What You Need to Know before You Consider Retirement, Even When the Economy Is Weak iahk by Terry Clark - HTML preview

On the other hand, the policy of each retirement system for the teachers may vary depending on the state law, where it falls under a particular state’s jurisdiction.

 

Just like any retirement programs, the teachers who chose to be a member of the system are required to pay the monthly contributions to the system. Usually, the monthly contribution is 6.4% of their total gross income.

 

As the teacher reaches his or her retirement age, he or she will soon benefit from the money that they have long saved. Indeed, with all these things present, the teacher retirement is truly a feasible method of saving for the future.

 

 

The Time to Retire

 

 

When people are young, the word retirement is not something of much concern. It is 20 or even 30 years away and a lot can happen during that time. The thought of retiring and what to do when the time comes, is a dream and with proper planning that can become a reality.

 

Years ago, the concept of retirement did not exist. People worked till the day came where they would die.  Those days are gone now with government sponsored health care, company benefits and insurance companies.

 

Figures show that some people who have reached the age of 50 are not able to make that dream a reality.

 

To avoid being one of the people who have failed in making the dream come to life, you should think smart and save up while there is still time.

 

Playing it smart and managing expenses is one of the ways of getting to that goal. You can buy groceries from the supermarket instead of the local convenience store since items are much cheaper there. A person can also buy generic stuff instead of designer products that are of equal quality. The money saved is a start and in time, can go a long way.

 

Getting a good 401k plan from the company is another. The money saved will double in a few years and if the time is right, then one can already think about retiring.

 

Financial institutions can also help make this dream come true. With the packages that are offered and the interest rates that are available, it can enable someone to double the money in 10 to 15 years which makes early retirement also possible.

 

In the 1970’s people worked hard and relied more on the job than the investments that were available. These days it is the other way around which can make it challenging at times.

 

There is no ideal time to retire. It depends if the person has accumulated a certain amount of cash which makes it easy not to rely on a monthly paycheck anymore and if one is willing to finally settle down.

 

Life after retirement does not end there. There are some who have decided to get another job instead of lounging around at home.  This helps the person stay active, productive and physically active.

 

It can make a person try out new things like going back to school or exploring a new talent which one can excel in later on.

 

The options are endless and retirement made that all possible.

 

 

Looking for Retirement Paradise

 

 

Your days of toil are almost over and the relaxing and pleasant age of retirement has dawned. Time to make one of the most important decisions of your life: choosing a place for you to enjoy your well-earned rest. It can be pretty daunting to think about it, but with a few pointers you should be able to make the best choice for yourself.

 

There are a few things to look at. These are your finances, the climate, health care facilities and, of course, distance from your family.

 

Let us first take a look at your finances. Ask yourself the following questions: can I afford a move from my location? How much money do I have coming and can I support myself while staying at my present home? Will I be able to pay the taxes, both state and local that I will be accruing?

 

Take a look at your nest egg and judge what you can afford. If staying at your current residence is cheaper than moving out, by all means stay - you can't enjoy retirement without your hard-earned money. Also, make calculations on what you'll be spending your money on. That way, you can also check if you can afford to move into a decent retirement community.

 

The climate is another factor. Take into consideration the fact that you're not as spry or healthy anymore - the extremes of warmth and cold can do major damage to an old body. Also, think about what you enjoy - if you have hobbies that are specific to a particular climate, it would be best to choose the right one for your pastime. Enjoy fishing or swimming? Maybe a nice coastal residence with a sunny climate would be the best for you. A majority of retirees prefer warmer climates for their retirement days and thus choose to take residence in the southern states. Florida isn't the only senior-friendly state and you have a wide array to choose from.

 

The two final factors are the medical facilities and how far away from your relatives do you want to be. Growing old usually means fading health and your choice for spending your golden years should have ample access to health care. Check around for a place with a good hospital or a nice local doctor. Relaxing in your twilight years would be better if you had the good health to enjoy them. Also, take into consideration your immediate family. Do they want to visit often? Do you want them to visit often? Do you want to drop by on them frequently? Try checking for a place that is affordable for you and your family's travel budget and easy enough for them to visit.

 

 

Life Begins With Retirement

 

 

Sometimes transitioning from your workaholic daily life to the relaxed rhythm of the golden years is not easy. Some people have difficulty finding the same feeling of accomplishment they had when working in the fast lane. They see retirement as a dead end. This shouldn't be so - retirement is retiring from your job not your life. It's like shifting to the slow lane on a highway - less demanding, more relaxed and even pleasurable.

 

Put things into perspective: remember the days at your job when you wanted to chuck it all in and go off to relax somewhere. Think of the times when you just wanted to kick back and not care about anything at all. Retirement is all about that. You may dislike the slower pace but, in the end, it is what you've been working towards in your job and it is time that you enjoy the fruits of your labors. It’s finally time to handle life on your terms!

 

All your anxiety and restlessness is just a reaction to the change you're experiencing. Make no mistake; retirement is a major life change that brings with all that it entails - a bit of emotional displacement and depression. You can handle it like all the other changes in life: go with the flow and learn to adapt.

 

When the honeymoon phase of retirement is over, you will inevitably feel all these things and more. This is where you start to figure out ways to spend your retirement time -  what you want to do, how much time you want to spend on whatever interest you have and what interests to pursue. The difference here from your working days is the fact that you'll be answering to no one but yourself, not the company boss or the company itself. This is your "me" time and it will last for the rest of your life. You may have put your dreams on hold when you went to work and began making a living - why not start them up again?

 

Here are a few more pointers that may help you on how to enjoy your golden years:

 

- Sharpen your talents: Singing, dancing and many other interests may have been hard to pursue during your working years, but retirement offers you the opportunity to enjoy and even improve them.

 

- Reaching out: All the people you've met through the years and your old friends that you've fallen out of contact of, people you wished to know more about and to keep in touch with? What better way to spend your golden years but to revive these old ties and hook up with old pals?

 

- Travel: It's always good to see the rest of the world and now you have a lot of time to spare. Pack your bags and call your travel agent, it's time to go on a trip!

 

These are just a few suggestions. Remember, when you're in your golden years, the sky's the limit!

 

 

Not Willing to Leave Just Yet

 

 

When people are young, the word retirement is not something of much concern. It is 20 or even 30 years away and a lot can happen during that time.  It is something that slips in an out that is given little thought.

 

Some companies offer early retirement to its employees. Even if the age of retirement is officially at 65, there are some who are not yet willing to leave and would rather work some more instead of enjoying the other pleasures that life has to offer.

 

A job or a profession to some is what makes the person a member of the community. It makes the person feel important for the years of service given and the number of accomplishments one has achieved. These are things that some people hold on to which makes retirement hard to accept.

 

The psychological impact makes it hard for someone who has lived in a fast paced world to adjust to a life that is at a more leisurely pace. Some forms of leisure after working for so long can be done by spending more time with family and friends, playing golf or cruising around the world.

 

Another reason is perhaps the person who is still employed is just waiting for the right moment or package that the company will give out to its employees. Such issues are whether or not the retirement package that is being offered is higher than the projected earnings if one stays employed or if the retirement fund can be used immediately once it has been given.

 

Some people can get more just waiting for the normal retirement age than accepting the company’s early retirement plan. Instead of saving, one might end up forfeiting and miss out on opportunities to make additional contributions to the plan.

 

People who don’t want to retire yet are also concerned if the offer given by the company includes post-retirement medical insurance. This is because Medicare doesn’t start until one has reached the age of 65 and the cost of getting private insurance is expensive. 

 

There are risks in deciding to stay if a retirement offer is on the table. Business may not be doing well prompting the company to lay off workers or even have the position one has eliminated due to redundancy.

 

The most important reason that makes some employees still stay is that regardless of age, one strongly believes that one can still do more being at the job.

 

 

Tax Implications of Retirement Accounts

 

 

There are several retirement accounts with tax implications. 401K accounts, Keogh accounts, Roth IRAs and standard IRAs are some of the most important and widely know retirement accounts.

 

What is an Individual Retirement Account (IRA)?

 

An Individual Retirement Account (IRA) is a retirement investment into which you put contributions on which you do not pay taxes until you withdraw the money from the account after you retire. Usually, your tax bracket will be lower after retirement and so you won't have to pay as high a percentage of the money in taxes as you would have if the money had been taxed at the time it was originally earned. When you put money into an IRA, you get a tax deduction. When you take a "distribution" from that IRA later, it counts as taxable income. There are penalties for early withdrawal up to age 59 1/2.

 

You are required to start taking money out of your IRA no later than at age 70 1/2.

 

You should check with your accountant or the IRS to see how much you can contribute in the current tax year. How much of this money is tax deductible depends on your Adjusted Gross Income (AGI) and whether you are covered under an employer retirement plan.

 

There are other variations of the standard IRA, such as the "Simple IRA," a relatively new but popular employer based plan allowing employer contributions and a higher contribution by the taxpayer.

 

What is a 401K Retirement Account?

 

A 401K plan is named after a section of the 1978 U.S. Tax code. It is a plan offered by employers which allows you to automatically save a portion of your income for retirement without paying taxes now on the money you are saving. As with the IRA, the idea behind it is you'll be in a lower tax bracket after retirement and therefore will have less tax to pay on the saved money than you would pay now at your higher salaried income rate. You only pay taxes on the money when you withdraw it from the 401K account after retirement.

 

Usually, the 401K money is automatically deducted from your paycheck by the company's payroll system in much the same way your taxes are withheld.

 

In its basic configuration, a 401K account is similar to a standard IRA, but in many employers' plans, there is a matching contribution from the employer which provides the real power to the plan. Beware. Many companies invest the 401K plan money heavily in their own company stock. If the company has an unusually bad financial problem, you might find this money in jeopardy as well as your job. The best 401K plans allow you to control the investment vehicles for your money.

 

Typically, at the time of retirement, a 401K plan is "rolled over" into a standard IRA, from which the retiree then makes withdrawals over time to provide retirement income.

 

What is a Keogh Retirement Account?

 

A Keogh retirement account is a tax deferred retirement plan for self employed people. If you are self employed, with a sole proprietorship or a partnership, then this is the plan you may want to consider setting up. Any type of qualified retirement account can be set up to cover self employed individuals. You should also look into 401K plans, and standard and Roth IRAs.

 

There are advantages and disadvantages to each. One advantage to the Keogh plan is that contributions are deducted from the gross income. Contribution limits are more liberal than those allowed with some other retirement accounts. As with other retirement accounts, tax is deferred until money is withdrawn, usually after retirement. In some cases, lump sum withdrawals may be eligible for 10 year averaging which can provide a tax benefit.

 

Another IRA type used for self employed sole proprietors is a SEP IRA which has less complex filing administrative paperwork and allows higher contributions.

 

What is a Roth IRA?

 

The Roth IRA came into existence in 1998 and is named after the late Senator William V. Roth, Jr. The chief advantage of a Roth IRA is obvious. Although there is no deferral of taxes on the money originally invested in a Roth IRA, as in other IRAs, all income earned by the investments in a Roth account is tax free when it is withdrawn. Another benefit is that you are not required to take distributions beginning at age 70 1/2 as with other accounts, so if you don't need the money to live on, it can continue growing and earning for you tax free. Also, a Roth IRA makes it easier in some cases to take early withdrawals without penalties compared to other retirement accounts.

 

For many people, the Roth IRA is a wonderful retirement investment account. Some employers offer Roth 401K plans.

 

There are, however, limitations on who may contribute and under what conditions. Individuals with higher incomes may not be able to use a Roth IRA. Check with your accountant or the IRS for current rules.

 

You need to plan early and do your homework thoroughly. Review your choices regularly since rules and types of accounts change over time. Don't wait until you are 60 to start planning for your retirement or you'll be sorry.