February 2020
Retirement Articles This Week
Your Retirement Help Center!
We'll focus on websites and publications that help prepare and plan your retirement and personal finance decisions. Visit us each week. Thank you for visiting and gaining great retirement insight!
Thrift Savings Plan March Update
Here are the results for the primary TSP funds:
| Fund | G | F | C | S | I |
| March 2007 | 0.42% | 0.00% | 1.09% | 1.09% | 2.57% |
| Last 12 Months | 5.05% | 6.60% | 11.83% | 9.30% | 20.22% |
| Fund | L2040 | L2030 | L2020 | L2010 | Income |
| March 2007 | 1.34% | 1.16% | 1.08% | 0.89% | 0.62% |
| Last 12 Months | 12.57% | 11.64% | 10.82% | 9.00% | 6.94% |
Wise Owl
Do You Have A Pension Plan?
Research, in fact, shows that money from a traditional pension - combined with Social Security - generally replaces 56.3 percent of a couple's pre-retirement income, while a 401(k) combined with Social Security substitutes for just under 43 percent. Social Security alone replaces 34.4 percent. Some pension plans - particularly those in the public sector - replace an even greater percentage of salary.
"Having a pension and Social Security [combined with private savings] allows most households to live as well after retirement as they did before," said Alicia Munnell, director of the Boston College Center for Retirement Research, which studied the topic. "If you don't have a pension, you'll have to tighten your belt in retirement."
PBS "The Boomer Century"
“The Boomer Century: 1946-2046” is a two-hour documentary that looks to the baby boomers’ past for clues to how this generation of 78 million Americans will shape the future.
Hosted by gerontologist and psychologist Dr. Ken Dychtwald, the program focuses on the boomers’ formative years to reveal the personality traits of a generation that has since rewritten the rules for work, marriage and parenthood, and is now redefining retirement and aging. The final question the program poses, is what kind of future will the baby boomers lead and leave for succeeding generations?
March 28 Check Your PBS Station Boomer Century Site
Here's Your Tab For Retirement Health Care
A 65-year-old couple retiring this year without employer-provided retiree health insurance will need about $215,000 to pay for future medical care-related expenses, according to an analysis by Fidelity Investments.
The amount, up from $200,000 last year, includes such expenses as Medicare premiums, copayments and deductibles. The ever-increasing tab for retiree health care expenses comes as the number of employers offering retiree health care coverage dwindles, making future retirees liable for a big chunk of their health care costs.Fidelity researchers estimate the $215,000 will be eaten up by three costs:
- Medicare Part B and D premiums, which account for 32 percent of the total
- Medicare co-payments, deductibles, co-insurance and other cost-sharing items, which account for 35 percent
- Prescription drugs, which account for 33 percent
Source: Fidelity Investments
Health+Wealth=Happy Retirement
Most of the topics we present on our site concern personal finance and retirement planning issues. I visit a lot of financial websites each week for insight and tips to share with readers of RetirementThink. But the fact is, a "healthy retirement" really does start with a healthy lifestyle. It will be tough to "super size" your retirement savings without paying attention to diet and exercise. Bankrate.com explains the health and wealth connection.
Certified Financial Planner Barbara O'Neill experienced an "aha" moment when she listened to a lecture on nutrition delivered by registered dietician Karen Ensle. The two have since collaborated on the book "Small Steps to Health and Wealth," the result of her epiphany. You can read their book online at the Rutgers Cooperative Extension Web site.
Small Steps To Health And Wealth online book site.
Many people believe they must make major lifestyle changes to be healthy and wealthy. So, instead, they “freeze” and do nothing. A 2004 U.S. Department of Health and Human Services press release alluded to the importance of just getting started: “America needs to get healthier one small step at a time. Each small step does make a difference, whether it’s taking the stairs, instead of an elevator, or snacking on fruits and vegetables instead of greasy chips or sugary foods. The more steps we can take, the further down the road we will be toward better health for ourselves and our families.” Similarly, some people fear never having “enough” money saved for retirement because they’ve seen gloomy reports about unprepared retirees needing seven-figure sums. However, any positive change (e.g., saving $1 a day or 1% more of one’s salary) is better than none. The trick is to get started today.
New Legislation Would Help Charities
The Public Good IRA Rollover Act would make the IRA rollover provision permanent. It also would allow donors age 59½ or older to make contributions tax free from their IRAs to a charitable remainder trust, pooled income gift or charitable gift annuity. In addition, gifts could be made through the IRA rollover to donor-advised funds, supporting organizations and private foundations.
We'll keep you posted on this bill which was just introduced in both the House and Senate this week.
Social Security Puzzle
Charleston.net gives us a picture of the Social Security trust fund.
Two trillion, forty-eight billion, one hundred twelve million dollars. That number represents the value of the assets held by the Social Security trust fund at the end of 2006, including old age, survivor and disability insurance funds.
Every year since 1982, Social Security has collected more in tax receipts than it has paid out in benefits. In 2006 alone, the difference was about $189 billion. Add up all those surpluses over the years and the cumulative total is $2.48 trillion. Those surpluses go into the Social Security trust fund, presumably to be used to pay future retirement and disability benefits to retirees.
So the market value of the Social Security trust fund is around $2 trillion, right? Wrong.
The market value is zero because there are no real assets in the trust fund. Those surpluses are spent by the federal government each and every year as they occur. Those surpluses also mask the federal budget deficit.
Are You Doing Your Taxes This Weekend?
Here's the 2006 1040 Instruction booklet. It's only 87 pages this year.
Sandwich Generation Help
Are you juggling work, kids and helping relatives or parents too? You're probably a member of the sandwich generation. It really is a struggle. Money.com provides sites that can help the sandwich generation. This is a great resource page.
First, get the facts... Your goal: Avoid surprises. Talk to your parents about how they're doing financially and what plans they've made if they become ill or incapacitated.
While you're at it, get a grip on your own financial needs too. If you haven't already done so, run the numbers to assess how much money you'll need for retirement and to send Junior to college.
Then, get the power...If an emergency arises, you'll need legal authority to act swiftly on your parents' behalf. Make sure your mom and dad have the following: a durable power of attorney authorizing someone to sign checks, pay bills and make financial decisions on their behalf; a durable power of attorney for health care (or a healthcare proxy) authorizing someone to make medical decisions; and a living will outlining their wishes if life-sustaining medical care is needed.
Long-Term Care For Federal Employees
SiteSeeing: Visit this website for LTC information.
The Federal Long Term Care Insurance Program (FLTCIP) offers long term care insurance (LTC) to federal employees, members of the armed forces and dependents. John Hancock and Metropolitan Life Insurance administer this plan. Long-term care insurance site for federal employees.
Scott Burns Take On Annuities
Scott Burns of the Dallas Morning News always has great information on retirement planning. His recent column discusses variable annuities and advantages of income annuities.
Recent research shows exactly that – your investment portfolio is more likely to survive a long retirement if you convert a portion of your portfolio to a lifetime annuity.
The reason for this is simple, if you think about it a bit. What destroys portfolios are high withdrawal rates – rates that are far above the income-generating capacity of the portfolio.
Tax Time Questions On 1099-R Forms
We've received numerous e-mails this week with questions on 1099-R forms. If you did a distribution or direct rollover from a 401k, 403b or other employer plan or did a distribution from your IRA you should have received this form.
Often investors will do a direct rollover and then take a distribution from their IRA which will actually generate two 1099-R forms; one from your employer and the other from your IRA custodian.
Bankrate.com answers questions on the 1099-R.
What the 1099-R tells you
Box 1 of the form shows the total amount of your retirement fund that was distributed. The more important amount to you right now is in box 2a, the taxable amount. For direct rollovers from one qualified plan to another, that amount is generally zero.
Also check box 7, the distribution code. A letter or number should be here, explaining to the IRS exactly why your retirement money was taken out and just what was done with it. Direct rollovers to another qualified plan are coded with the letter "G." This includes transfers to another company's 401(k) plan, a tax-sheltered 403(b) annuity, a government 457(b) plan or an IRA.
The code lets the IRS know that the money was never in your hands, an important point when it comes to taxes on transferred retirement funds. If you had taken the money out yourself, taxes would have been withheld.