Retirement decisions

retirement decisions
thebalance.com

Getting the most out of your retirement dollars

by Larry Hungerford, Winston-Salem Journal

July 1, 2017

“Given that so many baby boomers are retiring as they age into their 60s, I thought that a column that provides some basic ‘money tips’ for them might be appropriate. Certainly, it is a huge adjustment to give up that regular paycheck to live off of Social Security, pensions and savings.

Of course, the best of all possible scenarios is to retire from a full-time job to work part time doing something enjoyable. It means you don’t need to deplete your savings as rapidly and you still have the opportunity to fund (up to $6,500 per year per person) your and your spouse’s Roth IRAs. (As of last April, 19 percent of Americans age 65 and over were still working, the highest rate since 1962.)

When I discuss the retirement decision with clients, there are always two key questions.

The obvious one is how much income will they have available to maintain their preferred lifestyle? The second question is: Do they still enjoy going to work every day?

If they are in their mid-60s and dislike their jobs, then I argue that we need to do everything possible to make the numbers work so they can retire. It may even mean taking Social Security early — giving up the yearly 8 percent raise (plus cost of living adjustments) as well as scaling back on planned expenditures after they retire. (The usual best strategy for Social Security is to draw on your spouse’s account while you permit yours to keep increasing until age 70.)

The amount of money retirees can withdraw from their savings and the way that is done to pay the lowest taxes possible are the two most crucial financial decisions they must make. Given how little safer investments pay (money markets, CD’s, government bonds, etc.), investing during retirement in the stock market is a must.”

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Contact Larry Hungerford, age 81, at 335-941-3164 or e-mail him at hhplanner@aol.com.

Underfunded pensions – Do you have one?

This morning my friend Sharon and I were talking and the subject of pensions came up.  We both receive a pension from the Public Employees Retirement Account (PERA), a Colorado teacher’s retirement fund.  I asked her if she knew if it was in good standing.  She said she thought it had gotten better than in years past.

This evening while reading the Denver Post, I read an article by Terry Savage titled, “Pensions at risk, group finds.” After checking out the website mentioned, it appears the Colorado PERA account gets a grade of D.  The School Division Trust Fund of PERA (Sharon’s and my pension fund) had unfunded benefits of -$15.30 billion in 2015! That’s a negative in front of the number!

underfunded pensions
biswa.net

Check out your city or state pension fund to see if you have an underfunded pension after you read this article:

Don’t Count on that Government Pension

by Terry Savage, The Savage Truth

April 23, 2017

“Millions of Americans are expecting to receive a pension from the city or state that employs them. Many will be in for a terrible surprise, according to the nonprofit organization Truth in Accounting.

It surveyed 237 municipal pension plans across the country, using newly required reporting data about pension underfunding. Although it has taken decades for many of these pension funds to get into such bad shape, only now are the details being revealed, says Sheila Weinberg, president of Truth in Accounting and a CPA who has dedicated her life to requiring full and useful disclosure of federal, state and local debt obligations. (I am a board member of Truth in Accounting.)

This newly collected data should be frightening to those counting on a state or municipal pension. The latest numbers are available at http://www.statedatalab.org/pension_database. There you can search by state to find both state and local pension statistics. The report for each city and state includes the amount of pension plan assets, the amount of plan promises, and the dollar amount and percentage of pension underfunding. Every plan also receives a letter grade, from A to F.

Of the 237 cities studied, 29 received an ‘F’ grade, reflecting a funding ratio of less than 35 percent. Those plans cover many thousands of workers who cannot possibly be paid their full promised pensions, absent a huge tax increase (which would also come out of their pockets as workers).”

Read more about underfunded pensions

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