Saturday, June 07, 2014

Retirement Planning De-Mystified

As the TAG 401(k) Plan moves closer to switching to Vanguard Mutual Funds (it happens August 1st) we look for ways to get members more involved with saving for retirement.

We came across a short but most excellent on-line book that is worth the few minutes of your time that it will take to peruse it. The (short and pithy) chapters are as follows:

Taking the Mystery Out Of Retirement Planning

Chapter 1 - Tracking Down Today's Money
Chapter 2 - Tracking Down Future Money...At Retirement and After
Chapter 3 - Tracking Down Future Expenses
Chapter 4 - Comparing Income And Expenses
Chapter 5 - Five Ways To Close The Gap
Chapter 6 - Making Your Money Last
Chapter 7 - Tracking Down Help For Retirement
Resources ...

A small slice of Chapter Six:

Taxes & Retirement - True Or False?

Income taxes go away when you're retired. True or False?

False. Remember all that pretax money you contributed to your retirement plan? When you withdraw it at retirement, you pay income taxes.

Social Security benefits are not sheltered from taxes. True or False?

True. A portion of your Social Security benefits is included in your taxable income if, for example, in 2011, you have taxable income and Social Security benefits of more than $25,000 for a single person and $32,000 for a couple.

There are no tax consequences if you don't start to withdraw your pretax savings at age 70½? True or False?

False. There is a 50 percent tax penalty on amounts that the IRS requires to be taken out after age 70½ and that are not withdrawn when required. In tax terms these are called "minimum required distributions.”

In the time I've been business rep, I've seen members come across lots of money in various nooks and crannies they didn't know existed. Some of the money locations:

1) Old forgotten 401(k) accounts.

2) Money/property held by the State Controller's Office.

3) Member pension accounts at the Motion Picture Industry Pension and Health Plan*.

You might also find this Retirement Calculator useful.

* Yes, people actually forget to claim the Defined Benefit Plan and Individual Account Plan inside the Motion Picture Industry pensions.


Unknown said...

Too many people really trying to plan for retirement are taken advantage of. We aren't sure why financial advisors and planners aren't endorsing tax deferred or tax free retirement plans, but they should be. We've had many clients that can afford these plans and take action on them over our 30 years in business. There's a great book by Patrick Kelly called Tax Free Retirement that we give out to all of our clients. This book describes how the tax free or tax deferred retirement plans can not only be more effective than traditional IRA's or 401k's, but also ensure you don't lose what you've been saving. We highly encourage all financial planners and advisers pick up this book as soon as possible and start pitching the idea to their clients.

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