Archive for the ‘Retirement’ Category
A retirement portfolio that makes sense
Posted: March 11, 2012 at 1:22 pm
For most Americans, building their retirement nest egg is one of their most important priorities -- and most difficult challenges.
A big factor to achieving that goal is constructing a well-designed portfolio. We can't predict the future, so no one knows what the ideal investment plan will turn out to be. However, we can construct a sensible one that is broadly diversified, low-cost, tax-efficient and consistent with your goals and investing temperament.
Such a portfolio will significantly improve your chances of reaching your retirement goals. Here are the key steps to developing an intelligent retirement investment plan:
* Clearly identify the goals for your portfolio. What do you want it to accomplish in the period leading up to retirement, during retirement and after you're gone? In addition to a secure retirement, are you planning to leave assets to family members or a charity? If so, how much do you plan to leave?
* Understand your risk tolerance. This is your willingness to accept short-term losses in exchange for expected, but uncertain, longer-term gains. If you can't sleep at night fearing that a severe drop in the market could cost you a significant portion of your assets, a portfolio that holds a high percentage of risky investments such as stocks may not be right for you. Your risk tolerance affects your portfolio design, so take the time to get this right.
* Determine your time horizon. For many investors, this will consist of
* Establish your asset allocation. The most important investment decision you will make is the portfolio's asset allocation, which is determining the portion of your investable assets you want in the three major asset classes -- stocks, bonds and cash. This decision will determine the majority of your portfolio's performance and risk. Different asset classes have different risk and return characteristics and can respond differently to economic and market forces. Therefore, you can balance a portfolio's risk and return by spreading your investments among different types of assets. This doesn't guarantee a profit or ensure against a loss, but it can help you manage the level and type of risks you face. A sensible asset allocation depends upon your investment objectives, time horizon, risk tolerance and other personal and financial circumstances.
* Diversify through sub-asset allocation and security selection. To further diversify your portfolio, you'll need to select the sub-asset classes and specific funds that offer you the exposure within the specific stock and bond categories you want.
* Determine your asset location. Different types of accounts, assets and gains are taxed differently. Therefore, choosing which assets to hold in which accounts can help improve after-tax returns. Generally, investors should hold tax-efficient investments such as broad-market index funds in taxable accounts, and tax-inefficient investments such as taxable bond funds in tax-advantaged accounts. However, factors such as short-term cash needs and estate-planning decisions can dictate exceptions to this strategy.
* Rebalance periodically. Asset classes perform differently during the year. In order to maintain your target asset allocation and manage your portfolio's risk, you should rebalance the portfolio periodically.
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A retirement portfolio that makes sense
Rahul Dravid to retire from Test cricket? – Video
Posted: at 1:49 am
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Rahul Dravid to retire from Test cricket? - Video
Rahul Dravid announces retirement from International Cricket – Video
Posted: at 1:49 am
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Rahul Dravid announces retirement from International Cricket - Video
Rahul Dravid announces retirement – Video
Posted: at 1:49 am
Senate Approves Retirement-Work Hybrid for Feds
Posted: March 10, 2012 at 8:50 am
The Senate passed an amendment on Thursday that allows retirement-eligible federal employees to work part-time -- a move designed to offset the costs of economic-development aid in rural counties.
The measure, proposed by Sen. Max Baucus, D-Mont., passed the Senate 82-16. It was put forward just hours before the vote as an amendment to the Surface Transportation Bill.
The American Federation of Government Employees feared that the amendment would result in additional, unneeded sacrifices by government workers in a congressional session that already has hit federal pay and benefits -- for instance with a pension contribution hike for newly hired federal employees passed in February as part of an extension of the payroll tax break.
While the change to federal retirement -- a phased, part-time retirement-employment concept -- may be acceptable to the federal-postal community after proper analysis and study, it is completely outrageous for federal and postal employees to be required, again, to serve as the automated teller machine for programs having nothing to do with deficit reduction, Beth Moten, AFGEs legislative and political director, said in a letter to senators on Thursday. She also complained that lawmakers had not made the text of the legislation available.
AFGE spokesman Tim Kauffman explained that the union was not necessarily opposed to phased retirement but took issue with the process of the legislation.What we really have a problem with is using the savings that would come from that proposal to fund yet another program thats unrelated to federal employees, Kauffman said.
Our opposition to the Baucus amendment is in how this assistance for rural schools is being paid for, Moten said. Federal employees have paid -- again and again and again.
National Treasury Employees Union President Colleen Kelley echoed those sentiments. NTEU supports a phased retirement program for federal employees on its merits, Kelley said in a statement Thursday. However, we do have serious objections to the use of the projected $450 million in savings from such a program for any use unrelated to federal employees. This includes the rural schools funding initiative.
The Office of Personnel Management included a similar proposal in its fiscal 2013 budget request. Easing older employees into retirement by offering a part-time work program would save the Obama administration $720 million during the next 10 years, the White House estimates.
Many federal employees are nearing retirement, so part-time work could pad federal agencies coffers if they did not have to replace these employees entirely. Under the proposal, part-time employees would receive partial annuities and could earn additional retirement benefits proportional to the amount of time they work. Older employees also would be required to mentor younger new hires and help preserve agency knowledge.
The Baucus amendments passage also stoked old AFGE fears of the Houses Transportation bill, H.R. 7. The most recent version of that bill includes a proposal to eliminate the Federal Retirement Employees Retirement System annuity supplement and changes the annuity calculation for new federal hires from one that uses an average of their three highest salaries to one that uses a high-five average.
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Senate Approves Retirement-Work Hybrid for Feds
Rahul Dravid Announces Retirement – Press Conference – Video
Posted: March 9, 2012 at 9:42 pm
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Rahul Dravid Announces Retirement - Press Conference - Video
How to (Legally) Dodge the Tax Man in Retirement
Posted: at 9:42 pm
Saving for retirement isn't just a smart move for the long run. It can also cut your taxes right now.
But just because you can reduce your current tax bill doesn't mean it's always the right move. For many workers a smarter option -- and one made possible by more and more employers -- is a retirement plan that completely eliminates your tax bill down the road.
Make Way for the Roth 401(k)
401(k) plans have been staple benefits from employers for decades. Your retirement plan at work lets you have money taken straight out of your paycheck, and in some cases, your employer matches those funds with extra money of its own.
In a regular 401(k), the money you set aside reduces your taxable income for the year, potentially saving you hundreds or even thousands of dollars in current-year taxes. But a relatively new type of retirement plan -- called the Roth 401(k) -- can be an even better idea for some workers.
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Based on the Roth IRA, these retirement plans don't give you the same up-front tax break. But unlike regular retirement plans, you don't have to pay a cent in tax when you pull money out of a Roth 401(k) to spend after you retire.
Is the Tax Trade-Off Worth It to You?
Currently only a very small number of workers who have access to Roth 401(k)s at work have taken advantage of them. In part, that's because you lose your current-year tax savings when you contribute to a Roth 401(k). (Apparently, the idea of paying taxes today on money that will be locked up for decades in a retirement account doesn't sit well with many workers.)
But that only tells half the story. For many workers -- especially those who are early in their careers -- you can expect your income to go up over time, as well as your corresponding tax rates. Giving up on a deduction now essentially lets you preserve it until a time when it might be worth a whole lot more.
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How to (Legally) Dodge the Tax Man in Retirement
Decision Points: Should I Postpone My Retirement?
Posted: at 9:42 pm
For most of us, retirement is the ultimate reward after a long life of hard work. Yet some of our retirement futures may not be as secure as we would like. If the market is dipping as you approach retirement age, you may be considering postponing your golden years a little longer in order to reap richer rewards. To help make your decision a little easier, here are some of the major advantages and disadvantages associated with postponing retirement.
Retirement Pros
Some of the benefits to retirement are quite obvious. Youll begin a well-earned break from the trials and stresses of working life as you prepare to enter your golden years. If youre well prepared financially or flexible about your quality of life, then deciding to forgo the extra cash in exchange for the freedom to start a new chapter of your life should be a no-brainer. Of course, if you choose to retire as planned, youll need to assess your finances thoroughly to ensure that you will remain well-supported throughout the rest of your life.
Certified Public Accountant and member of the AICPAs National CPA Literacy Commission, Ted Sarenski, warns that with poor financial planning, you risk having insufficient funds supplementing your Social Security to live your desired lifestyle after retirement.
For a quick calculation of what I need to have saved when I retire; take the desired budget, subtract what you would receive from Social Security, multiply the result by 25. If your savings fall short of this amount, youll most likely need to postpone your retirement, he says.
Retirement Cons
According to the AARP, the single most important question you need to consider when deciding whether or not to delay retirement is if you will have, at a minimum, enough lifetime income to cover your basic living expenses. If you decide that your retirement fund is insufficient to support you and your dependents throughout the rest of your life, youll almost certainly need to postpone your retirement. Even if you do decide that youve saved enough to get by, you may still experience a significant dip in your quality of life. Remember, if you retire in your fifties or sixties, you may still live for another 30 or 40 years, so you need to be sure that your finances are well prepared.
Postponement Pros
While spending a few more years in the workforce may not sound like an appealing prospect, for some it can greatly enhance their quality of life throughout the years that follow. Of course, postponement will allow your investments further time to grow, and decrease the amount of time spent drawing down your investments, but there are even further benefits to be gained.
According to Social Security Online, each additional year of full-time work adds another year of earnings to your Social Security record, which can result in higher benefits when you retire. In addition, individuals will receive delayed retirement credits, which increase each extra year you work after retirement age.
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Decision Points: Should I Postpone My Retirement?
Reaction to Dravid's retirement
Posted: at 9:42 pm
March 9 (Reuters) - Reaction to the retirement of India batting stalwart and former skipper Rahul Dravid on Friday:
India batsman and team mate Sachin Tendulkar:
There was and is only one Rahul Dravid. There can be no other. I will miss Rahul in the dressing-room and out in the middle.
Former India opener Sunil Gavaskar on BBC Radio 5 live:
He was totally a class act, on and off the field. A terrific role model for youngsters with his work ethic, with the way he carried himself, with the way he applied himself.
Its going to be a bit of a void in Indian cricket now. I think you really wont find anybody playing with the same tactical virtuosity that you saw with Rahul Dravid.
Former India captain Anil Kumble:
Ive enjoyed every moment that Ive played with you. Its been a great honour. Rare are those individuals that hold the unique combination of exceptional talent and commitment.
His ability to concentrate for long hours remains unmatched. He is someone who is constantly in search of perfection.
You are a perfect ambassador for cricket and an ideal team man.
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Reaction to Dravid's retirement
Senate-Passed Measure Approves Retirement Work for Federal Employees
Posted: at 9:42 pm
The Senate passed an amendment on Thursday that allows retirement-eligible federal employees to work part time -- a move designed to offset costs of economic-development aid in rural counties nationwide.
The measure, proposed by Sen. Max Baucus, D-Mont., passed the Senate by an 82-16 vote. It was put forward just hours before the vote as an amendment to the Surface Transportation Bill.
The American Federation of Government Employees, the largest federal-employee union, feared the amendment would result in additional, unneeded sacrifices by government workers in a congressional session that already has hit federal pay and benefits -- for instance with a pension-contribution hike for newly hired federal employees passed in February as part of an extension of the payroll-tax break.
While the change to federal retirement -- a phased, part-time retirement-employment concept -- may be acceptable to the federal-postal community after proper analysis and study, it is completely outrageous for federal and postal employees to be required, again, to serve as the automated teller machine for programs having nothing to do with deficit reduction, Beth Moten, AFGEs legislative and political director, said in a letter to senatorson Thursday. She also complained that lawmakers had not made the text of the legislation available.
AFGE spokesman Tim Kauffman further explained that the union was not necessarily opposed to phased retirement, but took issue with the process of the legislation.
What we really have a problem is using the savings that would come from that proposal to fund yet another program thats unrelated to federal employees, Kauffman said.
Our opposition to the Baucus amendment is in how this assistance for rural schools is being paid for, Moten said. Federal employees have paid -- again and again and again.
National Treasury Employees Union President Colleen Kelley echoed those sentiments. NTEU supports a phased retirement program for federal employees on its merits, Kelley said in a statement on Thursday. However, we do have serious objections to the use of the projected $450 million in savings from such a program for any use unrelated to federal employees. This includes the rural-schools funding initiative.
The Office of Personnel Management included a similar proposal in its fiscal 2013 budget request. Easing older employees into retirement by offering a part-time work program would save the Obama administration $720 million during the next 10 years, the White House estimates.
Many federal employees are nearing retirement, so part-time work could pad federal agencies coffers if they did not have to replace these employees entirely. Under the proposal, part-time employees would receive partial annuities and could earn additional retirement benefits proportional to the amount of time they work. Older employees also would be required to mentor younger new hires and help preserve agency knowledge.
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Senate-Passed Measure Approves Retirement Work for Federal Employees