Ready Or Not, Here Comes Retirement!

It comes as no surprise that in survey after survey, workers today worry over their retirement readiness. With today’s shaky economy, depressed home values, and a stock market that seems to be in a perpetual free fall, it’s no wonder that only 18% of workers feel very confident they will have enough money for a comfortable retirement.*

It wasn’t that long ago that we were all basking in the glow of high home appreciation property values, maximized retirement savings, favorable returns on investments, good jobs and a sparkling economy. Then as all good bubbles must, this bubble burst in a fiery blaze. Over a year later, we haven’t been able to put the flames out yet.

While politicians, financiers, and our “friends” on Wall Street try to sort out the resulting problems, the rest of us are left looking for answers after witnessing a decade of generated wealth disappear before our very eyes. For those who are nearing retirement or who are already in retirement, the stakes are that much higher. Without another ten or twenty years to rebuild a crumbled nest egg, how does one manage to support oneself and their family for twenty to thirty years (or longer) in retirement?

The answer is a simple one; true retirement readiness does not fluctuate with the economy. True retirement readiness hinges on three things that you can control:

1. your spending,
2. your retirement savings, and
3. how you’ve invested your hard-earned nest egg.

Today’s economy itself seems to be a self-correction for out-of-control credit driven spending, but in order to make up for recent losses in one’s retirement portfolio, simple math illustrates that one must save, save, and then save even more than before for retirement.

The good news for those aged 50 years and older is that Uncle Sam is making this a little easier with annual retirement plan catch-up provisions. For 2009, those with a 401(k) or 403(b) may contribute an additional $5,500 to their qualified retirement plan. Even those with an IRA may contribute an additional $1,000 resulting in a total cap of $6,000 for those over age 50.

Now, how to you invest your nest egg? Conventional wisdom recommends that those nearing retirement or in retirement make greater allocations of their savings to more conservative or “safe” investments. These are investments that are less volatile and can serve as a hedge against untimely market losses (like those we’ve seen over the past year!) Today’s market ups and downs is seeing a return to quality fixed investments that guarantee your principal so that your retirement monies are still there when you need them - in retirement!

Of course, building a retirement nest egg is only the first step in preparing for your retirement. In fact, actually reaching retirement age begs the answers to a whole new set of questions. How prepared you are in answering these important and far reaching questions is called Retirement Readiness. Retirement Readiness addresses the many questions that you will be faced with once you retire and the paychecks stop coming.

For instance...

• Do you know how to make your retirement savings last a lifetime?
• Do you know how to hedge yourself against the ill effects of inflation?
• Do you know how Social Security and Medicare play into your future?
• Do you know how to protect yourself from the catastrophic consequences of a long-term care incident?
• Do you know how to create a legacy for your family, your children and your grandchildren?

And don’t forget about our friend Uncle Sam - he has something to say about all of this too!

*EBRI 2008 Retirement Confidence Survey

PUBLISHED IN THE 2009 AMALGAMATED TRANSWORKERS UNION ANNUAL DIRECTORY