Don’t Rely on Social Security or Pensions -- ‘Wealth Odyssey’ Explains Simple Retirement Saving Formula
ContentDesk) March 28, 2006 -- The old three-legged stool of the past is losing some of its legs and putting more and more pressure on people. Before, the combination of pensions, Social Security and personal savings in retirement plans were what people relied on for retirement. Nowadays, with pressures on Social Security and pensions, it has become even more important for people to focus on the third leg personal retirement plans those through employers and IRAs and Roths.
What is a simple retirement savings formula? How can a person judge if they are on track or not? The critical questions people need to ask is: What is the savings formula? The savings formula is the amount needed to retire (AMTR) times the withdrawal rate (WR) (called Wealth Rule in Wealth Odyssey ) equals todays Standard of Individual Living (SOIL), or SOIL = AMTR * WR. Therefore, SOIL / WR = AMTR. There you have it!SOIL is todays living expenses everything you are currently spending to support your standard of living.
The starting point is really what you earn since most people spend all they earn. SOIL does not include what you are currently saving towards retirement. Now, to adjust SOIL for retirement, subtract what you are contributing towards Social Security; this equals your Retirement SOIL. How much of your Retirement SOIL is funded through Social Security benefits and pensions? Subtract these amounts from your Retirement SOIL and you arrive at your Unfunded Retirement SOIL. This is the first number for the simple formula.The second formula number comes from the Wealth Rule, which is the percentage of how much you will withdraw each year to support your expenses.
The website www.WealthOdyssey.com explains how to determine this based on your age; 5 percent should be the maximum, unless a qualified advisor has determined some other rate for you. An example: SOIL is $64,000 income reduced by $4,000 contributed to a Roth, equals $60,000. There is no pension, and Social Security is estimated to be (from their annual statement from Social Security) $12,000. This means the Unfunded Retirement SOIL is $48,000. If the withdrawal rate is 4 percent (.04), then $48,000 divided by .04 equals their AMTR, or $1.2 million.
What are your numbers? Everybody is different.Now, a person knows how much they need to retire with to support todays standard of living expenses. They can determine if they are on track by comparing how much they have currently saved to this lets say $250,000 between a Roth and 401k. So, they still need $950,000 before they can retire. How many years of saving do they have left? Only they know.Now people can see what they lose in monthly pension or Social Security benefits, they must compensate themselves for that loss by saving more elsewhere in their 401k, 403b, 457, IRA and/or Roth. How much more? Simply determine the Unfunded Retirement SOIL and do the simple math above.Here is where it should hit home people are not saving enough.
What elements can they control? Certainly not the stock market! They can control how much they dont spend, i.e., save more. And, they control how long they work (how long they save), health permitting. But save they must! Studies show that a person will have more money by saving more than trying to get a higher return on lower saving rates. By saving more, this actually helps reduce the problem. Saving more means the SOIL has also been reduced which means the AMTR is reduced as well.
An example of this is at www.WealthOdyssey.com .Today, more so than ever before, people need to understand how to balance their spending today with their retirement income needs of tomorrow. It is a matter of sustainable living. Most people have unsustainable standards of living. Between the lines, people need to understand the ramifications of changing Social Security and pensions. The common denominator for this balance is how much they save towards their AMTR.With Social Security and pensions between a rock and a hard place, prudent people would save more and spend less in order to sustain their unique Standard of Individual Living into retirement.
The world is changing people need to change with it. Contact:Larry R Frank Sr., MBA, CFP, Author, Wealth Odyssey Wealth Odyssey (916) 773-3509
www.WealthOdyssey.com.
Funding Your Retirement: The 401K and 403B Way
Saving for your retirement doesn't have to be a nightmare as long as you are aware of your options. For now, we're focusing on 401K and 403B retirement plans. These two plans are essentially the same except that for-profit companies use 401Ks and non-profit companies, such as the government, use 403Bs.An employee contributes to a 401K plan with pretax salary. This means that this account appreciates without taxation until you retire or leave the company. So, 401K contributions are not included in your reported income.In essence, you receive an immediate tax deduction for your contribution.Many employees offer an automatic payroll deduction, so there isn't any extra effort involved for you.
Matching contributions or partial matching contributions are other incentives offered by employers. For instance, my employer matches every one of my dollars with a quarter. Sounds like small potatoes, but remember the beauty of compound interest.Of course, there are rules and regulations. You...
Funding Your Retirement: The 401K and 403B Way
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Estate Planning and Insurance Concerns When You Divorce
If you are getting a divorce from your spouse, you have a lot of planning to do.
You will need to name your own beneficiaries, organize your divided assets, and
set up your individual estate. It is important that you meet with a qualified attorney to discuss the specifics
of planning your estate to ensure that your wishes are carried out as you desire. You need to be well versed in the most strategic methods of dividing your joint estate so that you do not end up paying all of the taxes while he or she enjoys the benefits of your assets. I have outlined some important information for you to be aware of when planning
your estate after your divorce.
Please keep in mind that divorces lend themselves
to new structures for individuals. You will want to meet with a qualified attorney
to discuss how to best protect your new estate. Assigning Your Beneficiary
During your marriage, chances are your spouse was the...
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Media, Pennsylvania, Becomes the "First Fair Trade Town in the United States"
Media, PA (ContentDesk) July 13, 2006 -- On Saturday, July 8, 2006, Media Borough Councilperson Monica Simpson and Idyll Development Foundation Director Hal Taussig announced at a public ceremony in the center of town, that Media, Pennsylvania, is the First Fair Trade Town in the US. Europe and Britain have hundreds of Fair Trade towns, and now the US has one.
Councilperson Simpson remarked, Media, Pennsylvania, is proud to support Fair Trade's simple and effective economic model. We hope in a few years to be the first of hundreds of Fair Trade towns in the United States."The Media Borough Council unanimously passed a resolution on June 15th supporting the concept of Fair Trade and promising to serve Fair Trade products at its meetings and functions. The resolution was the last goal necessary to become a Fair Trade town. The other goals are that a certain percentage of retailers and institutions sell and use Fair Trade products, widespread support and media coverage exist...
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Financial Planning for the MTV Generation
(ARA) - So, you were born between 1965 and 1978. Are you tired of the Generation X label and being portrayed by the media as a cynical, Xtreme sports-loving, body-piercing slacker? If you're one of the 76 million Americans that are considered to be "Xers," you may see yourself more as an independent, career-minded, technologically savvy, young adult. As someone between the age of 22 and 35, "Xers" most likely tune out the thousands of marketers with retirement messages geared towards "boomers." Insurance providers, investment companies and financial planners are virtually ignoring the millions of Americans considered to be "Xers." Meanwhile this misunderstood group continues to buy homes and select mortgage companies and retirement plans with little attention and relevant advice.So, are boomers the only generation that should be concerned about their future? Absolutely not. Planning for your future can be tough for anyone, no matter what his or her age. But individuals between the ages...
Financial Planning for the MTV Generation
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Financial Planning for Singles
Financial planning often gets a bad rap. Part of the problem is self-inflicted, since some industry participants would rather sell you a product than address your financial concerns. The process of planning is important, though, whether done with a professional or on your own. After all, you wouldn't leave on a long trip without looking at a map ? a poor analogy for some of us men, but you get the idea.So where should you start? That really depends on you and your situation. Since everyone has different goals, needs, risk tolerances, and concerns, everyone needs a unique plan.
But in general, planning needs to take into account at least three major areas ? insurance, investments, and estate planning. While you can fill a library with all the necessary information to properly address these issues, below are a few single-specific tips to help you get started.InsuranceInsurance is confusing. It comes in all shapes and sizes and covers everything from your car to your health. You...
Financial Planning for Singles
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Control Health Care Costs and Save Taxes?
One of the most prominent issues being discussed in the media is the rising cost of health insurance. Employees are being asked to contribute an ever increasing amount of their pay to group insurance premiums. Employers face double digit increases health insurance premiums while dealing with customers who are not accepting price increases. Self?employed individuals and those who must purchase individual health insurance are feeling this same bite out of their own pocket. These are in addition to the cost concerns of medications and prescriptions.Health Savings Accounts may be a way to cut health insurance premiums, take control of health care costs and save money on taxes.Health Savings Accounts (HSA) were part of the Medicare Act Congress passed in December, 2003.
They are designed to help take control of health care expenses with a tax-favored savings account and a high deductible health insurance plan. Money in the savings account helps pay the deductible and health expenses...
Control Health Care Costs and Save Taxes?
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Tips for Single Travelers to Save on Supplement Charges
Single Travelers Don't Need to Pay More!Proven Tips to Overcome the Single Supplement Blues LOCKPORT, IL (ContentDesk) November 3, 2003-- Tammy Weiler, singles travel expert and president of Singles Travel International, finds the most frequent comment that she hears from single travelers is "How do I avoid the single supplement? I feel penalized because I'm single." Weiler offers the following ideas for single people who wish to fulfill their desires to travel the world, but not have to pay...
Tips for Single Travelers to Save on Supplement Charges cruise
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Compare Dish Network vs. Direct TV
Do you need help in deciding which satellite company is better? Dish Network and Direct TV are the most popular satellite tv systems in the USA. WE have set out and compared Dish Network vs. Direct TV to help you decide on what satellite provider is best for you..Dish Network 1. You get more digital channels for the same price, you get all the free features such as TiVo, up to 4 tv connections, free installation, and more.Dish 2. Dish Network will offers NO Equipment to Buy, FREE Home Protection...
dvr Compare Dish Network vs. Direct TV
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