Retirement Archives - Page 2 of 4

The Financial Pinnacle

After reading the title above can you grasp what it means to live a life after you have reached the financial pinnacle? Well in all honesty many people might not even comprehend how a life like that might feel, because we have been slowly institutionalized to a system that is ingrained in our psyche. The people who have the complainly pants syndrome as other blogs have mentioned, are partly to blame for their financial shortcomings, but what if they are merely victims to the system. A system set up to keep you indebted and to keep you plugged into working for 45 years of your life. Can you still reach the financial pinnacle if you live in a society where everyone wants a piece of your finances?

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Withdrawing from the 401K

Many people are withdrawing from their 401k funds and losing out on a big opportunity to make money in the future. Every time someone switches jobs I bet a little piece of them is wondering, what can I buy with this 401K money I have saved for years? The answer should be nothing, but that is not the case for millions of working adults. It goes to show that many people do not understand the full effect and repercussions involved when they take out retirement account money.

The only funds you can take out are the contributions of a Roth IRA that has been established for some time. When in doubt ask, and when in further doubt, have the check made out to Vanguard. (Never have the check made out in your name) Why do we tap into these funds without finding out all the information involved in the transaction?

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Pension Concerns are Alarming

Do you know that many municipalities in the US are filing for bankruptcy due to retirement pension default? A recent report released by Bridgewater states that 85% of them will fail in a specific time frame. How confident are you that your pension will last you the rest of your living years? This is why pension concerns are alarming for millions of people in the US. It is a frantic time for anybody who is dependent on that pension succeeding because most are hanging on a short financial string. A sharp scissor is ready to cut funding and politicians could care less. The problem in my opinion is that the people who manage the funds, are not doing enough to grow it, or are misusing the money for the municipality’s other budget shortfalls.

Private pensions are on the same boat as the public pensions. The corporation who was set up to help failing pensions is 34 billion in deficit. The numbers do not lie as it beckons anyone who believes pensions will be around to support them. As quoted in Forbes, “Over the past forty years the Pension Benefit Guaranty Corporation has assumed responsibility for thousands of failed plans. Traditional defined benefit pension plans offered by private employers are rapidly facing extinction and with the PBGC’s deficit recently hitting a record $34 billion, the future of private pensions looks grim.”

Now let’s focus on what can we do to avoid getting a heart attack due to worries that your pension might go under very soon. It all boils down to realizing you have to save more while in your working years. See the pension as gravy if you get it when you retire. Never be dependent on that income from day one and you will see things differently.

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The New MyRA Account

There is a new account that the government will be releasing soon to entice people to save more money. Its called MyRA and it obviously stands for My Retirement Account, I must say it is very catchy phrase. The government is backing it with full faith treasury bonds. Does this mean the government will take on more debt?

The New MyRA Account:

Employer must sign up for the program

You must have Direct Deposit

It will have a 191K household income limit

There is no match and you can put in up to $5500 a year.

It is not invested in the Stock Market aka No Risk

The funds will be invested in Govt. Bonds aka like TSP Plans

$25 minimum investment to start

You can contribute to a MyRA and 401K and other retirement accounts offered

If the account reaches 15K or 30 years, then it must be rolled into a Roth IRA

Expect to earn around 1-3%, with no loss to principal.

You can withdraw funds at any time with no taxes or penalties (Emergency Account)

Must wait till 59.5 to withdraw any earnings on money with no taxes or penalties at all.

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How much you saved for Retirement?

Hey my financial friends, if somebody walked up to you and asked you, How much you saved for retirement? Would you answer the question honestly or would you dodge the question? The way you answer might shed light on how confident you are with achieving that magical retirement number everybody talks about in the media. I can bet some greenbacks that the people who answer honestly and without hesitation have all their finances in order, plus they might even know the exact number they have saved to the penny. On the flip side the people who have no idea how much they have in retirement, might not be saving enough thus might feel scared that they will never be able to reach that perfect retirement relaxing on an island beach house.

This is obviously an assumption but you get the idea behind how certain subliminal feelings might come to the surface when asked a personal finance question that might be too personal for some people. I totally understand how this might shock some folks to become guarded, but for the most part talking about money should not be so secretive. The one awesome behavior I have witnessed when I speak with others about money is that talking about it, triggers something within them and then they take greater notice to step it up with finances. This hopefully will lead to them being more competitive with how they manage money for the future. In addition to this it can open up great ideas or discussions with how to make more money. If the person is open mined enough to begin the money dialogue.

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Milestones I achieved in 2013

Merry Christmas and Happy New Year!

Hello friends if you are reading this you will soon learn all the milestones I achieved in 2013. I want to do this every New Year as a way to remember what I accomplished and as a way to help me set up my new goals going forward. I hope you succeeded in completing a few goals of your own. This past year was a very memorable one, I can’t complain as I am one step closer to reaching FI and hopefully becoming a full time blogger one day.

Now this is not a post to brag, but a way to recognize that I am finally keeping track in a personal finance capacity and that just transforms me to keep superseding past goals. I want to give you a few milestones relating to several topics, but the majority will be related to personal finance or money management. If you want to catch up with Last year’s Milestones click Here

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What can you trade for Freedom?

If you could trade something, anything for Freedom what would it be? Maybe the desire to not have to work for someone else forever would change something to attain that freedom? This idea might seem far-fetched for many of you today, and that is the exact message I want to instill in how you think for a moment. Every day deals are exchanging hands in the form of currencies, barters, favors, and political power exchanges. Did you know that with every unfavorable exchange you make, you are giving up the chance to possibly have freedom sooner? What can you trade for freedom? The answer should be that you will do anything legally possible to get it.

A simple choice that you must decide can give you a few months of freedom later from having to punch that dreaded time card. Whomever told you that they enjoy working for others is either unaware or in denial, because when working for others is counter productive to allow you much opportunities to work for you. It’s a complete catch 22, because security can be developed greater when working for yourself, but many people do not have the vision to pull it off so they make due and try to find security with working for corporate America. Does corporate America really have your best interest at heart or are we just another source of revenue for the corporations. Did you know that on average employees make the companies they work for about 2-3X the amount they are getting paid as a salary. It’s time to realize that nobody has your best interest at heart except for you.

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Financial Responsibility toward the Future

Do you know that you have a financial responsibility towards the future? In the present you might want to spend every last penny from each pay check, but this is not good for several reasons. See Below:

This trend will lead you to never improve financially. (Bad Habits take time to break)
If you do not have readily available money, no opportunities. (Businesses need startup funds)
The future will look bleak. (Retirement will be below average)
If you have kids you will pass on those horrible habits on to them. (Johnny will not learn the right way to manage money)
Giving back or leaving a windfall for loved ones will be a joke if you do not take things seriously. (What did Dad or Mom leave me? – Headaches with no money)

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