Eligibility for retirement benefits begins at different ages. Your age also plays a role in what you need to do to avoid retirement account penalties. Here are important ages to factor into your retirement plans:

[See The 10 Best Places to Retire in 2012.]

Age 21. Employees can generally first join a 401(k) plan at age 21. Plan sponsors are allowed to exclude employees younger than 21 from 401(k) plans, and many companies do. A recent IRS survey of 1,200 401(k) plan sponsors found that 64 percent require employees to be at least 21 before they can participate in the 401(k) plan. And 61 percent of companies that offer a 401(k) match require employees to be at least age 21 to qualify. "If you can start saving this early, it can make a tremendous difference because you have the growth in your investments accumulating for more years," says Joe Tomlinson, a certified financial planner and founder of Tomlinson Financial Planning in Greenville, Maine.

Age 50. Beginning at age 50, you can defer paying income tax on more of your retirement savings in a 401(k) or IRA. The contribution limit for 401(k)s, 403(b)s, and the federal government's Thrift Savings Plan is $22,500 for people age 50 and older in 2012, $5,500 more than younger people can deposit in these accounts. Older workers can also tuck away $1,000 more than their younger counterparts in a traditional or Roth IRA.

Age 55. Retirees who leave their job during the calendar year that they turn 55 or later can take 401(k), but not IRA, withdrawals without having to pay the 10 percent early withdrawal penalty. Qualified public safety retirees can begin penalty-free withdrawals if they separate from service the year they turn 50 or later. "If you separate from your employer at 55 or later, you can take a lump-sum payment from your 401(k) and there is not penalty," says Erin Botsford, CEO of The Botsford Group in Frisco, Texas, and author of The Big Retirement Risk: Running Out of Money Before You Run Out of Time. "But you cannot roll that 401(k) into an IRA and take a lump sum out without penalty."

[See 401(k) and IRA Changes Coming in 2012.]

Age 59½. The 10 percent early withdrawal penalty on IRA withdrawals ends at age 59½. However, you are not required to take distributions until after you reach age 70½.

Age 62. Workers become eligible to sign up for Social Security benefits at age 62. However, your payout will be reduced if you begin payments at this age. For example, a baby boomer born in 1950 who signs up at age 62 will get 25 percent less per month that he would have gotten if he had waited until age 66 to claim. A worker eligible for a $1,000 monthly benefit at age 66 would get just $750 monthly at age 62. Also, people this age who work and receive Social Security benefits at the same time could have their payments temporarily withheld if they earn above certain annual limits.

Age 65. Medicare eligibility begins at age 65. The initial enrollment period starts three months before the month you reach age 65 and ends three months after your birthday. It's a good idea to sign up right away because Medicare Part B premiums will increase by 10 percent for each 12-month period you were eligible for benefits but did not enroll. If you or your spouse is covered by a group health plan based on your current employment, you should sign up within eight months of leaving the job or health plan to avoid the higher premiums.

Age 66. Baby boomers born between 1943 and 1954 qualify for the full amount of Social Security they have earned at age 66. For those born between 1955 and 1959, the full retirement age gradually increases from 66 and two months to 66 and 10 months. Once you reach your full retirement age, you will also be able to work and claim Social Security payments at the same time without having any of your payment withheld.

Age 67. The Social Security full retirement age is higher for younger workers. Eligibility for unreduced Social Security payments for workers born in 1960 or later begins at age 67.

Age 70. Social Security payments continue to grow by 8 percent per year for each year you delay claiming up until age 70. "The longer you can postpone it up until age 70, the better, especially if you have longevity in your family," says Botsford. Your spouse could also benefit if you delay claiming Social Security. "If someone waits until age 70, when they pass away, their spouse will be able to continue that higher benefit for the remainder of their life," says Tomlinson. After age 70, there is no additional benefit to delaying Social Security payments.

[See How to Finance Life Until 100.]

Age 70½. Withdrawals from 401(k)s and IRAs become required after age 70½. If you don't withdraw the correct amount, you will be required to pay a 50 percent excise tax on the amount that should have been taken out. The first distribution is due by April 1 of the year after you turn 70½. After that, annual withdrawals will be required by December 31 each year. If you delay your first withdrawal until April, you will need to take two distributions in the same year. "If you delay taking that first one, you are bunching up two years' worth of distributions into one tax year and you are going to have to be comfortable with whatever the tax impact of that is going to be," says Gerald Wernette, director of retirement plan services at Rehmann in Farmington Hills, Mich. In some cases, two distributions in the same year could push you into a higher tax bracket.

Twitter: @aiming2retire

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10 Important Ages for Retirement Planning

In a recent column, I asked you to complete a retirement checklist to create a big-picture strategy. The next step is determining your needs. You may find that your needs and your actual savings don't come together in a nice package. In that case, knowing there is a gap will help you better prepare.

[See top-ranked ETFs by category ranked by U.S. News Best ETFs.]

Since there are so many variables, turning your needs into your savings number can be complicated. There are online calculators, and retirement planning professionals should be able to help. Some things to consider as you work toward your number are:

Lifestyle. Do you plan to maintain your current lifestyle? Retire more frugally? Take on new expenses? Oftentimes, financial advisers figure monthly retirement needs in terms of current monthly income. However, your income replacement need could be 70 percent or 105 percent of your current income.

Long-term care. Do you have long-term care insurance? If not, decide whether to budget for long-term care.

Retirement age. Earlier retirement means fewer earning years and more spending years.

Living situation. If you plan to live in a home with a paid-off mortgage, budget for home repairs, updates, and insurance. Renters, ensure your budget includes monthly rental payments forevermore.

Transportation. If you'll own a car, you'll need to pay for gas, upkeep, and insurance--and you may want to purchase new cars periodically during retirement.

Gifting. Do you plan to give your children monetary gifts?

Employment. Do you plan to work as a consultant or start a new business? Maybe you'd like to have a part-time job during retirement. Account for any income you plan to have.

Inflation. The average inflation rate has historically been about 3.4 percent per year.

Health care. Your retirement age and employment situation will alter your health insurance options. Even if you'll immediately qualify for Medicare, you'll still need money to pay for care within that program as it currently stands.

Post-retirement investing philosophy. Think about your risk tolerance during retirement. Your post-retirement investing plan may revolve around wealth preservation, or you may prefer to put your money to work, investing some portion in asset classes with more risk.

[See Using Brokerage Windows to Expand Your 401(k) diversification]

Social Security. Under the current structure of Social Security, how much income do you anticipate receiving? Do you believe Social Security will pay at that rate when the time comes? There are differing opinions about the future of Social Security. To be safe, some retirement planners assume they'll receive no Social Security income.

Spousal/partner income. Remember to account for your spouse or partner's employer-sponsored retirement plan or IRA income.

Other income. Don't forget pensions, annuities, inheritance, and other investments. Consider when you'll receive them and in what form.

Filling in the gap

Once you determine how much money you'll likely need to live the retirement lifestyle you prefer, calculate how much money you're currently on track to have at retirement. This number is based on your current and future rate of saving with your ongoing investing style. Remember that it's wise to gradually move toward a more conservative allocation as you near retirement.

[See Preparing for the Ultimate Vacation]

If your goal is higher than your actual expected savings, you have a gap.

There are online gap analysis tools to help, but filling the gap means making financial changes. If you're on track to earn less money that you'll need, you can:

--Save more money now. To increase your current retirement contributions, you may need to change your current lifestyle: Spend less so you can afford to contribute more, or earn more by changing your employment situation.

-- Change your investing strategy to be more aggressive. However, people who already have a suitable, well-planned investing strategy in place should not invest at an uncomfortably aggressive level.

--Postpone retirement in order to put more money into a retirement account and spend less money from that account.

--Change your retirement goals and expectations. If you're unwilling or unable to make enough changes to fill the gap between your expected retirement account balance and your desired retirement account balance, something has to give. You'll need to have a less expensive retirement. Perhaps you'll need to travel less and forgo financial gifts to your children. You could work during retirement and take up fewer hobbies. Many Boomers are choosing to work longer and retire later.

Everyone contributing to an employer-sponsored retirement plan has taken a step in the right direction. But anyone serious about retirement readiness has to dig into the numbers.

Scott Holsopple is the president and CEO of Smart401k, offering easy-to-use, cost-effective 401(k) advice and solutions for the everyday investor. His advice has been featured on various news outlets, including FOX Business, USA Today and The Wall Street Journal. Keep tabs on Scott on Twitter and Facebook.

Read more:
Saving for a Comfortable Retirement

Video Link: https://www.youtube.com/watch?v=-I19SDkkbck

02-02-2012 15:21 403 b plans. What is a 403b? 80% of Teachers currently make a HUGE Retirement Mistake. Are you One of Them? Find out on this Teacher-Only Webinar: http://www.teachersretirementhelp.com This video goes over all the basics of 403b plans and the 403b contribution limits. Also discussed is 401k vs 403b, the different types of 403b teacher retirement plans, and the 403b maximum contribution. Best part of the video is it is all in easy to understand terms, none of that "finance speak". For more articles and videos to help you get more out of your money, visit TeachersRetirementHelp.com http

Excerpt from:
403 b Plans. What is a 403b? - Video

Video Link: https://www.youtube.com/watch?v=csokGDVu2kU

05-02-2012 04:36 Nick Diaz to retire? Did he actually lose? retires "I'm not gonna accept the fact that this was a loss. That ain't right," a disappointed Diaz stated. "I pushed him back the whole fight, I walked him down, I got the takedown, I'm the guy who went on top. "I think I'm done with this MMA. It's been great out here. I've had a good career. You guys pay me way too much, but I don't think I'm gonna get enough to keep going in this." The 170-pounders competed in some very close rounds to score, specifically the first two frames. Diaz felt that because he consistently took the center of the cage and hunted Condit down, he was the one that dictated Octagon control. "I don't need this [expletive]. I pushed this guy back the whole time, he ran from me this whole fight," Diaz stated. "I landed the harder shots, he ran the whole time. He kicked me with baby leg kicks the whole fight. That was the way they understand how to win in here, I don't wanna play this game no more. "I'll help my team and my brother, I'm out of this [expletive]." When Diaz's temperature eventually cools, the 29-year-old will most likely compete again. Then again, we are talking about the most unpredictable fighter the sport has ever seen.

Read more:
Nick Diaz to retire? Did he actually lose? - Video

Video Link: https://www.youtube.com/watch?v=947cKFAgsHo

15-02-2012 16:05 Lovers always plan to grow old together, but what if someone grows old without that special someone? Dating services say they are seeing more clients who are looking for romance after retirement.

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Couples Find Love After Retirement - Video

TORONTO, ONTARIO--(Marketwire -02/19/12)- As the February 29th deadline approaches to make a contribution to a Registered Retirement Savings Plan (RRSP) and as part of its ongoing commitment to improving financial literacy, BMO Financial Group will be providing daily retirement tips during the month of February from BMO Retirement Institute Head Tina Di Vito's new book 52 Ways To Wreck Your Retirement...And How To Rescue It.

Tip Number 37:

Take Advantage of tax gifts such as the Tax Free Savings Account

When the Tax Free Savings Account (TFSA) was introduced in 2009, it changed the way Canadians approached savings and investing. While tax-efficient vehicles such as RRSPs or registered pension plans allow Canadians to defer or postpone tax on investments earned, payments out of these accounts are fully taxable as ordinary income. With a TFSA, withdrawals are completely tax free, regardless of whether they are drawn from cash or returns on different investment vehicles held within it. TFSAs provide a big tax saving opportunity that Canadians should use by doing the following:

-- Take advantage now: Open a TFSA and maximize your available
contribution. If this is the first year you're getting a TFSA, you can
invest up to $20,000 and contribute the $5,000 maximum each year
thereafter. For those with children over 18, encouraging them to open
and contribute early could mean they may never pay income tax on any
investment income they earn.
-- Double-up: Open a TFSA for a spouse or common-law partner to double-up
on tax-free savings.
-- Continue to take advantage during retirement: Continue to use your TFSA
to your advantage well after you retire to help minimize tax on
investment income, maximize OAS entitlement, provide flexibility to pay
for unexpected costs without increasing your taxable income or to
preserve the tax-free status of any inheritance you have received.

Tip Number 38:

If you own U.S. property, account for estate taxes as part of your succession plan

While there is no estate tax in Canada, many countries impose estate tax on succession duties, including our neighbour south of the border. Canadians who own U.S. property may have to pay U.S. estate tax at the time of death. This applies to real property, such as vacation homes, furniture or vehicles, and stocks or options to acquire stocks issued by a U.S. corporation. Without proper planning ahead of time, this substantial tax could significantly hamper your succession plan.

To minimize U.S. estate taxes, consider the following:

-- Review your net worth with your financial advisor to determine your
exposure to U.S. estate tax.
-- Look for opportunities to invest in U.S. securities through Canadian
mutual funds.
-- Speak to a financial expert to determine whether it is appropriate for
you to hold U.S. investments in a Canadian holding company.
-- If your current U.S. vacation or secondary property isn't being used,
sell it and move furniture and other related belongings to Canada.

For more information on retirement: http://www.bmo.com/retirement.

Get the latest BMO press releases via Twitter by following @BMOmedia.

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BMO Retirement Tips of the Day: Take Advantage of the TFSA & Plan Ahead for Possible U.S. Estate Taxes

The decision about whether to opt for Roth tax treatment of your retirement assets--where you pay taxes upfront in exchange for tax-free withdrawals later on--requires you to make a judgment about whether your taxes will be higher in retirement than they were while you were working.

That's a lot harder than it sounds, as my colleague Adam Zoll explored in this article (http://news.morningstar.com/articlenet/article.aspx?id=537102). Not only does itinvolve divining what tax rates are apt to be on a macroeconomic level by the time you retire, but you also need to bear your own personal situation in mind. For lower earners who are early in their careers, it's likely that their income tax brackets will be higher in the future than they are today, making Roth contributions and conversions a good bet. For older savers, that might not be the case.

To help gather insights into the latter question, I recently surveyed Morningstar.com's many retired readers about their tax experiences, both pre- and post-retirement. Posting in the Investing During Retirement section of Morningstar.com's Discuss boards. I asked them whether their tax rates had gone up or down during retirement. Posters shared their own observations and how they navigated the "to Roth or not to Roth" question themselves. Several posters also weighed in with their own strategies for keeping their in-retirement tax rates down. Click here (http://socialize.morningstar.com/NewSocialize/forums/p/299270/3200784.aspx#3200784) to read the complete thread or share your own experience.

'My Retirement Tax Bracket Is Radically Lower'
Many posters noted that their in-retirement tax brackets were lower than when they were working, and that was, at least in part, by design. Several retired or soon-to-be retired readers said their lower earned incomes in retirement had helped; others noted that they had taken maximum advantage of asset location and tax-advantaged investments such as municipal bonds to limit their in-retirement income. However, posters' responses also alluded to the fact that managing tax brackets becomes more difficult past age 70 1/2, when seniors are required to begin taking minimum distributions, or RMDs, from their traditional IRAs and 401(k)s; those distributions are taxable.

Capecod's response to my query was unequivocal: "My retirement tax bracket is radically lower than pre-retirement. That is a consequence of one, no work compensation/earned income; two, living off Social Security and a portfolio composed largely of tax-free munis; and three, holding growth and higher-yielding taxable assets in an IRA with mandatory distributions still several years in the future."

Hanneral has employed similar strategies--and a few others--to keep taxes down in retirement. "My tax rate has dropped a lot [in retirement]. I have moved many of my high-return stocks to the tax-deferred account. I also added a number of munis to my holdings several years ago while their rates were more favorable. I also make maximum use of opportunities like donating unused time-share properties to charity. I have been retired now for 14 years and these steps have aided in keeping my tax rate low."

The same holds true for ThePrune, who shared, "Before retirement our married filing jointly tax bracket would have been 28%, but by making use of tax-deferral savings such as 401(k), 403(b) and 457 plans, we were able to push ourselves down into the 25% marginal tax bracket. After our recent retirement our marginal tax rate rate has dropped from 25% down into the middle of the 15% bracket. And I have a long-range tax planning strategy to keep it in the 15% bracket, even once required minimum distributions begin."

Hoodee is using a similar playbook: "My tax bracket went down dramatically and has stayed down in the 12 years since retirement. I can manage my investments to time capital gains so that I pay little in taxes; also, when I was working, my adjusted gross income was much higher."

Snorton is taking tax management a step further still: "I'm not yet retired, but I expect to pay less tax because I will be able to control how much I draw from taxable assets, unlike now where everything is taxed. I hope to change our official residence to a tax-free state where we have a second home to escape California's 10% (and rising) tax."

Poster audreyh1, who also participates in the Early Retirement Forum, has observed it's not uncommon for tax rates to go down during retirement. She wrote, "Many retirees seem to be able to stay in the 15% tax bracket. It may also be that some are receiving part of their income as capital gains and qualified dividends which are taxed at the 15% rate. Some of retirees have reported that they way overestimated the taxes portion of their retirement budget."

Audreyh1went on to provide a few additional reasons that retirees often see their taxes decline. "The total tax burden drops as well as a retiree is no longer paying Social Security or Medicare taxes. During the past decade, the amounts an older investor can put aside into tax-deferred retirement accounts has increased a lot. Back in the 1990s, the amounts that could be tax-deferred were much more limited. So perhaps newer retirees won't see such a drop in taxes if they were able to invest heavily in tax-deferred accounts before retiring."

Rossinator, with a big share of overall assets in taxable accounts, exemplifies Audrey1's point: Those with taxable assets can take advantage of a variety of maneuvers to keep taxes down, something those required to take RMDs cannot do. "My taxable investment account is a good deal larger than my retirement account (now a Roth IRA). The good news about this is that I can pass the Roth on to my heirs (hopefully), and I can manage my capital gains in my taxable account. I have been looking at my taxes for 2011 and noticed that my capital loss carry forward will run out on the 2011 tax return. So I won't have an extra $3,000 to deduct from income in 2012, but my tax rate in future years should still be substantially lower in retirement."

For Morningboy1, lower in-retirement tax rates are, at least in part, a sign of the times in which we live. "My tax rate went down because the interest rate went down and some banks went bust."

'It Is Hard to Reduce Our Taxes as Some Have Done'
Other posters, meanwhile, haven't seen a substantial change in their tax rates in retirement relative to what they paid while they were working. Those retirees who are deriving a big share of their income from pensions, RMDs from traditional retirement accounts, and Social Security were the most likely to report that their tax rates had stayed the same or even gone a little bit higher in retirement; they exert less control over their income streams than those retirees with big shares of their portfolios in taxable accounts and those who have yet to start taking RMDs.

For poster DennyF, keeping taxes--and income--level was part of the plan. "Our marginal tax rate (25%) has remained the same. But that was an expected outcome of our financial planning. Our goal was to work until our pension and Social Security benefits matched our pre-retirement income."

The same goes for Hondo, who noted, "We have remained in the same tax bracket that we were in before retirement. We both receive pensions and RMD income, plus I have Social Security, and we must take the standard deductions on our tax return. Therefore, it is hard to reduce our taxes as some have done."

Mdgardner concurred. "Our rate is about the same as before retirement. Most of our income is from combined pensions and Social Security and puts us into the 25% bracket."

Nittwit's post hints at the fact that for many seniors, retirement doesn't mean completely saying goodbye to the workaday world, and that can increase the tax bill. "I am retired 'on and off,'" this reader wrote. "This means that when managing my property and finances leaves me with too much free time, I seek employment. My wife is 10 years younger and loves to work and works for good people (boy does that make a difference), and so for tax purposes we still work. Our effective tax rate according to Turbo Tax for 2010 was 14.5%. My projections do not see that effective rate changing when we both retire although our official tax rate will decrease."

Mjlevine, like Nittwit, has also continued to work, which in turn has had implications on the tax front. "No one seems to consider the person who chooses never to retire because they love their work! I'll be 70 1/2 this year and will have to start taking RMDs. I'll still be earning as much as before, part of my Social Security is taxable, and I'll owe tax on my distributions. My bracket will therefore actually be higher!"

'So Far So Good'
Posters also weighed in on the pros and cons of converting traditional IRA and 401(k) assets to Roth status; doing so will reduce in-retirement tax bills and reduce the amount of money that must be distributed during their lifetimes. (Owners of Roth IRA accounts, in contrast with traditional IRA owners, are not required to take taxable required minimum distributions.)

Dipiranha notes that the ability to take tax-free IRA distributions keeps in-retirement taxes at or close to zero. "Before I retired two years ago, I was paying about 25% Federal, 14% self employment tax, and 9% California tax. Seventy percent of my money is in a Roth and 30% in Taxable IRAs. I pull just enough out of my taxable accounts to avoid any tax and the rest of my yearly expenses comes out of the Roth."

Poster WOODJ believes the decision to convert traditional IRA assets to a Roth IRA has helped increase in-pocket income during retirement. He shared his complete strategy for reducing in-retirement taxes in the thread, concluding. "Paying no taxes means that all of our income can be spent on the good things in life."

Jomil has also been pleased with the decision to convert: "I converted the last of the 'alphabet soup' of deferred compensation plans and IRAs to Roths in 2010. So far no regrets or worries about 'what ifs.'"

FidlStix, not yet retired, thinks that the possibility of higher tax rates in the future bolsters the case for converting traditional retirement vehicles to Roth. "Since taxes are sure to go up substantially in the years ahead, I'm thinking hard about biting the bullet and rolling 10% of my 401(k) into my Roth (backdoorwise) when I retire."

Paulbrown notes that being in a low tax bracket when the conversion takes place can make a conversion advantageous; his post also alludes the fact that reducing taxable income from other sources reduces the taxation of Social Security benefits. "I thought the only advantage [to conversion] was that it would lower my RMD, and I may never have to take more than what is required. When I did [the conversion] seven years ago I was already in the 15% bracket with no earned income, only Social Security, and RMD from IRAs. I was hoping I could also have less than 85% of our Social Security that was taxable. So far, so good."

Scotty believes that estate-planning considerations bolster the case for converting to Roth status. "With the Roth IRA the returns can be passed on to their children as tax-free extensions since the tax has already been paid upfront. At least this is with current law."

For texasboy, the decision to convert was driven by his desire for tax diversification--the ability to draw assets from vehicles with varying tax treatment. "I believed in spreading investments out among vehicles so I have traditional/Roth/401/403(b) depending on my ability to fund in any given year. That way I can pull from vehicles as each year's needs dictate would be best."

Both estate planning and tax diversification played a role in Rule72's decision to convert part of the household's IRA assets. "I will probably stop conversions once we are about 50/50 split in the Roth versus a traditional IRA. At least in our case it appears beneficial to pay more taxes now so 'the family' can pay less overall. And since we won't convert 100% I guess that means we've hedged our bets on the future taxing of tax qualified accounts. I reserve the right to adjust my spread sheet and change my opinions as the tax rules change."

Other posters weren't as sold on the benefits of converting traditional IRA assets to Roth. Hondo wrote, "I did convert some traditional IRA money to Roth before retiring. Looking back, I'm not sure that was a wise decision. Perhaps Roth conversions are good if the person is young, but I now feel it is unwise if the person is near retirement. In general, I don't believe in paying a tax before you have to."

Capecod was on the same page, noting that the appropriateness of a Roth conversion varies by individual. "For what it's worth, I've never understood the appeal of converting a traditional IRA to a Roth, but perhaps those with higher net worths see tax/estate planning advantages that don't apply to my family."

Johnep also did the analysis and concluded that Roth conversions weren't for him. "I went from top of 25% bracket to mid-point. Using pension and Social Security now but [being required to take] RMDs in a few years will put me back in high range of 25% bracket. I looked very closely at Roth but could not see the benefit starting now. A clear benefit for those starting much younger."

See More Articles by Christine Benz

30-Minute Money SolutionsNeed help picking up the pieces in this turbulent market? 30-Minute Money Solutions by Morningstar director of personal finance Christine Benz simplifies the daunting task of getting your financial house in order. Written for novice and experienced investors alike, this book offers manageable, step-by-step solutions for tackling money challenges and building a comprehensive financial plan in simple 30-minute increments. Learn more.Get Your Copy Today--$16.95

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Do Tax Rates Go Up or Down in Retirement?

My editor (age withheld) shuddered when I told her I had an item about what folks are thinking when they think about retirement.

Here's a clue: Most of them think the 49ers will win the Super Bowl before they get there.

Actually, it may not be quite as dire as my editor fears, if a new survey of Bay Area "pre-retirees" is to be believed. Most, for example, think they'll have enough money to live the good life through their golden years. Less than half believe they'll have to continue working.

There may, however, be an element of Cloud Cuckoo Land here. In a report to be released Monday by Wells Fargo, those surveyed estimate they'll need $1 million to enjoy retirement. On average, they're about 10 percent of the way there. Many acknowledge a lurking fear their savings won't be enough and swear they're going to cut back on spending today to save for tomorrow.

Kids, take note: One-third of parents surveyed said they probably won't be leaving their offspring any money when they die. Oh, and by the way, two-thirds of the pre-retirees, including parents, say they intend to stay in the Bay Area when they do retire. They like the weather and the health facilities.

While that suggests a comfort with their surroundings, said Bob Morgan, a financial planner at Wells Fargo, "There is a significant level of anxiety about what they can do to save and prepare for retirement."

The survey, conducted in December by Richard Day Research, interviewed 364 Bay Area residents, ages 25 to 75, with investable assets of more than $25,000. That amount, of course, excludes residents with far fewer assets and a great deal more to worry about.

The Bay Area findings also differ markedly from a larger national survey conducted for Wells Fargo last year. It found 74 percent of middle-class Americans, ages 25 to 49, expected to work well into their retirement years, many by choice, and a quarter of them saying they will "need to work until at least age 80."

Their estimated nest egg needed for retirement was $350,000, far less than the Bay Area. On average, those surveyed nationally were 7 percent of the way there, even lower than the Bay Area. The reaction from Wells Fargo retirement specialists to the national survey was also more downbeat.

"The fact that the vast majority of middle-class Americans expect to work well past the traditional retirement age has significant societal and economic implications," said Joe Ready, director of the bank's Institutional Retirement and Trust department. "Will people be physically and mentally able to work later in life? What will it mean for young people entering the workforce?"

The Bay Area may be better off than most of the rest of the nation, but the same questions, and gnawing anxieties, still apply.

Less money, more risk: Younger pre-retirees among the state's public employees may have more to worry about, according to the California Public Employees' Retirement System.

Analyzing one of Gov. Jerry Brown's pension reform proposals - replacing the current defined benefits plan with a "hybrid risk-sharing plan," i.e., a tacked-on 401(k) type plan - CalPERS says that the resulting benefits will be lower for new employees.

The report, presented to the Legislature last week, also said the 401(k) element adds more risk and uncertainty for employee benefits.

CalPERS has yet to evaluate other proposals in Brown's reform package, including raising the retirement age from 55 to 67 and having a significantly greater percentage of the pension costs deducted from employees' paychecks.

Socially responsible reward: The Northern California Community Loan Fund got a rather nice 25th anniversary present last week - a $2 million grant from JPMorgan Chase.

The money will go toward the San Francisco nonprofit's housing preservation program in low-income communities, one of numerous programs it has developed since its founding in February 1987.

Excerpt from:
Retirement optimism stifled by economic realities

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

17-02-2012 13:27 First Among Equals: George Washington and the American Presidency http://www.aei.org

Link:
Richard Brookhiser: The Significance of George Washington's Retirement - Video

TORONTO, ONTARIO--(Marketwire -02/18/12)- As the February 29th deadline approaches to make a contribution to a Registered Retirement Savings Plan (RRSP) and as part of its ongoing commitment to improving financial literacy, BMO Financial Group will be providing daily retirement tips during the month of February from BMO Retirement Institute Head Tina Di Vito's new book 52 Ways To Wreck Your Retirement...And How To Rescue It.

Tip Number 35:

Consider splitting income to pay less in taxes, now and during retirement

In the Canadian tax system, higher-income Canadians pay anywhere from 38 to 50 per cent in income tax, depending on the province or territory in which they live. Because Canadians file separate income tax returns from their spouse or common-law partner, there may be situations where one person is paying at the highest tax rate, while the other is paying no tax at all. If couples split their income as reported on their tax returns, they could save a great deal of tax. For example:

Before income tax splitting
----------------------------------------------------------------------------
You Your Partner Combined
----------------------------------------------------------------------------
Income $65,000 $5,000 $70,000
----------------------------------------------------------------------------
Tax estimate $13,000 $0 $13,000
----------------------------------------------------------------------------
Net after tax $52,000 $5,000 $57,000
----------------------------------------------------------------------------
After income tax splitting
----------------------------------------------------------------------------
You Your Partner Combined
----------------------------------------------------------------------------
Income $35,000 $35,000 $70,000
----------------------------------------------------------------------------
Tax estimate $5,000 $5,000 $10,000
----------------------------------------------------------------------------
Net after tax $30,000 $30,000 $60,000
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The simplified example above results in a savings of $3,000. Income splitting is not always automatic. Here are tips for couples to keep more of their income and pay less in income taxes:

Pre-retirement years:

-- Higher income earning spouses should pay all of the household expenses
so the lower income earner can save most of their income in their own
name.
-- Build assets in the lower income earning spouse's name by making a
contribution to his/her spousal RRSP, Tax Free Savings Account or
setting up a spousal loan.

During Retirement:

-- As soon as you are eligible to split pension income, make an election on
your tax return and claim pension income split up to 50 per cent of
eligible pension income.
-- As soon as you are eligible to share CPP/QPP payments, apply to do so.

Tip Number 36:

Take steps to keep as much of your Old Age Security income as possible

Old Age Security (OAS) is paid to Canadians aged 65 and older who have lived in Canada for at least 10 years after their 18th birthday. Those that qualify for OAS get the maximum entitlement after 40 years of Canadian residency, which over a 25-year period can amount to $160,000. However, besides being subjected to income tax, OAS is also income-tested; this means that some or all of that amount may be paid in taxes if your income in retirement exceeds the annual threshold amount, which is approximately $69,562 for 2012.

For those in retirement, consider these strategies to keep as much of your OAS income possible:

-- Make an estimate of your retirement income to determine how close you
might be to the OAS threshold. Ask your financial planner to help you
with this.
-- Begin to rebalance your portfolio up to five years before you start
collecting OAS so that there is no spike in income resulting from
capital gains.
-- Seek out advice and proper planning so you can reduce the impact that a
withdrawal from your savings will have on your income and the OAS
clawback in retirement.

For more information on retirement: http://www.bmo.com/retirement.

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BMO Retirement Tips of the Day: Consider Splitting Income to Pay Less Tax & Take Steps to Keep More of Your OAS Income