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You've no doubt heard many of the old adages about building a retirement nest egg: Aim to save $1 million, withdraw 4% a year to live on, plan for expenses that are 75-80% of your pre-retirement expenses. But a lot has changed since these rules were created, including a massive financial crisis. So is it time to tweak our retirement rules?
If you die before collecting your pension, a few key things are going to happen next. Find out what happens if you die before collecting your pension with help from a financial expert in this free video clip.
You should start saving for your retirement as early as possible during your working career. Learn what to do if you need to retire but haven't saved enough with help from a best-selling author and financial expert in this free video clip.
How much money you’ll need to save every year to achieve your retirement goals depends on a number of personal factors that include: your life expectancy; your desired lifestyle; whether you want to help your family financially; your health care costs; inflation; taxes; and your average return on investment in your retirement accounts. Thus, it is important to sit down and write out your individual retirement goals. Retirement planning can be as simple or complicated as you make it and working with a financial planner can help this process immensely.
The term "rollover" broadly refers to the process of moving your retirement savings either between accounts or financial institutions. Typically, most people roll over their 401(k) or other employer sponsored plan into an IRA, which is one of the easiest types of rollovers; however, you can usually rollover an IRA into an employer sponsored plan without much difficulty. Any decision regarding your retirement accounts is an important one that requires careful consideration. Thus, you should consult with a qualified financial advisor before you roll your accounts over.
When it comes to retirement, time is mostly on your side. Thus, if you are still many years away from retirement you still have time to build up your nest egg. However, if you are closer to retirement you will need to increase your savings as soon as you can since you don’t have as much time for your investments to appreciate.
After 10 years of marriage, you and your spouse decide to divorce. You amicably agree on a 50/50 split of all assets. But wait. Through your employer, you have a pension. Likewise, your spouse has a 401(k). You both have IRAs. How do you legally divide these retirement assets? More importantly, how do you divide them without incurring tax penalties? To avoid the mistakes in that befall many couples as they divide their retirement assets, it pays to familiarize yourself with the basic IRS rules that govern these matters.
Calculating your income tax during retirement can be an intimidating and complex process, depending on how you've saved for retirement. Many retirees draw income from a variety of assets. The main categories of retirement assets are taxable retirement plans, tax-free retirement plans, annuities and regular investment accounts. Each category faces a different style of taxation. Understanding how different types of assets are taxed during retirement enables you to better plan how to manage your assets and maximize your total retirement income.
Roughly half of all marriages in the United States end in divorce. Consequently, many married couples currently planning for retirement may eventually need a Qualified Domestic Relations Order (QDRO). This legal order, often issued by a state court, divides a couple’s interest in an employer-sponsored retirement plan in the event of divorce, separation or annulment. For those contemplating legal dissolution of their marriage, it is important to understand how QDROs work, how and to whom they may assign benefits, and the challenges divorce attorneys face when drafting these often complex documents.
When you receive a lump sum distribution from an employer’s pension plan, you have several options. If you hold onto the funds -- depositing them in your savings account, for example -- federal tax laws require you to declare the amount as income on your tax return. To avoid paying taxes on a lump sum pension distribution, transfer the funds into an eligible retirement plan or an individual retirement account (IRA). This process is known as a rollover.
You can set up retirement withdrawals in a very specific way. Get help with setting up retirement withdrawals with help from the manager at an independent investment advisory firm in this free video clip.
Joining the military has its advantages, especially when it comes time for retirement. Those in the military enjoy a number of benefits that civilians are simply not entitled to. Going into military retirement, then, it is helpful to know how to plan, what to expect and how to take advantage of your veteran status.
Pension settlements are typically offered by businesses wishing to decrease the amount of money paid to you upon retirement. The pension settlement could propose a lump sum payment in lieu of lifetime payments. If you disagree with the terms of the pension settlement, begin the process of appealing the decision. Carefully review your pension inclusions and exclusions before going through the timely and potentially costly process of appeals.
Pension plans are funded based on the requirements set forth by the Pension Protection Act of 2006. This particular act defined the manner in which a lump sum distribution is calculated, including the minimum permissible value of any lump-sum payments. The rules took effect in 2008 and made the amount received for a lump-sum payment much less attractive than regular monthly payouts, according to Kiplinger.
Pensions allow employees to contribute funds to benefits plans that will offer them fixed or variable payments when they retire. If you are married, your employer may reverse pension funds acquired during marriage. Married couples may have to reverse the terms of a pension plan if they initiate divorce proceedings and split pension plans in which they share common ownership.
When you are enlisted in the military, you are entitled to many special benefits both during and after service. One of these benefits includes potential access to military medical retirement pay, depending on your circumstances. According to the military's website (Military.com), most types of military retirement pay, including military medical retirement pay, can generally be calculated on your length of service in the military and when you first enlisted.
If you have served in the military, the United States government rewards your sacrifice with retirement benefits. If you became disabled while serving in the military, the Department of Veterans Affairs provides VA disability compensation or disability pension depending on the your age. You may be eligible to receive these benefits at the same time. This practice was forbidden until 2004, but it is allowed now, provided that you meet the eligibility requirements. Concurrent benefits are highly personalized based on your specific situation, so there are no tables or generic ways to determine your benefits. However, there is a process…
Stakeholder pensions were developed in the United Kingdom as another savings alternative for workers preparing their retirement. Stakeholder pensions have advantages over other savings products that encourage consistent saving over extended periods of time. Stakeholder pensions are governed by financial rules set forth by the U.K.
When you invest in a retirement plan such as an employer-sponsored 401k, you may have the ability to choose from a variety of stocks, bonds and mutual funds to help you grow your retirement savings. However, you do not have an active role in determining how your plan sponsor manages these investments. In most cases, your plan sponsor relies on an adviser, usually a 3(21) fiduciary, to make recommendations regarding fund management.
A multi-employer pension plan is a retirement plan to which a group of businesses contribute. These types of plans are designed so that the businesses share the cost of administrating the plan and its benefits. Contributions are placed in an investment fund. In some cases, the plan accrues unfunded, vested benefits. That is, the value of the plan's portfolio is decreasing, and it will not cover the future benefits promised to the plan's contributors. If employers withdraw from the plan, they are still responsible for covering their portion of these benefits. Withdrawal liability is the cost employers must pay to…
When emergencies come up, it may be necessary to apply for a hardship withdrawal from your pension. Applying for a hardship distribution from a retirement plan should never be the first option, but under some conditions, it may be appropriate. The Internal Revenue Service sets the guidelines that retirement plan administrators and employers must follow when making distributions from a pension plan.
The Illinois Department of Employment Security administers the unemployment insurance program for the state. If you receive Social Security or a pension, you may receive reduced unemployment benefits in Illinois. A chargeable employer is in the base period for calculating your benefits and is charged for your unemployment benefits. A non-chargeable employer is outside the base period counted for your unemployment benefits or otherwise isn't charged for your benefits. A pension from a non-chargeable employer doesn't offset your Illinois unemployment benefits.
When a worker chooses early retirement or receives strong encouragement from an employer to accept early retirement, the arrangement might require financial adjustment on the part of the worker. If the worker hasn't planned adequately for full retirement or wants to continue receiving income, additional financial support may become necessary. While Washington state sets aside unemployment compensation for eligible workers, individuals who choose early retirement should research their legal options under state law carefully. In some situations, early retirement might complicate a claim for unemployment benefits.
A 401(k) plan is a way for employees to save some of their earnings toward retirement. Most employers who sponsor 401(k) plans allow employees to contribute to the plan through automatic payroll deductions. Some may choose to match their employees contributions up to a certain percentage. The maximum amount of yearly contributions depends upon the employee's age and the current limits established by the Internal Revenue Service (IRS).
If you've come to an agreement with your soon-to-be ex-spouse on dividing pension assets, you can facilitate the split by having an Illinois family court issue a Qualified Domestic Relations Order (QDRO). In short, QDROs create an alternate payee to whom half the pension funds go, if indeed the divorce settlement stipulates the funds are to be divided equally. If the retirement funds were accrued via an Illinois government/public service job, a Qualified Illinois Domestic Relations Order (QIDRO) should be issued.
Unlike employed individuals, who often have access to an employer-matched retirement plan, as a self-employed worker, you must stash away 100 percent of your cash for retirement with no matched funds. While you could just put your money in savings and investment accounts, there are special retirements accounts that you can qualify for because you work for yourself. These accounts offer benefits, but they also place restrictions on your retirement withdrawals.
The Internal Revenue Service offers a number of tax benefits to pension plans to encourage their use as retirement accounts. If you need to cash in your pension benefit before retirement, the government charges several tax penalties on the withdrawal, including Massachusetts state income tax if you live in that state. Your company may also have several plan restrictions limiting your access to your pension benefit.
Some people recommend that people save 10 percent of their income each year they work for retirement. The prevalent thought is that as long as a person saves 10 percent of his income, he should be able to afford retirement. Although this is true for some people, for others it may not be accurate. If you have been saving for your retirement, you should do a thorough analysis of your finances before you decide to retire to make sure you have enough money. Online retirement calculators also can give you an estimate of the amount you need to retire.
While retirement benefits such as pensions may seem abstract when you begin your career, they become an increasing concern for many workers the closer they are to retirement age. One issue workers of all ages understand is taxes, however, and many workers and retirees wisely attempt to maximize the tax benefits of a pension by claiming deductions. Although pensions contributions may be deductible in the year you make them, you may also be able to deduct your pension when computing your adjusted gross income in certain situations.
Employers are required to pay taxes each year, though tax rates and amounts vary by state and other factors specific to each business. These include the type of business, the number of employees and other factors like unemployment reserve contributions. Employers are allowed to make voluntary or extra contributions to their state's unemployment reserve account.
Planning is an integral part of a manufacturing company’s management process. It enables a company to operate profitability and maximize its investment in equipment and raw materials for an acceptable return on investment. To facilitate the development of effective plans, one or more planning processes should be used.
On Jan. 1, 2011, 10,000 baby boomers celebrated their 65th birthday. Ten thousand more will celebrate it every day for the next 19 years; by 2030 the entire boomer generation will be senior citizens. Adjusting from wage earner to retiree generates a range of financial issues. Individuals must figure out how much money can be withdrawn from savings yearly without eventually running out of money.
Depending on your age and how long you might live, you might need to save more than $3 million to live comfortably in your golden years. For some, working for wages may linger a bit longer than planned and retirement may be cut short thanks to a recessive economy. Though different financial planners will give different advice about how much you need, one thing they all agree on is that you should start saving now if you haven't already.
A retirement fund such as an Individual Retirement Account (IRA) is designed to help you save for retirement, not to help you buy a home. As a result, you may face certain taxes and penalties if you take a retirement distribution for a home purchase. With some plans, such a distribution may not even be allowed. The most flexible retirement plan when it comes to first-time home purchases is the IRA.
Contributing to a qualified retirement plan usually results in income tax benefits, but setting aside too much results in tax penalties. On certain types of retirement accounts that permit both employee and employer contributions, the Internal Revenue Service sets both a maximum individual contribution limit and a maximum total contribution limit.
According to an IRS ruling, employees may force employees to participate in the company's retirement plan provided sufficient notice is given to the workers. Employer-provided retirement products such as 401(k) plans allow employees to save for their later years in a way that is consistent and tax-friendly. Through payroll deduction, employees invest a small percentage of their earnings into the plan each pay period. Some individuals choose to save for their retirement on their own through IRA accounts.
Retirement distributions from your employer’s pension program generally are included in your taxable income. Pension distributions may be fully taxable or only partially taxable, depending on how the employer set up the pension plan. Benefits from Railroad Retirement or Social Security don't count as pension distributions and are separately taxed.
Like your married couple counterparts, you've commingled your finances with your significant other and purchased property. If you've split up or are thinking about your future, it's natural to be concerned about what happens to the equity in your joint property when you part ways. Coming to a reasonable and fair division of property can be challenging, especially with emotions involved. Unfortunately, because you're unmarried, you don't have the same claims to property and legal remedies as married couples. However, you can protect yourselves by coming to an agreement -- preferably before you enter the break-up zone -- and getting…
Your pension may become an important source of income during retirement. Your pension is usually retirement income funded entirely by your employer, although some pension schemes allow you to fund your pension along with your employer. Pensions in Florida are not treated the same as they are in other states.
When assessing how to proceed with your retirement planning, it can be frustrating when trying to choose the "right" plan. This can also be the case for employers who must choose what type of retirement plans and benefits to offer to employees. Two such retirement accounts, TSPs and pensions, are different plans, but both have certain advantages.
In the United States, weekly unemployment compensation benefits are potentially available to workers who are temporarily unemployed. While each state may have slightly different requirements for receiving benefits, if your employer has decided to retire and leave you without a job, you may be eligible for benefits if you meet all other requirements.
The closer that employees in a pension plan get to retirement, the more mature that fund becomes. If a pension is not properly funded, that is if there are not enough assets to cover liabilities, as a plan matures, the plan members become at risk of not receiving retirement income. Pension administrators can prepare for a plan's maturity by making cash contributions, and in some cases taking more chances in the way that assets are allocated to the financial markets.
American citizens can save for retirement through a variety of means, from personal retirement accounts to employer-provided pensions. Employer-provided pensions provide continued payment in retirement to former employees. Two primary types of employer-provided pension plans exist: contributory and noncontributory. Understanding the full extent of noncontributory plans requires looking not just at their role in the American workforce, but also at their impact on retirement schemes throughout the world.
A pension plan is a retirement scheme funded by your employer. Generally, the pension is funded entirely by your employer, but some pensions allow you to contribute to the plan through salary reductions. When an employer funds most or all of your pension, he must commit substantial resources to your retirement. Your employer is obligated to pay you a benefit when you retire and, when you die, to your spouse, who has rights to your pension plan.
When you go through divorce, it can lead to many financial issues, including depleting your retirement savings. If you are in the process of going through divorce, you may be able to take a hardship withdrawal from your retirement account. In some cases, your retirement account may be split up as a result of a divorce.
The Thrift Savings Plan is essentially an alternative to the 401k for federal employees. Like the 401k plan offered by many private employers, if you are a federal employee, you can opt into the TSP and defer taxes on your contributions and the investments inside the plan until you reach retirement age. It is possible to pull out your TSP money early, but if you do, you may incur an additional tax penalty.
Your retirement plan may be your greatest investment. This money will support you when you can no longer work. Because of this, it's important that you protect this money from loss by making wise investment choices and balancing the risk with the reward you get in your investments. However, you may also need to use this money while you're still working. If so, an in-service distribution may be appropriate for you.
When you cash in a pension plan, you receive your account proceeds as a lump sum. Normally, you cannot withdraw money from a pension that your current employer funded while you are still employed. Once you leave your job, depending on the kind of pension plan that you have, you may have the option to cash in your account, but in many instances you cannot liquidate a pension until you reach retirement age.
The Survivor Benefits Plan is an insurance plan that allows retired military wives to receive their deceased husband’s pay. At retirement, the husband's automatic enrollment in the Survivor Benefits Plan continues, but he must make monthly premium payments to the plan for continued coverage.
In a perfect world, everyone would have enough money to pay off all their debts, build a savings fund for emergencies and fund a comfortable retirement. But in the real world, people must prioritize their funds. Putting your limited money where it will do the most good helps you make the most of what you have available.
