Are you ready to retire?
Provided By: Duane J. Silbernagel
Here are some questions to ask yourself when deciding whether or not you are ready to retire.
Is your nest egg adequate?
It may be obvious, but the earlier you retire, the less time you’ll have to save, and the more years you’ll be living off your retirement savings. The average American can expect to live past age 78.* With future medical advances likely, it’s not unreasonable to assume that life expectancy will continue to increase. Is your nest egg large enough to fund 20 or more years of retirement?
When will you begin receiving Social Security benefits?
You can receive Social Security retirement benefits as early as age 62. However, your benefit may be 25% to 30% less than if you waited until full retirement age (66 to 67, depending on the year you were born).
How will retirement affect your IRAs and employer retirement plans?
The longer you delay retirement, the longer you can build up tax-deferred funds in traditional IRAs and potentially tax-free funds in Roth IRAs. Remember that you need taxable compensation to contribute to an IRA.
You’ll also have a longer period of time to contribute to employer-sponsored plans like 401(k)s — and to receive any employer match or other contributions. (If you retire early, you may forfeit any employer contributions in which you’re not fully vested.)
Will you need health insurance?
Keep in mind that Medicare generally doesn’t start until you’re 65. Does your employer provide post-retirement medical benefits? Are you eligible for the coverage if you retire early? If not, you may have to look into COBRA or an individual policy from a private insurer or the health insurance marketplace — which could be an expensive proposition.
Is phasing into retirement right for you?
Retirement need not be an all-or-nothing affair. If you’re not quite ready, financially or psychologically, for full retirement, consider downshifting from full-time to part-time employment. This will allow you to retain a source of income and remain active and productive.
* NCHS Data Brief, Number 267, December 2016
What is an ERISA fiduciary?
The Employee Retirement Income Security Act (ERISA) was enacted in 1974 to protect employees who participate in retirement plans and certain other employee benefit plans. At the time, there were concerns that pension plan funds were being mismanaged, causing participants to lose benefits they had worked so hard to earn. ERISA protects the interests of plan participants and their beneficiaries by:
• Requiring the disclosure of financial and other plan information
• Establishing standards of conduct for plan fiduciaries
• Providing for appropriate remedies, sanctions, and access to the federal courts
It’s the fiduciary provisions of ERISA that help protect participants from the mismanagement and abuse of plan assets. The law requires that fiduciaries act prudently, solely in the interests of plan participants and beneficiaries, and for the exclusive purpose of providing benefits and paying reasonable expenses of administering the plan.
Fiduciaries must diversify plan investments to minimize the risk of large losses, unless it’s clearly prudent not to do so. Fiduciaries must also avoid conflicts of interest. They cannot allow the plan to engage in certain transactions with the employer, service providers, or other fiduciaries (“parties in interest”). There are also specific rules against self-dealing.
Who is a plan fiduciary? Anyone who:
• Exercises any discretionary control over the plan or its assets
• Has any discretionary responsibility for administration of the plan
• Provides investment advice for a fee or other compensation (direct or indirect)
Plan fiduciaries may include, for example, discretionary plan trustees, plan administrators, investment managers and advisors, and members of a plan’s investment committee.
Fiduciaries must take their responsibilities seriously. If they fail to comply with ERISA’s requirements, they may be personally liable for any losses incurred by the plan. Criminal liability may also be possible.
I hope you found this beneficial and informational. For more information about me and my services, visit my website:
Thank you for your interest.
Duane Silbernagel is a Financial Advisor in Lincoln City, Oregon offering securities through Waddell & Reed, Inc., Member FINRA and SIPC. He can be reached at (541) 614-1322 or via email at DSilbernagel@wradvisors.com.
This article is meant to be general in nature and should not be construed as investment or financial advice related to your personal situation. The article was written by an independent third party, Broadridge Investor Communication Solutions, Inc. (Copyright 2017) and is provided for informational and educational purposes only. Waddell& Reed is not affiliated with www.newslincolncounty.com website and is not responsible for any other content posted to this website. (05/17)