Skip to main content

Have You Prepared Well Enough?

This is a hot-button issue. All of the literature regarding saving for retirement suggests that there soon may be a glut of aging bums on the streets.

But, is that a realistic outcome?

 Statistics suggest "Yes".

First, I have to point out that retirees are divided into two major groups:

  • Those with pension plans that will provide a specific amount of money each month (called Defined Benefit plans). Those with these plans include:
    • Police, Firemen, and other government workers
    • Teachers and full-time workers in schools
    • Military - it may not be a BIG benefit, but it is a stable one
    • SOME workers in larger corporations
  • Those with pension plans that do not guarantee a certain benefit (called Defined Contribution plans). Most people have these.
    • These include 401(k)s and other tax-free contribution plans
    • Many employers will match or even double the contributions made by their workers. Too many people don't even make minimal contributions in their early years, if at all.
    • If people leave their job, too often, they cash out the plans (well, to be fair, many of them desperately need the money to pay their bills)
The stories that talk about the HUGE amounts of money you will need to retire are primarily talking about the second type of plan. Even with that pile of money, you can be at risk of losing everything if a health crisis hits.
The Defined Benefit plan is less vulnerable to being lost in a financial crunch. It's not, generally, a large income, but it is steady. And, it cannot be touched by bankruptcy, nursing homes (if you are a spouse), or other things that threaten Defined Contribution plans. If you are divorced by someone with a Defined Benefit plan, you can't even lose your spousal share against your will (you CAN negotiate it away, but you can't be forced to give it up).

Comments

Post a Comment

Popular posts from this blog

One Reason to Write

This post sparked mine today. I've been writing (slowly, one anecdote at a time) my memories of my youth, and the stories that I remember being passed down from parents, grandparents, and other long-lived people. I was fortunate - in my mother's family, old age was the default - my grandparents were born in the 19th century, and passed on stories of their youth. My father's family was equally long-lived, but not as talkative (WV vs. Irish-descent). Still, I have an aunt by marriage whose passion is genealogy, and who had compiled a bookshelf of clippings, copies of newspaper stories, and charts of the family, back to pre-Colonial times. If you aren't on Ancestry.com (and, I don't blame you - the price has risen shockingly!), you might want to use a word processing program or app - Google Docs is easy to use, and can be shared with others easily - to write down your memories - personal, or what has been told to you. If you'd rather, set up a videocam, and...
2 comments
Read more

Stop! Just - STOP!

I do understand that furniture designers have to make a living, but - this is just wrong . I've tried "ergonomic" furniture. I've sat in those hard-seated chairs and couches. They are NOT comfortable. They are NOT conducive to working on for extended time periods. They are NOT what I want. Apple LOVES them - well, yeah, they would. 20-somethings can sit anywhere comfortably. What I want is furniture that fits a senior, with a bad back and aching knees, and a need to get to her feet INSTANTLY, when the call of nature sings out. I don't need a seat so hard that my butt goes numb. I've seen seats like the ones shown, and a LOG has more 'give' to it. I don't need a couch for "two" that can only fit MAYBE 1-1/2 - IF they are on the 1 meal a day, semi-starvation diet (SO healthy!). I don't need a fixed table that encroaches on my already-diminished seating space. That "table" won't allow more than a small laptop/ta...
1 comment
Read more

WEP, Explained (Sort of)

The idea behind WEP - the Windfall Elimination Provision - is that a FEW people were taking advantage of the ability to get a government pension, then take a non-government job, and get Social Security benefits, as well. According to Wikipedia: "The  Windfall Elimination Provision  (abbreviated WEP [1] ) is a statutory provision in  United States  law [2]  which affects benefits paid by the  Social Security Administration  under Title II of the  Social Security Act . It reduces the  Primary Insurance Amount  (PIA) of a person's  Retirement Insurance Benefits (RIB) or  Disability Insurance Benefits  (DIB) when that person is eligible or entitled to a pension based on a job which did not contribute to the  Social Security Trust Fund . While in effect, it also affects the benefits of others claiming on the same social security record." How it affects me: both my husband and myself worked primarily in teaching jobs ove...
Post a Comment
Read more