Retirement Counseling

Retirement readiness requires planning, and in a 2007 study by the International Foundation for Retirement Education (InFRE), only 13 percent of those surveyed claimed to have significant plans for retirement. Make your retirement a pleasant experience. Retirement counselors emphasize the importance of health and mental health considerations and insurance, pursuit of hobbies and interests, and addressing of financial concerns.

History

Seniors in most employment positions in the United States have not received pre-retirement or retirement counseling. The Employee Retirement Income Security Act (ERISA) of 1974 required higher standards in the creation of a pension-based fiduciary or trust relationship, discouraging employers from offering retirement counseling. ERISA exempted public sector or federal, state and local government plans, so these organizations offer some form of retirement counseling. The Department of Labor has offered some directives or interpretive bulletins since the year 2000, allowing employers to offer investment advice and retirement planning, reports an article from Stetson University. With the Pension Protection Act of 2006, the field of retirement counseling has opened to other groups.

Significance

The Pension Protection Act allows the American worker to take money out of an annuity tax-free if the money buys long-term care insurance. The Baby Boomer Caretaker website reports that insurance companies are looking to launch an annuity with long-term care provisions to sell this product to the target class of individuals aged 50 to 60. Strategists are providing retirement counseling to promote new products.

Function

Retirement counseling should not only address financial concerns, as there are social changes that seniors encounter in making the transition from work to home. There may be anxiety and stress, depression and loneliness. How to fill the time previously spent at work is another concern. While financial concerns are a large part of retirement counseling, a proper plan should cover all of these issues.

Considerations

Retirement planning should start at least 10 years before the expected date of retirement. Use the AARP retirement calculator tools to identify estimates for your personal situation. Be aware that Social Security is not sufficient to meet the needs of most retirees; the AARP reports that Social Security retirement benefits cover only about 40 percent of an individual's necessary living expenses. To that end, savings and investments are often needed to provide additional funds. Some seniors retire early and seek part-time employment, only to find that they must pay a penalty if their income exceeds a certain amount, $14,160 in 2010. Others do not realize that they pay income taxes on Social Security income if their total income exceeds $25,000 individually or $32,000 if married filing jointly.

Benefits

Seniors have the opportunity to learn about retirement even after retirement. Social Security has extensive information on its website to educate and counsel the retiree. Research issues of concern to you. Texas A&M University offers a Certified Retirement Counselor (CRC) certification course online. You can even take the test and become certified as a retirement counselor.

References

• International Foundation for Retirement Education: InFRE General Population Retirement Readiness Survey
• U.S. Department of Labor: Pension Protection Act of 2006
• Baby Boomer Care: Pension Protection Act and Long Term Care With Hybrid Annuities
• "Financial Services Review"; How Prepared is the Retirement Industry for Meeting the Needs of Retiring American Workers?; Betty Meredith et al; 2008
• Texas A&M University: Retirement Counseling Certification Program
• Goliath: Employers Should Make Pre-Retirement Counseling More Meaningful

Resources

• Social Security Online: The Social Security Statement
• Social Security Online: Paying Income Tax on Social Security Benefits
• AARP: Money and Retirement Tools