retirement plan
Nearly Half of Young Americans have Zero Retirement Benefits Savings
The retirement savings of young Americans are not up to the mark. It has been proven again by a survey which found out that nearly half of young Americans have zero retirement benefits savings. Their chances of getting regular income post-retirement are also low and they also don’t trust the social security system. Still, the majority of young Americans believe that they will have ample amount of money in retirement.
Survey Exposing Zero Retirement Benefits Savings
The survey that revealed the retirement savings problem was conducted by the Black Youth Project at the University of Chicago in association with Associated Press-NORC Center for Public Affairs Research. The survey was conducted via a GenForward poll. It stated that 48 percent of Americans who were between the ages of 18 to 30 have zero retirement benefits savings and they don’t have access to a traditional pension either. Over 4 in 10 respondents between the ages of 25 to 30 have admitted that they have saved nothing for retirement.
Fewer Traditional Pensions
In the survey, it was also revealed that younger Americans won’t be able to access the traditional pensions that were enjoyed by earlier generations. Only 7 percent of the respondents said that they would be getting the rare benefit so that they get a pre-defined monthly amount post retirement.
No Faith in Social Security
The age in which the Americans receive social security is climbing high too. It is up to 67 rather than 66 so young Americans would have to wait longer for it as compared to their parents and grandparents. Young Americans don’t have faith in the social security system. Only 5 percent have admitted to having full confidence in this benefit while 28 percent said that they are somewhat confident.
The Self Confidence
Despite the sad fact that many of the young Americans have zero retirement benefits savings, their confidence in their own abilities is not lacking. A majority of the respondents admitted that they would have enough money they need in retirement and they will not be dependent on others. About 53 to 56 percent of Asian Americans, African Americans, and white Americans are sure that they will have enough money post-retirement. Only the confidence level of the Latinos is not that high. Just 43 percent think that they are either very confident or somewhat confident that they would have enough money to live comfortably in retirement.
Oregon has a Clear Path for State Retirement Benefits Plan
The state of Oregon can now easily help the private sector employees to get access to a state-run retirement benefits plan. This plan was earlier facing a key federal hurdle that has cleared now. This plan would be implemented in stages and ensure that all the workers of Oregon who have no access to a plan from their employer could have some retirement savings.
The State-Run Retirement Benefits Plan
The state-run retirement benefits plan of Oregon was narrowly approved by the State lawmakers last year. This plan allows all the workers who do not have employer-sponsored retirement benefits plan to enroll in one run by the state. This plan would work like a 401(k) plan in which the money would be deducted from the salary of a worker on a regular basis and the money would be invested so that the worker can have a regular income post retirement.
The Hurdle
Unfortunately, the state-run plan earlier had a federal hurdle as the federal government had not taken a stand over such plans. But a few days back, the department of labor finalized the rules that would pave the way for the Oregon state-run retirement plan to be operational by next July. The Obama administration now clearly mentions that state-run retirement plans are allowed under federal law. This announcement has paved the way for state-run retirement plans in not only Oregon but seven other states as well.
Implementation
A spokesperson for Oregon Department of Treasury, James Sinks has recently cleared the air on the implementation of this vital state-run plan. He said that the state government is planning to implement it in stages. This plan would be offered to only a handful of private companies present in Oregon that are not offering any such plan. If it’s successful, then the state would ramp up the plan and offer it to more such companies.
The Reason
A major reason that highlights the necessity of a state-run retirement benefits plan in Oregon is that about a million Oregon workers lack access to an employer-based retirement plan and hence they don’t have much savings. They may not have enough money to live comfortably in retirement. It is also a fact that several private sector companies are already offering a retirement plan so they would not be impacted by the change much.
California to Initiate a State-Run Retirement Plan
The California lawmakers would probably pass a new bill in a few days in which a new state-run retirement plan would be given a nod. This plan will help all those people in California who have got no access to a retirement plan from their employer. The plan would be managed by a board that will make low-risk investments. The employers with more than 5 workers would be required to participate in the plan and the workers would automatically get enrolled in this program.
Who will Benefit from this State-Run Retirement Plan?
It is being estimated that more than 7.5 million residents of California would benefit from this state-run retirement plan because they do not have access to a good employer sponsored retirement savings plan right now. About two-thirds of the aforementioned numbers of people are employed at a business that has less than 100 workers at present.
Who will Manage the Plan?
The retirement plan would be managed by a board, the California Secure Choice Retirement Savings Investment Board that was established in 2012. It has state officials and political appointees as its staff members.
Expected Investments
It is being predicted that the state-run plan would invest in low-risk debt securities such as Treasurys until the board develops more investment options for all the participants.
The Key Details
If the plan proposal is approved by the lawmakers, all the employers who have hired over 5 workers and do not offer a retirement savings plan would be required to be a member of the state-run plan. The workers of these employers would be automatically enrolled and they will have the choice regarding opting out of the plan. It is estimated that 3 percent of the workers’ salaries would be contributed to the plan and the contribution limits would be same as those of IRAs.
The Support
The bill is supported by many people including a senior legislative representative with AARP (an advocacy group for older Americans), Sarah Gill. She believes that the bill would soon become a law. She also said that the program would pay for itself in the future and small business owners would want to give some retirement security to their employees. She added that there is bipartisan support for bills like this and the state-run retirement plan was a conservative idea which was developed by the Heritage Foundation.
Women have Bigger Retirement Benefits Challenges: Study
A recent white paper has revealed that women are very poorly prepared for retirement. The reason is the higher number of challenges faced by women. Many women work only part time and some are not even offered a retirement plan. The women who are offered a retirement benefits plan are often saving less money in the plan than they should for a secure retirement.
Why Women Don’t Have Access to a Retirement Benefits Plan
The white paper was released by a leading Washington-D.C.-based popular advocacy organization for America’s financial services industry named Financial Services Roundtable. The white paper revealed that about 27 percent women work part time because they need to take care of the kids or any other family members. Part-time workers are often not offered a retirement benefits plan. Moreover, the earnings of part-time workers are so low that even if they are offered a retirement plan, they can hardly contribute to it.
The Workplace Earning Differences
The white paper has also highlighted the fact that women consist of 47 percent of the labor force in America. Women also have nearly equal education to men. About 29.6 percent women hold a bachelor’s degree and this percentage is 30.4 percent for men. But still, women’s weekly earnings for salaries and full-time wages are just 81 percent of what men make.
The Bad News
About half of the millennials who were surveyed accepted that they don’t even have a retirement investment account while the fact is that the millennials need more money saved towards the retirement as compared to baby boomers as the cost of living and healthcare expenses are constantly rising.
Women Need more Retirement benefits than Men
The white paper also shared the fact that women need more money stashed for the retirement than the men because they have a longer average lifespan. The average lifespan for men is 84 years while its 87 years for women. It is also a strong possibility that women will need to spend more money over time towards their health care.
The Participation
The white paper has also found out that women who are saving towards a retirement benefits plan are not doing enough. About 62 percent of women were offered a 401(k) or a similar plan. Just 76 percent participated in the plans and the rate of saving they chose stands at 7 percent of their salary.
Democrats push for more Retirement Benefits Coverage
Many democrats are asking the Obama government to ensure that more government contractors are covered under the retirement benefits plans. Those workers who do not have employer-sponsored retirement savings plans must be given the opportunity to invest in government-backed plans.
Who Wants More Retirement Benefits Coverage?
About 65 Democrat leaders want more retirement benefits coverage according to a letter sent to the White House. This group is led by Joe Crowley, who serves as the Democratic caucus Vice Chair. This group wants Obama to ensure that all federal contractors enroll employees working for them in the retirement plans of the company.
The Demands
The Democrats want Obama to create a requirement according to which the full and part-time workers who are not covered under 401(k) options should get access to a new government-run retirement savings plan that was started by the administration recently.
The Unsuitable Trend
Crowley recently made a statement in which he said that about half of the American workers don’t have access to a retirement benefits plan through their respective employers. He added that many more people don’t know about these plans or are ineligible for it. This has led to an unsuitable trend, which shows that less than 10 percent of such workers make a steady contribution to a savings account on their own. Crowley wants steps to be taken to reverse this trend.
The Government’s Role
The Democrats want the government to take some vital steps to solve the problem of retirement plans coverage offered to fewer workers. They want Obama to start with his own employees and capitalize on his executive branch power so that other companies could follow his lead.
The Employers’ Role
The Democrats also want the government to make it mandatory for employers to auto-enroll their employees in the new government-run savings plan if they don’t have any retirement benefits of their own. The new government-run savings plan was started by White House recently and it is known as “my Retirement Account.” It is a platform to invest money for the workers who don’t have access to any other retirement savings option.
The Main Goal
The main goal of all these steps required by the democrats is to ensure that all the U.S. citizens have some savings stored up that can serve them and offer them retirement benefits when they are too old to work.
State retirement plans a good bid for future
State run retirement plans have been among the news for quite some time now and the ever increasing excitement pertaining to the efforts made by the states to set up these private employer plans is really something that’s worth being a part of or knowing about, at the least.
State-run retirement plans a go?
These plans are in fact things that the majority of the population could be looking forward to. When you look at it from the general perspective, these retirement plans could go on and aid the millions of workers in the private sector who don’t enjoy financial stability to have something to look forward to after retirement.
Another side of this story is that this could create a mess. A really unavoidable, unwanted mess. The states are although very enthusiastic to make the move but their ability when it comes to running (After effectively creating) an employee benefit plan can be questioned. When you look at it this way, you can also expect every state to go on and develop its own retirement plan, which also can turn out to be a cumbersome situation.
The Pension Rights Center claims that around 25 of the states have been devising some sort of plan for the general population. Most of these plans involve the employers deducting money from the pay checks just like in a 401(k) plan. Minnesota is a name that comes to mind. The Management and Budget Agency of the state is busy trying to propose a private sector retirement plan. They could come up with one as soon as March, as indicated by a spokesperson.
While these plans could go a long way in making lives of the private sector employees better, the concerns regarding the decision of approval are also very important. Let’s hope that whatever transpires benefits the majority.
New Federal Budget Will Be Good For Federal Retirement Savings
President Obama has always been one for focusing on federal retirement savings and recent news arriving from the White House indicate that the President will focus on the same matter in the coming budget as well. It’s expected that some new proposals will be put forward that will aid in the expansion of the access to retirement savings accounts provided to the employees. Also, some previous provisions are also expected to be looked at.
President Obama to expand access to federal retirement savings:
It’s common knowledge that the multitude of the American working class doesn’t care about retirement plans. Around 1/3rd of the population haven’t got a savings or pension available for their post-retirement life and let’s just say that this is a stat that we would like changed sooner than later. Thankfully, the President’s proposals, if accepted, would go a long way in enabling millions of people access to retirement savings accounts.
This increase will occur the most from the legislation that requires the employers that currently don’t have any workspace retirement plan to make the enrolments on the behalf of their employees in an IRA. The employers that would do this would be compensated by 3 thousand dollars in their tax credit. This proposal was part of last year’s budget as well but the Congress didn’t approve it.
This step is destined to make the post-retirement lives of millions of Americans a lot better than they would turn out otherwise. It’s worth mentioning that even though the initiative has been taken by the President, the final approval lies in the hands of the Congress and while the excitement went in vain last year, this year it’s hoped that things might just turn out for the good. This particular plan, once approved is probably going to stay for quite some time.
Expect Your Newly Announced Retirement Plan To Not Deliver
myRA has been the recipient of many critique and analysis in the past few months after its announcement and there has been a wave of uncertainty generated in the minds of the federal employees so as to whether or not it’s the solution that they were after. The gap in our country’s retirement savings is magnanimous and the new program was destined to make it a lot less but experts think otherwise.
Many of the feds and critics lauded the government’s step to make myRA open to applications and to allow the millions of Americans (without retirement plans) to finally up the ante but now it looks as if myRA isn’t going to do the trick. Here’s why:
The account that gets initiated when you sign up for the program gives away almost the same rate of interest as the G fund of the government that the federal employees should know about. This is not just a statement put forward by anybody; this is what the US treasury has to say. The average of the fund over a ten year tenure was around 3.3 percent. myRA is different in its operations though because contributions go straight to the government’s security funds which have really low rates of return.
Many experts believe that the traditional plans that always existed can help in making hefty contributions but myRA can increase the number significantly. The program was introduced to allow the officers that have no retirement procedures applicable to them and the government can only hope that it is going to allow those imprudent souls to finally take actions. Having said that, we have to conclude that things aren’t as clear as you would ideally want them to be. Let’s hope that things turn out well and people of America find better ways of preparing for their post-retirement life.
Your Retirement Plan – Your GPS
Your Retirement Plan
Sticking to a retirement plan can be a challenge but it is well worth the investment. Many people are excellent at finding their way from point A to point B. They simply have a natural sense of direction. They can find their way no matter where they are in a new town, a new city, the country roads of West Virginia or some distant land. Unfortunately, most of us do not have the advantage of innate directional systems.
We need a little help. The Global Positioning System (GPS) acts as a resource for helping us get from place to place, taking the stress out of navigating the highways and byways. Having a retirement plan and sticking to it is equivalent to having a GPS. We need to have a retirement plan in order to keep us on track with where we are, where we have been and where we need to go.
It simply will not work to go through life depending on – comes what may. Just as our mortgages don’t automatically end when we retire, our lives also don’t end when we leave our places of employment. Having a retirement plan allows us to make changes as needed to balance the equation between income and expenses.
A retirement plan will help us identify obstacles so that options can be exercised to help us turn away from old habits that get us in financial trouble. Look at your plan often and make sure there is flexibility in the plan. Although life is about constant change, including flexibility in plans, major efforts should be made to always have a plan. Now that you know the importance of having a plan, the greater challenge is sticking to the plan.
P. S. Always Remember to Share What You Know.
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Living Will and Durable Power of Attorney
Living Will and the Power of Attorney
A Living Will is an advanced directive giving doctors and hospitals expressed instructions regarding how you want your health care treatment handled. In the event of incapacitation or an irreversible coma and you are unable to articulate your desires, a Durable Power of Attorney can act on your behalf, while you are still alive, ensuring your wishes are carried out. These types of documents are an incredibly important part of your financial plan. The Living Will is generally focused on whether or not an individual wishes to have his or her life sustained by life support systems. Hospitals and physicians are more and more supportive of patients having a ‘living will.’
Whether to sustain life or not by artificial means is such a personal and highly emotional encounter that doctors and hospitals are not eager to bare that responsibility or to have to make such a crucial decision. It is very important that we put plans in place when our capacity to do so is fully intact not leaving painstakingly difficult decisions to be sorted out between family members and loved ones.
For clarity, let’s distinguish between the roles of ‘Power of Attorney’ and ‘Durable Power of Attorney’. Power of Attorney is a fairly well-known concept which is generally invoked for carrying out financial matters when the principal cannot be present. However, when the principal dies the power of attorney also terminates.
Durable Power of Attorney may be a more useful tool when dealing with the elderly and the informed. It allows individuals who can no longer conduct their own financial affairs and affairs otherwise, to continue doing so through the Durable Power of Attorney arrangement. There are no hearings or court proceedings to appoint someone Durable Power of Attorney. It is a simple matter of signing a legal document.
Once again, doing your homework is the key ingredient to success. If you are considering moving in this direction in your planning process, be as certain as humanly possible, that you choose someone you can trust who will always have your best interest at heart.
You may also find it necessary to have both a Medical and Financial Durable Power of Attorney. The Medical Durable Power of Attorney would only be able to handle and speak for your medical treatment and care; while the Financial Durable Power of Attorney would only be able to handle your financial concerns and matters.
In planning your estate, one of the best approaches is to talk to your family about what you plan to do. Open communication with family members and those involved in your life’s achievements concerning how you want to divide your assets is part of implementing an action plan that will help you retire in comfort and security.
P. S. Always Remember to Share What You Know.
For information on your retirement plan and your investments – check your TSP.gov Account regularly.
For postal employees – your PostalEase LiteBlue account is your portal to much more than just your earnings statement
Financial Plan for the Federal and Postal Employee
Like all Federal and Postal Employees we must all consider the importance of our Financial Plan as we prepare to live in retirement – on our own terms. Whether you are part of the CSRS system or FERS you should know the importance of having an overall financial PLAN and how vital it is for a successful retirement future. Part of THE PLAN should include a financial piece – your financial plan.
What is a financial plan? It is a thought process of what is important to you and what is required for your life in order to make your dreams a reality. A financial plan assists us in identifying what we want, how to get it and how to keep it. Sometimes it is as simple as identifying the small changes that you can make today which will have large impacts in the future? Devising a financial plan means making choices, sometimes difficult ones, in order to reach your retirement goals.
The process of building your financial plan has much to do with your value system. Our value system is often shaped by our parents. As we mature our value system may change. The values we have today, we probably did not have them when we were younger. One reason being, our responsibilities and obligations have changed.
Often when we make one decision, it simply causes us to make another decision. Constructing a financial plan and making decisions also involve trade-offs.
For instance: Would you like to maintain a Life Insurance policy on yourself or your spouse so you can protect your family? The trade-off is the cost of the insurance for the benefit of that protection. Then if you make the decision to protect your family in this manner, what is the best way (most cost effective way) of managing this expense? Should you stay with FEGLI or find a different policy? Is there a ‘best and cheapest’ policy for your needs?
Another decision you will need to work through is with regard to your TSP Account. The decisions you will need to make consists of the amount and manner you take income from your savings. Additional TSP consideration include rolling your funds into an IRA or and whether or not you should hire a professional to help you with your investments
You may have to give up something today in order to gain something tomorrow that might ultimately be of far greater benefit in the future. We save now and we plan now so that our retirement years can be spent in comfort and security.
The most educated Federal and Postal employees and retirees will likely be working with a Financial Professional to help them with these decisions. That is to say – the federal employees who choose to enjoy more of their free time and worry less in retirement will likely want someone else to manage the day-to-day minutiea of their investments and retirement plan. We may know a lot about our own circumstances and may even know a lot about the economy or the markets – but I suggest that you find a financial expert in your benefits to ensure that you are looking at all of the possible savings and advantages that you have as a result of your employment.
P. S. Always Remember to Share What You Know.
Federal and Postal Employee – Retirement Goal Setting
Retirement Goals
The importance of constructing a PLAN for moving into retirement with comfort and security cannot be overstated. You should have a laundry list of goals as you ready yourself to retire well. Constructing a plan, managing your TSP account, making sure you’ve run a Benefit Analysis BEFORE retirement is also incredibly impactful on the whether or not you will reach your retirement goals.
Goals are all very individual and personal. They are also meant to guide us in making your plan real and making it work. Even though they are highly individual and personal, there are core criteria common to setting goals.
Goals must be achievable; they should also have a time horizon. If you set a goal, then you should also entertain a time by which the goal can be realized.
Goals should be flexible. There is nothing wrong with having to move the goal post either closer or farther away.
Goals should be defined with the ability to track or evaluate progress.
Essentially, GOALS shoudl be; SPECIFIC, MEASURABLE, ATTAINABLE, REALISTIC and TIME RELATED.
Often when we think about life and living, putting something down on paper escapes us. We think about setting goals at work and linking time horizons to those goals. On the other hand, we fall significantly short when it comes to setting goals for our lives.
For the average worker – WORK – is business. In order to place the same importance on our lives, it might be advantageous to think of facing the challenges and opportunities of retirement as the BUSINESS OF OUR LIVES.
P. S. Always Remember to Share What You Know
