Financial planning is full of rules of thumb. One of the most famous is the "Four Percent Rule," which simply says that in retirement you can safely take out no more than 4 percent of the combined value of all of your financial assets each year with an expectation that your money will last 30 years or more, which is longer than the average length of time Americans spend in retirement.

However, the Four Percent Rule may be much more valuable as a guide rather than a steadfast rule.

A bit of history: The rule was originated by my fellow NAPFA member and fee-only financial advisor Bill Bengen. His conclusions, published in the October 1994 issue of the Journal of Financial Planning, were based upon a number of simulations of historical market behavior.

The result was a commonly used formula for managing retirement expectations, based on a number of assumptions about retiree needs and market performance. For example, at age 65 if you have a retirement portfolio of $1 million, and don't want to run out of money until you're 95, you can safely withdraw up to $40,000 a year.

But what if real life strays from these underlying assumptions? For example:

--What if you need more than 4 percent annually?

--What do you do if you live to be 100 or 110?

--What if you get really spectacular returns in your first few years of retirement so that by the time you're 95, you find you have a much bigger surplus than you expected? You may realize that you could have afforded a more comfortable lifestyle during retirement.

--What if, in the first few years of your retirement, the stock market drops by 45 percent?

Questions like these very quickly show the real value of the rule: it's a good place to start.

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Using the 'Four Percent Rule' for Retirement Planning

The U.S. Treasury Department is examining individual retirement accounts as vehicles for potential tax avoidance, a top tax official said in a letter to Democratic lawmakers released on Wednesday.

Democratic lawmakers have raised questions about the individual retirement account, or IRA, of Republican presidential nominee Mitt Romney and asked the agencies to look into potential tax skirting by IRA holders. Romney has disclosed that his IRA contained up to $101 million, despite annual limits of much smaller amounts.

Treasury and the Internal Revenue Service "have been aware of this risk for a number of years and have been taking actions to curb abuses," Mark Mazur, Treasury assistant secretary for tax policy, said in the Sept. 19 letter to three Democratic House of Representatives members.

The IRS organized a team last year to improve compliance and enforcement of retirement account tax issues, Mazur said.

The IRA and Treasury are trying to estimate the number of IRA audits that involve asset valuation issues and gauge the size of any tax compliance problems, Mazur said.

IRAs are subject to contribution limits, which prompted some speculation at the time about how Romney's got so large, as shown in financial disclosure forms the former Massachusetts governor filed with federal election officials in August 2011.

"Gov. Romney has been eligible to contribute to retirement plans since he entered the workforce in 1975," a Romney campaign spokeswoman said in a statement on Wednesday. "Likewise, the investments in the IRA have appreciated sharply."

Aaron Albright, a spokesman for Democratic Representative George Miller, who received the Mazur letter, said: "Governor Romney's financial disclosure forms raised significant issues on whether this presents a problem of how people possibly misevaluate their IRAs to evade taxes."

House Democrats have called on the tax-writing committees in Congress to address IRA tax avoidance concerns.

Continued here:
US Authorities Eye Retirement Accounts as Possible Tax Dodges

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As couples plan for retirement, there is a helpful checklist they ought to consult to make sure they have enough money to maintain their accustomed lifestyle after they quit working.

By Richard Satran, TODAY contributor

Its the impossible dream to many people: coming up with enough money to retire well. But Fidelity investments has come up with a new strategy to figure out if you are saving enough and not just making it a race to The Number.

The Number, of course, is the total you need to assure an adequate retirement. For some of us its like those medical charts telling you the optimal weight for your height. Great, but how do I get there?

For the savings-challenged, Fidelitys Number is still daunting: You will need to have saved eight times your final salary by age 67 if you want to maintain a lifestyle similar to the one you have had while working, the company's planners figure. But Fidelity says its easier to get to the peak if you think of it as a series of manageable milestones through life.

To reach the 8x altitude, Fidelity says, here are check-down markers for getting to the golden peak at the right time:

Seems easier than climbing to the 8x level all at once, right? Thats the idea. If you follow the rule of thumb, your savings along with Social Security will likely deliver 85 percent of your ending salary until you reach age 92.

These savings targets offer a rule of thumb to help employees get engaged in retirement planning by making it simpler and more achievable, said James M. MacDonald, president of workplace investing at Fidelity Investments.

Fidelity admits the rule of thumb might not work in all situations. But it offers a plan for millennials, gen-Xers and baby boomers increasingly skeptical that they will ever be able to retire.

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Retirement made easy: Here's the magic number

Retirement is a big transition that you need to prepare for. Retiring before age 60 has even more challenges. While there are many financial obstacles for early retirees, personal challenges could be even more difficult. Here are some ways you can ease the transition into early retirement:

Finance. Early retirement can be financially challenging. Leaving your job will reduce your income significantly, and your retirement benefits may not kick in right away. The earliest age that Social Security benefits will be available is 62, and leaving the work force early could negatively impact the size of your Social Security checks. You also generally can't access your individual retirement accounts (IRA) until you are 59 1/2 without incurring a 10 percent penalty. You need to take these ages into consideration and plan accordingly.

If you are thinking about early retirement, you probably have other sources of income. These sources can be from your pension, spousal income, rentals, investments in taxable accounts, CDs, or peer to peer lending investments. You need to add all these up to come up with a monthly income figure.

Income calculation. For example, if you want to retire at age 55, then you need to estimate your retirement income at various ages. You may want to delay retirement account withdrawals to avoid the early withdrawal penalty or postpone signing up for Social Security in order to get bigger payments later on in retirement. Here's an example of retirement income streams you might begin to tap at various ages:

55-60: Income from a pension, spouse's job, rentals, savings, or investment accounts

60-67: Add income from IRA and Roth IRA withdrawals

67-70: Add income from Social Security

70+: Add income from required minimum distributions from retirement accounts if applicable

The biggest challenge is funding retirement from 55 to 60 because of the reduction in income. Once you get passed this stage, you will have your IRA and Social Security to draw upon.

Expense calculation. The other side of cash flow is your monthly expenses. Some of your expenses will go down when you retire, but some other costs will increase. Job related expenses will drop, and you can estimate some of these.

Original post:
Take an Early Retirement Test Drive

Video Link: https://www.youtube.com/watch?v=XmMdX6BbPAs

04-10-2012 04:38 Michael Schumacher has announced that he will retire at the end of the Formula One season.

Read more here:
Michael Schumacher announces retirement - Video

Video Link: https://www.youtube.com/watch?v=RhVeC3yyIYQ

03-10-2012 14:19 What is long-term-care insurance? This type of policy covers basic daily needs over an extended time. While health care insurance or Medicare helps pay for immediate medical expenses, say, a surgeon's bill, long-term-care insurance helps people cope with the cost of chronic illnesses, such as Alzheimer's disease, or various disabilities. The policies pay for assistance with everything from the basics — bathing and dressing — to skilled care from therapists and nurses for months or even years. Financial Advisor Adam Moeller in Denver Colorado says "long term care costs can easily use up your retirement savings quickly." Moeller says "new hybrid products combining insurance and an annuity can be particularly helpful."

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What is Long term care insurance? Retirement Planner Adam Moeller Denver, CO - Video

Video Link: https://www.youtube.com/watch?v=FkGMG8Ah0pA

03-10-2012 14:44 Retirement planning expert Kevin McEnereny in Melbourne & Orlando Florida discusses benefits to the employee and employer of using an annuity in their 401k plan. This strategy can provide lifetime income for the employee and be very cost effective for the employer.

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401K Annuity Pension Strategy Retirement Planner Kevin McEnerney Orlando Florida - Video

The role of private savings and how Kiwi women will fare when it comes to retirement income are among the terms of reference for the latest Review of Retirement Income Policy released publicly today.

Every three years, the Retirement Commissioner examines retirement income policies and practices to assess their effectiveness and identify future issues. The resulting Review of Retirement Income Policy will be presented to Government in late 2013.

Retirement Commissioner Diana Crossan says the review is an important tool for ensuring the Government is aware of the facts, any emerging trends, and new developments that could affect the long-term future of retirement income policy.

"The decisions we make now about retirement income potentially have consequences for generations to come. We need to regularly review and assess where we are to ensure universal New Zealand Superannuation is available for Kiwis who are currently in their 30s and 40s.

"Our ageing population and the global financial crisis of recent years make these issues more relevant than ever," she says.

The findings of the review will help provide policy stability and inform policy development. The terms of reference for the review will cover five main topics. They are:

1. An update of, and commentary on, the developments and emerging trends in retirement income provision since the 2010 review, both within New Zealand and internationally.

2. A discussion of the intergenerational impacts of New Zealands retirement income policy, with due consideration given to:

a). the effects of increased longevity on present retirement savings schemes;

b). alternative retirement savings approaches; and

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Focus for retirement policy review released

MINNEAPOLIS--(BUSINESS WIRE)--

Wealth Enhancement Group, is pleased to announce that Joe Brummel, Director of Retirement Plan Consulting, along with industry leaders, today unveiled iJoinTM, a web-based software delivered through mobile technology that helps Americans prepare for retirement. iJoin addresses a critical need in the market for engaging, interactive retirement-planning solutions that educate and, more importantly, change behavior.

Fully 70 percent of American workers say they are not where they need to be with their retirement savings, according to the Employee Benefit Research Institutes 2011 Retirement Confidence Survey. These types of statistics are staggering and call for solutions, said Joe Brummel, AIF. When we set out to develop a solution to this growing problem, we knew we had to apply behavioral finance to technology.

iJoin leads users through an interactive decision-making process to determine:

In an iJoin pilot program in which nearly 500 workers across a variety of industries participated:

Experience iJoin for yourself by visiting http://www.ijoinsolutions.com for a video tutorial.

Joe Brummel is a 16-year industry leader in the retirement planning community. Brummel has earned the Accredited Investment Fiduciary (AIF) professional designation from Fiduciary 360, which trains and certifies advisors in investment fiduciary responsibility. He is also a Founding Lecturer of The Retirement Advisor University (TRAU) at UCLA Anderson School of Management Executive Education.

For more information about Joe Brummel and Wealth Enhancement Group on the services they provide, visit http://www.wealthenhancement.com/RPC.

Securities are offered through LPL Financial, Member FINRA/SIPC.

Photos/MultimediaGallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50429484&lang=en

Originally posted here:
New Web-based Technology Improves Retirement Readiness

GREENBURGH, N.Y. (AP) -- The quiet of Rasheed Wallace's retirement in North Carolina was interrupted last spring by a call from an old coach.

''Out of the blue, coach Woody called me like, 'Young fella, what are you doing?''' Wallace said of Mike Woodson.

''I'm like, 'Uh, you know, just down here enjoying life, enjoying the summer, down here with my mom, taking it easy,''' Wallace recalled. ''That's all I was doing pretty much.''

Woodson had something else in mind.

The Knicks coach wanted depth in his frontcourt and remembered the success he and Wallace had in Detroit on Larry Brown's 2004 NBA championship team. So they were back together Wednesday - an older, mellowed Wallace ending a two-year retirement to sign with the Knicks.

''We have a good history coming from Detroit,'' Wallace said. ''We won one together, so he asked me if I still want to play. I said, 'I'll come up there and see what I can do for you.'''

Woodson isn't sure what that might be, using the term ''only time will tell'' at least three times when asked about Wallace's potential. But the Knicks were young and thin in the frontcourt last season, so he figures it's wise to give the four-time All-Star a shot.

''The fact that he's asked to come out of retirement and play, for me it's great to give him a shot because I remember the good times,'' Woodson said. ''I don't know if he still has it yet until he gets out here and he starts working and playing, but only time will tell.''

Wallace said he decided in late August after a few conversations with Woodson to attempt the comeback. He cited his respect for the laid-back Woodson, an assistant under Brown whom Wallace credited with calming down the player who once racked up 40 technical fouls in a season.

The 38-year-old Wallace last played for the Boston Celtics in the 2009-10 season. Terms of his contract were not announced, but the Knicks could offer only the veteran's minimum of about $1.7 million.

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Rasheed Wallace ends retirement to join Knicks