RETIRING WITH DEBT?

If you are concerned about being able to retire, you are not alone. Millions of Americans worry about whether their retirement savings will be enough to live comfortably. In fact, when Americans think about retirement, the top concern for many is a fear of running out of money — which they fear even more than death.

In the education sector, that concern is compounded by complicated retirement plans, student loan debt, and universities’ budgetary issues. A 2015 study found that 55% of educators expecting to work beyond normal retirement age say their personal finances require them to keep working.2 So a vast majority of professors are pushing off their retirement date for as long as they can.

The decision to retire is a very personal one that depends on a number of important factors, such as your age, financial circumstances, health, and family situation. You also need to know whether you are eligible to collect benefits from your pension or sponsored retirement plan. Be aware that many traditional pension plans have both age and service requirements you must meet before you can start collecting a retirement benefit. If you have questions about your eligibility, be sure to speak to your financial representative about your specific circumstances.

KNOW YOUR UNIQUE NEEDS

Today’s retirement culture demands that retirees develop personalized retirement strategies that reflect their unique financial life. By using online calculators for estimating withdrawals to creating a retirement strategy with a financial representative, you can approach retirement strategizing in many ways. As you look ahead, you will need to understand how various factors such as life expectancy, wealth, income needs, risk, and market environment affect your calculations, With these details in place, you and your representative can develop a strategy designed to balance your current cash flow while preserving income that you won’t outlive.

If you have run the numbers and think you may have a retirement-income shortfall, do not panic. Several strategies can help you increase your potential retirement income or reduce your expenses.

Health care expenses are a major concern for today’s retirees, and those who aren’t planning ahead may find themselves in trouble down the road. With life expectancies rising, today’s retirees can expect to live well into their 80s. Combine longer life spans with rising medical costs — and the fact that health care expenses can skyrocket during a serious illness — and retirees have pressing needs to prepare for.

According to an AARP survey, in 2015, a couple retiring could expect to spend 67% of their lifetime Social Security benefits on out-of-pocket health care costs.6 For people 65 and older, the average health savings account balance is only $5,016.7

Not being adequately prepared for your health care expenses could greatly jeopardize your ability to retire comfortably. And those who retire earlier may need even more assets to cover their health care costs before they are eligible for Medicare. Fortunately, with adequate preparation and personalized strategies, you can help tame health care costs in retirement.

Everyone’s health care needs are different, which is why it’s important to consider factors like your age, health, and family medical history when estimating your potential expenses.

You also should determine whether you are eligible for any employer-sponsored health care once you retire. Any benefits you receive could reduce your out-of-pocket costs and, thus, the amount you need to save for medical expenses.

In addition, retirement health care plan accounts like a Retiree Health Savings Plan may be available through your employer and can help provide a tax-advantaged way to save for future health care expenses. A financial representative can help you determine whether this option is available to you and how it may fit your overall retirement objectives.

For most retirees, Medicare will form the backbone of their health care plan. Medicare has gone through some significant changes due to the Affordable Care Act (ACA), and with a new presidential administration, there’s no way to predict how it may change in the future. A financial representative can help you stay abreast of details like eligibility, coverage, deductibles, and benefits.

It is also important to think about how you will pay for services to help you remain independent if you need help with daily living. According to a 2016 Genworth study, having an in-home health aide for 44 hours each week costs an average of $46,332 per year, and the national average annual cost of a private room in a nursing home topped $92,376.8 Generally, Medicare and employer-sponsored insurance do not cover long-term care. An investment representative can help you consider your current health, family medical history, and other factors, and help you evaluate your options for funding your long-term-care needs..

HOW MUCH OF A FINANCIAL GAP DO I NEED TO COVER?

STEP THREE

Unfortunately, no simple formula or approach exists to determine a safe, absolute withdrawal rate. The “4%” rule was popularized in previous decades and guided retirees that they could safely withdraw 4% to 4.5% of their portfolio each year. In our current environment of historically low interest rates and volatile markets, this rule may no longer apply.

Many different retirement plans exist, providing an array of options for creating retirement income that helps you support your desired lifestyle. While the best way for us to answer your specific questions is to meet with you personally, we’ve developed a list of common retirement plan types and some specific concerns you may want to think about. Many different retirement plans exist, providing an array of options for creating a retirement income that helps you support your desired lifestyle. While the best way for us to answer your specific questions is to meet with you personally, we’ve developed a list of common retirement plan types and some specific concerns you may want to think about.

Defined-Benefit (DB) Plans9  also are known as “pension plans” and guarantee a lifetime retirement benefit to participants based on factors such as age, years of employment, and salary. Though DB plans are disappearing, they are still common among public school systems across the United States. If you are enrolled in a DB plan, your employer takes care of investing all contributions to the pension fund and bears the risk of providing the guaranteed level of retirement benefits. Participants in DB plans have some special financial strategizing issues. Federal rules like the Windfall Elimination Provision (WEP) mean that your pension income may reduce your Social Security benefits, depending on the rules in your state. DB Plan participants may be able to choose among different retirement income options and schedules. Because of budgetary issues, some employers have sought to reduce or modify their responsibilities to pensioners. If you are concerned about possible reductions in your benefits, consult with your investment representative about strategies to help mitigate your risk.

Defined-Contribution (DC) Plans10  are the most popular employer- sponsored retirement plans available today. The most common types are 401(k)s, 403(b)s, 457s, and Thrift Savings Plans. As a plan participant, you decide how much to contribute to your plans from each paycheck, allocate your money between the investment choices available to the plan, and assume all investment risk. Often, your employer will match some of your contributions. Your money grows tax-deferred because contributions are made with pre-tax income. Once you retire, you retain control over your assets and can choose to roll them over into an Individual Retirement Account (IRA) or other types of accounts.

Hybrid Retirement Plans11 combine features of both defined-benefit and defined-contribution plans. For example, your employer may offer a cash-balance plan that they contribute to as though it were a defined benefit plan — but employees have the option of receiving the retirement income either as a stream of payments or a lump-sum distribution. Lump sums are popular, because investors can roll them into an IRA or new retirement plan, allowing retirement savings to potentially continue growing.

Supplemental Retirement Plans are provided by some employers to allow you to save more for retirement beyond what’s contributed to your primary retirement plan. Overall, contribution limits, early withdrawal penalties, and other details can vary a great deal from one plan to another. As a result, it’s a good idea to review your retirement plan with a qualified financial representative.

An increasing number of employers are offering early-retirement packages to professors and other employees. Typically, they will give you a lump-sum distribution based on your age, service, and contract. The decision about whether to keep working or accept a buyout is complex. You will want to consider all of your options and run the numbers before making a decision. Some factors to address include the following: An increasing number of employers are offering early-retirement packages to professors and other employees. Typically, they will give you a lump-sum distribution based on your age, service, and contract. The decision about whether to keep working or accept a buyout is complex. You will want to consider all of your options and run the numbers before making a decision. Some factors to address include the following:

• How will early retirement affect your  pension benefits and other retirement  income?
• Is Social Security an option for you, and if so, should you take it immediately or allow your  benefits to grow?
• Does the buyout come with low- or no-cost  health insurance until you are eligible for  Medicare?
• Do you have enough money saved for  retirement, or do you need to keep working to save more?
• What are the tax implications of taking a  lump-sum distribution?
• Is there a risk of future layoffs at your  employer? Do you love what you do?

Ultimately, many factors will affect your decision to accept an early-retirement package. We suggest consulting with your financial representative to help you understand your options and the benefits and drawbacks of each choice.

• How much income do you need  in retirement?

• If a Deferred Retirement Option  Program (DROP) is available to  you, is it worth continuing to  work while your retirement  benefits keep accumulating?

• Do you need survivor-benefit  options for your spouse?

• What other sources of income  do you have?

• Do you plan to work after  retiring? What is the age difference  between you and your spouse?

• What are your health care  insurance options?

• Do you have life insurance?

No matter what type of retirement plan you have, a financial representative can help you evaluate your options and choose a strategy designed to Maximize your retirement income while  protecting your wealth.

Everyone’s retirement dream is different, and an increasing number of active Americans are redefining retirement for themselves in new and interesting ways. Today’s retirees can expect to live long, active lives, making retirement more like the dawn of a new chapter of life rather than a sunset. Knowing what this lifestyle means to you requires taking the time to thoughtfully brainstorm your vision.

We hope you’ve found our retirement guide interesting and informative and a helpful starting point for details to consider. While retirement strategizing is complex, you can create a more comfortable retirement tomorrow by taking the steps you need today. Most of all, we want to encourage and support you as you prepare for retirement and for this next stage of your life. We hope you’ve found our retirement guide interesting and informative and a helpful starting point for details to consider. While retirement strategizing is complex, you can create a more comfortable retirement tomorrow by taking the steps you need today. Most of all, we want to encourage and support you as you prepare for retirement and for this next stage of your life.

Remember, as you navigate your transition from work into retirement, we are here to serve as a resource for you and your family. We are happy to answer any questions you may have about your personal financial situation or future goals.

In addition, if you have any questions about the information presented in this report, please don’t hesitate to contact us. We enjoy and appreciate the opportunity to help you fulfill your retirement goals and live your best life. To schedule a conversation with us, click on the button below and select times that work best for you!