfully and asking her to take a seat and explain her situation.

Dad ended up telling the lady that he could not take her car, but that he would give her money to buy groceries, he said. I remember the look of relief and gratitude on the face of the lady as she walked out of the dealership and drove away. I remember feeling so proud of my dad and, in my young mind, feeling that in some way I was a part of helping her.

Mark Harmon knows what hardships are like, and Robin Harmon does too.

There have been some really hard years, Robin Harmon said. He (Mark) is so honest, just really incredible integrity. Hes just so kind.

At 66, Mark Harmon said it was time to retire. I can see down the road. This dealership needs a new building and to grow.

Mark Harmon sold the dealership to Don Jones of Spartan Automotive based in Ashland, Oregon. Jones has nine dealerships in the western United States.

The new dealership will be called Provo Buick, GMC, Cadillac with Spartan Management as the holding company.

Harmon gave out kudos to his brother, Brant Harmon, who he said kept the business running so long because of his financial acumen and his attention to detail.

He also is grateful to the many employees that have stayed with the company for so many years. They will be retained by Jones. The company averages about 30 employees. He also gave a nod to the help from Provos mayors office and economic development.

We have had such wonderful employees, Mark Harmon said. They take such good care of our customers.

Mark and Robin Harmon wont be taking any cruises or big trips to Europe, they said; they are just looking forward to the trips they will make to see their children and grandchildren and then spend six days a week with the horses at the ranch. A sunset worth riding into.

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Provo legacy business and its owner retire the same day - Daily Herald

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March 5th, 2020 at 12:47 pm

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Will the stock market be able to support you in your retirement? – MarketWatch

Posted: January 28, 2020 at 8:48 pm


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How fast will your equity investments grow in coming years?

That crucial question is at the heart of every retirement financial plan, especially in todays era of low rates that virtually guarantee that bonds will provide a dismal long-term return. Stocks will have to do the heavy lifting of funding your retirement, in other words. So if you assume too high a return for stocks, you will run out of money during your retirement; assume too low a return and you deny yourself the standard of living you have earned.

The occasion to revisit this crucial question is the release this past week of new research from the Pew Charitable Trusts on the rates of equity return that are assumed by state pension plans. That study shows that the median assumed return has dropped over the last decade from 8.0% to 7.4% in the latest survey.

Read: Retired and facing a stock market downturn? Heres what to do and not do

Pews researchers add that even this 7.4% return is probably too high, and I heartily agree. For this column I review the predictions implied by eight valuation indicators that have the best record forecasting the stock markets 10-year return. (For a fuller discussion of these indicators track records, consult a Wall Street Journal column I wrote a year and a half ago.)

Household equity allocation. Specifically, this indicator is the average portfolio allocation that U.S. households commit to stocks, as I discussed in greater length in a recent column;

The price/book ratio, the ratio of the S&P 500s SPX, +1.01% by per-share book value;

The price/sales ratio, the ratio of the S&P 500s by per-share sales. This indicator was the focus of a recent MarketWatch story;

The dividend yield, the percentage that S&P 500s dividends per share represent of the overall index;

The cyclically adjusted price/earnings ratio championed by Yale Universitys Robert Shiller;

The so-called q ratio that derives from research conducted by the late James Tobin, the 1981 Nobel laureate in economics. The ratio is calculated by dividing market value by the replacement cost of assets;

The traditional P/E ratio. I calculated this ratio by dividing the S&P 500 by its trailing years earnings per share;

The so-called Buffett Indicator, which is the ratio of the total value of equities in this country to gross domestic product. It is so named because Warren Buffett, CEO of Berkshire Hathaway BRK.A, +0.71% BRK.B, +0.71%, suggested in 2001 that is it probably the best single measure of where valuations stand at any given moment.

To calculate what each of these indicators is forecasting for the next decade, I constructed an econometric model that most closely fit the relationship between its historical readings and the S&P 500s subsequent 10-year return at each step along the way. I then fed into that model the indicators current reading. The forecasted 10-year nominal return that is implied by these eight indicators ranges from a high of 3.5% annualized (for the traditional P/E ratio) to a low of minus 5.4% (for the price-to-sales ratio).

Pretty depressing, isnt it? Even the most optimistic of these forecasts is barely a quarter of the 13.6% annualized total return the S&P 500 produced over the last decade.

What about low interest rates?

One rebuttal to these sobering projections is that the stock market deserves to appreciate at a faster rate when interest rates are as low as they are today. But the historical data do not support this rebuttal.

Consider what I found when I added the 10-year Treasury yield as an input to each of the econometric models I constructed for the above eight indicators. In no event did this addition increase the models forecasting power, at least at standard levels of statistical significance. In any case, furthermore, my PCs statistical package found that higher Treasury yields were associated with higher subsequent stock market returns, not lower.

This is just the opposite of what the bulls are assuming when arguing that low interest rates justify higher projected stock market returns, of course. And it is not particularly surprising, once you stop to think about it, since stubbornly low interest rates indicate that the markets expect future economic growth to be no better than anemic.

I discussed this at greater length in a Retirement Weekly column a month ago. As explained to me in an email from Nicholas Bloom, an economics professor at Stanford University and co-Director of the Productivity, Innovation and Entrepreneurship Program at the National Bureau of Economic Research, interest rates are an excellent predictor of long-run growth potential, and their moribund level [today] reflects the markets expectation of sustained low future growth.

Reality check

As a further reality check on the low projected returns over the next decade, I next calculated the stock markets future return using a bottom-up, fundamental model based on projected sales growth, inflation, and dividend yield. When doing so, I come up with a projection of the markets nominal 10-year return of 4.5% annualized, and 2.6% after inflation.

My calculations were as follows:

Sales growth: 0.9% annualized after inflation. My rationale is this: If we assume that corporate profit margins stay at their current inflated level, which is a generous assumption since those margins are so much higher than their historical average, then the stock markets future growth will be a function of sales growth. And its hard to see how sales can grow faster than the economy as a whole, which the Congressional Budget Office will grow at a 1.8% annualized rate above inflation over the next decade. And from this rate we must subtract an estimate of GDP growth that does not come from publicly traded corporationssuch as entrepreneurial startups, private equity, venture capital, and so forth. Following research from Robert Arnott, founder and chairman of Research Affiliates, I subtract 0.9 of an annualized percentage point.

Dividend yield: 1.9% annualized

Inflation: 1.7% annualized (based on projections from the Cleveland Fed)

To be sure, mine is a simple model. I offer it here solely to show that the projections of the eight indicators with good long-term records arent that far out of line with a completely different approach to forecasting the market.

Its worth noting in this regard that Arnotts firm employs a far more sophisticated fundamental model than my simple one, and it is currently projecting an annualized 10-year return of just 2.4% nominal and 0.3% inflation-adjusted.

The bottom line?

There no doubt are other models out there that project more robust equity returns over the next decade. But it is very sobering indeed that 10 valuation approaches are each projecting very low returns between now and 2029.

You therefore might want to consider adjusting your retirement financial plan to include lower projected equity returns. If youre wrong, youll be pleasantly surprised, and thats a far better outcome than being too optimistic and discovering that you have run out of money.

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. Hulbert can be reached at mark@hulbertratings.com.

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Will the stock market be able to support you in your retirement? - MarketWatch

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January 28th, 2020 at 8:48 pm

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Avoiding The Paycheck Creep. Heres Why Your Raise Threatens Your Retirement – Forbes

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Almost every employee has two goals in their career: make more money and earn enough to one day retire. It turns out, according to new research, that by making more money, youre also hurting your chances to afford a retirement that accounts for your newfound wealth.

As people earn raises during their career, their lifestyle expectations change. Its one reason why you dont live like you did when you were in your 20s. It turns out, though, that the percentage that one saves doesnt change, even as raises boost a salary.

On the surface that looks fine. After all, if youre making $80,000 and saving 10%, then get a raise to $100,000, well 10% of the new salary is more.

The math doesnt account for a persons growing lifestyle expectations, which becomes more expensive after the raise. Without increasing the percentage of retirement savings, the employee will now experience a shortfall come retirement, based on their adjusted living expectations, according to new research by the financial services firm Morningstar.

When you get a raise, any type of new income becomes normal, said Steve Wendel, head of behavioral finance at Morningstar and co-author of the raise research. People then spend that income, affording more expensive vacations or nicer cars, and that becomes your new standard. But in order to now afford that lifestyle in retirement, you must save more than your previous savings rate, added Wendel.

In the financial independence retire early (FIRE) movement, theres a strong concern for lifestyle creep. Its the psychological tendency to, as you make more to spend more. What studies have found, as you spend more, the materials you purchase become your status quo. You dont necessarily get enjoyment out of the extra spending, but it feels natural or almost like a baseline requirement to live your life.

What the Morningstar study highlights is just how much lifestyle creep can endanger your retirement.

How Much To Save From The Raise

Part of the reason the raise can hurt your ability to retire, if you dont prevent lifestyle creep, is that your retirement savings grow slower than the raise. If you keep a constant 11% savings rate, as your salary moves from $100,000 to $120,000 at age 47, then your standard of living rises while your income from Social Security benefits and past savings remains relatively static. As the chart shows, it leaves you, on an annualized basis, short of your new normal.

With a raise from $100,000 to $120,000, this person will discover a gap in expectations come ... [+] retirement.

The solution? Always save part of your raise, said Wendel.

The researchers tested three ways to save the raise. They evaluated the effectiveness of spending twice your age (meaning years) to retirement. This means if youre retiring in 10 years, you would spend 20% of the raise and save 80%. The second option was to save your age. If youre 40 years old, you would save 40% of the raise. And, finally, save 33% of the raise, no matter the age.

For the youngest earners, all three strategies worked fairly well, leaving someone able to afford a new lifestyle, even with the raise. At 35, the strategies begin to diverge, and the effectiveness of stashing 33% of the raise tactic falls off. It isnt until age 45 when the effectiveness of the Save Your Age strategy begins to wane.

The only strategy to work for all ages was the spend twice your age to retirement tactic.

It allows you to spend some now, but also boost your retirement income, added Wendel.

Avoiding Lifestyle Creep

What the savings strategy also prevents is too much lifestyle creep. If you save more, you cant spend it. By keeping your costs lower, you have less to make up for in retirement.

Youre locking in a standard of living from now until retirement instead of setting yourself up for a drop in retirement, said Wendel.

Those that pursue FIRE, saving 50% of their income or more in order to retire at an extremely young age, take painstaking efforts to prevent lifestyle creep. Therefore, as more money flows in, it isnt used to necessarily bolster their lifestyle. Instead, its used to strengthen their retirement accounts.

For most people, though, theres a psychological tendency to take a breath when receiving a raise, leading to more spending even in situations where theyre actively trying to fight lifestyle creep. Thats true for someone following FIRE strategies as well.

To counter this, Wendel suggests planning for the raise prior to actually getting it.

Its easier to invest the raise at the onset, than to do so when its in a checking account, he added.

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Avoiding The Paycheck Creep. Heres Why Your Raise Threatens Your Retirement - Forbes

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January 28th, 2020 at 8:48 pm

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The Most Realistic Retirement Age in Every State – Yahoo Finance

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At what age do you hope to retire? If youre like the majority of workers, youre probably planning to stop punching the clock by the time you turn 65.

A survey by the Employee Benefit Research Institute (EBRI) found that 54% of respondents said they expect to retire at age 65 or younger. However, a significant percentage of workers expect to keep clocking in until theyre much older. One-third of respondents said they dont expect to retire until theyre 70 or older. Some dont plan to retire at all.

Its one thing to have an idea of when you want to retire. Its another thing altogether to know whether youll actually be able to retire. Several factors can affect your retirement plans including whether youll have enough saved by your ideal retirement age to stop working. The EBRI survey found that less than half of workers 42% had tried to figure out how much they would need to have saved by the time they retired to live comfortably.

Using an online retirement calculator is a great way to get an estimate of how much you should save to retire by a certain age. To give you an idea, though, of when you might realistically be able to retire and how much in savings you would need depending on where you live, GOBankingRates crunched the numbers for you.

To determine the most realistic retirement age in every state, GOBankingRates first calculated the median income by age in every state using Census Bureau data to find out how much people could set aside in savings at various ages. Then GOBankingRates used findings from its January 2020 study on how much savings one needs across America to retire comfortably to pinpoint an ideal savings target amount for each state. To find out how long it would take workers in every state to save up to the states ideal savings target, GOBankingRates assumed the following:

Using the above assumptions, GOBankingRates found how much a worker in each state earning a median income could have saved at ages 24, 34, 44 and 58 to 77 years of age. Once the ideal savings target as identified by the earlier GOBankingRates study was met or exceeded, the following year was determined to be the ideal retirement age of each state.

You might be surprised to find that if you start saving 20% of your income starting at age 22, the realistic retirement age in your state might be sooner than you think. Or you might have to work longer than you expected.

Last updated: Jan. 23, 2020

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Methodology: To determine the most realistic retirement age in every state, GOBankingRates first found median income in each state, according to the 2018 current population survey conducted by the U.S. Census Bureau. To calculate income by age bracket (15-24, 25-34, etc.), GOBankingRates first divided the median income of each state by the median income nationally to derive an income index that was use to factor out income by age for each state. Once the median income by age was calculated for each state, GOBankingRates found an ideal savings target for each state, sourced from a January 2020 GOBankingRates study (Heres Exactly How Much Savings You Need to Retire in Your State), which assumes one will draw 4% from their savings each year to pay for living expenses. Finally, GOBankingRates set three constants for the type of savings that would occur: (1) workers start working at age 22; (2) workers are following the 50/30/20 rule (allocating 50% of personal income to necessities, 30% to wants and 20% to savings); and (3) workers are saving 14% in a typical savings account, in addition to putting 6% into a 401(k) with a 50% employer match (up to 3%) and an average annual return of 5%. Using those constants, GOBankingRates found the savings total of each state at 24, 34, 44 and 58-77 years of age. Once the ideal savings goal was met or exceeded, the following year was determined to be the ideal retirement age of each state. All data was collected and is-up-to date as of Jan. 8, 2020.

Story continues

Heres Exactly How Much Savings You Need to Retire in Your State methodology: To find out exactly how much is needed to retire in each state, GOBankingRates found the annual cost of expenditures for a retired person in each state by multiplying expenditures for those over the age of 65 from the Bureau of Labor Statistics 2018 Consumer Expenditure Survey by the cost-of-living index for each state from the Missouri Economic Research and Information Centers third quarter 2019 cost of living series. To find how much money a retired person would need to save, GOBankingRates divided each states annual expenditures, minus the annual Social Security income as sourced from the Social Security Administrations monthly statistical snapshot, November 2019, by .04, assuming drawing down savings by 4% each year to pay for living expenses. All data was collected and is up-to-date as of Dec. 13, 2019.

This article originally appeared on GOBankingRates.com: The Most Realistic Retirement Age in Every State

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The Most Realistic Retirement Age in Every State - Yahoo Finance

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January 28th, 2020 at 8:48 pm

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A place in the sun: French defend right to retire early – Reuters

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NICE, France (Reuters) - Most weekdays, 64-year-old Joelle Svetchine steps out of her French Riviera apartment, checks the sun is shining and the sea calm, and decides whether to go rowing.

It clears your head being out on the water, the pensioner told Reuters as she sculled across a bay near Nice under a blue sky. Im lucky to have free time and to be in good health, to have this freedom and no longer worry about work.

The former physiotherapist says she can lead an active life because she retired at the age of 61 and 1/2, benefiting from a pension system that allows many French workers to stop working years before their peers in other parts of Europe.

That system though is now under threat from a reform of the pension system being driven through by President Emmanuel Macron. His reform has provoked weeks of protests and strikes.

France has one of the earliest retirement ages among industrialized nations and its pensioners enjoy the third highest income level on a purchasing power basis of all European Union citizens, behind only those in Luxembourg and Austria.

Macron, a former investment banker, is pressing ahead with creating a universal pension system from a mishmash of schemes, each with their own benefits. He says it will be fairer. Trade unions say it will mean workers affected could have to work longer to get the same pension.

Macron has for now pulled back on another plank of his reform, raising the retirement age by two years to 64, but that could be a temporary retreat as the government says the system is underfunded.

Svetchine began working in the private sector before switching to public hospitals. She said she frequently saw workplace injuries the likes of which unions cite as justification for rail workers, dockers and others retiring up to a decade earlier than typical workers.

In all jobs, the body gets worn down. I know that in foreign countries, like Germany, people work longer. But in what state? Svetchine said.

Macron has said a single, points-based system which gives every worker the same rights for every euro contributed will be fairer, in particular for women.

That aspect of the reform, at least, resonates with Svetchine, who failed to reach her full pension by the legal retirement age after having taken two years maternity leave and later working part-time.

But she expressed support for the anti-reform strikes and protests.

Longer life expectancies meant that the early 50s was perhaps too early to retire nowadays, but a one-size-fits-all system that did not factor in a jobs physical and mental demands would be unjust, said Svetchine.

After all, to enjoy retirement, you need to be in good shape, she said.

Editing by Richard Lough and Alexandra Hudson

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A place in the sun: French defend right to retire early - Reuters

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January 28th, 2020 at 8:48 pm

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Here’s where younger generations expect their retirement income to come from – CNBC

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Many Americans believe they will live longer than their parents.

For younger generations, that has led to a big concern: how they will provide financially for those extended years.

That's according to a new online poll from the Longevity Project and Morning Consult, which surveyed 2,200 U.S. adults in December.

Of the individuals polled, 63% said they expect their lives to be longer than their parents'. That rate was even higher for members of Gen Z, those ages 18 to 22, with 70% indicating they expect to live longer.

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Despite those hopes, many individuals are not saving more to prepare for those extended years, the poll found. In fact, many Americans believe they are saving less than previous generations.

In fact, 48% said they are not saving as much for for retirement as they should, and 50% feel unprepared in their ability to plan for their later years.

And many younger Americans feel less comfortable relying on one income source that has been a staple for generations Social Security.

While 83% of baby boomers expect to have some income from Social Security, that drops to 64% for Generation X. Meanwhile, just 42% of millennials and 38% of Gen Z plan to depend on those benefits.

On the other hand, across all generations, Social Security benefits are expected to be one of the biggest sources of income. That's alongside personal savings and investments and 401(k) and 403(b) retirement savings plans.

The results come as Social Security faces a looming funding shortfall. The Social Security Administration's latest estimate projects that the trust funds will be depleted in 2035. At that point, only 80% of promised benefits will be payable, according to the agency's calculations.

"There's probably more irrational worrying than there needs to be," said Sri Reddy, senior vice president of retirement and income solutions at Principal Financial Group.

That's because the system will continue to pay benefits, even if they are reduced, he said.

"It's not like Social Security is going away," he said.

Yet other recent research has shown that living on just Social Security alone in retirement is not enough.

While Social Security helps to shrink the wealth gap between high-wage earners and low-wage earners, many still face poverty in retirement, The New School Schwartz Center for Economic Policy Analysis in New York recently found.

Separately, an analysis by the University of Massachusetts Boston found that there isn't one county in the U.S. where Social Security benefits equal the cost of living. That is, the cost of living is always higher.

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Here's where younger generations expect their retirement income to come from - CNBC

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January 28th, 2020 at 8:48 pm

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