Two stories about retirement planning

You never know when Personal Finance lessons will come from. Today I heard two stories about the retirement of my family. First, my wife told me that her retirement program at work can be cut. Then I learned that my family in the box company has strange retirement crisis of its own.

Don't count your chickens
Chris come Home disappointed tonight. She has worked for the Government for almost twenty years (eight such as a teacher in high school science) and although she is the proud reinforced work, it is placed in, she Hates how she and her colleagues are often captured by the civilian political battles.

This year, public servants are feeling the pinch again. There are no fewer than eight legislative proposals for modification of the system of public employee retirement of Oregon. In other words, retirement policy, Chris (and colleagues) have been run are about to change, perhaps drastically.

Fortunately, Chris was particles from finished personalities screen saver all his life. It has squirreled away a lot more than the minimum size, so that their retirement was not left to chance. In fact, only a few weeks she proudly announced to me that it is a saving of 30% of its income through various sources. This is impressive. Thus while the proposed cuts in its retirement benefits to their cranky, and while they will hurt their savings rate, they will not respond to her retirement.

What is the moral here? They are ready. at any time you can change your retirement benefits and this is not just public sector employees whose retirement programs may change suddenly. The same may happen with private companies, too.

Note: does not want this post to turn into an argument over public servants and their advantages. Please do not use this forum to launch a debate on whether civil servants are before-or under-compensated Not give figs. Derails and vitriol will be deleted.

Thinking outside the box
My family owns a small company that produces custom fields. In 1995, just before he died, my father created a program for the distribution of profit, so that staff (most of which are members of the family) could have retirement savings, he never did.

Here's how our plan works: every tax season, we have seen the company earned for the previous year. If the flush times, the company would contribute up to 15% of each employee salaries in the distribution of income account. And so if I earned $ 30 000 in 1998, and profits were high, then you can set aside $ 4,500 my retirement account. When times are lean, we set aside anything. Most years are between 0% and 15%.

Shortly after I left my job to blog full-time, business made certain adjustments to the plan for retirement. I am clearly of the data (because it does not participate in the process), but it seems that things have been juggled so that employees can have direct control of their retirement investments. Also, as a side effect, it becomes much easier to withdraw money from the plan for distribution of profit. Which have been made.

In fact, many employees yanked all the money from their retirement to go on trips, buy new cars, etc. (have done so even they suffered 10% early withdrawal penalty and, presumably, had to pay taxes.)

When the company financed the plan for distribution of profit next year, these same officials promptly next money from their accounts — again as 10% of the positive — and spent it.

Solution of the company? They simply stopped financing plan for the allocation of the profits. Now they give employees cash bonuses at the end of the year instead, which averts the 10% penalty. But it hurts folks (like my mother) which were, on average, their retirement plans. And if I was still with the company, this will hurt me.

This is another situation where the existing retirement program has suddenly changed its parameters and is an example of why it is important to take as much control over your personal finances as soon as possible.

The Moral
Remember, folks: nobody cares more about your money than that – and includes your retirement. You've heard all the horror stories about the future of social security, but your other sources of retirement income are subject to change. It is necessary to you to an active role on the subscription in the future.

Here are some steps you can take to make sure, you can save sufficiently for the future:

I'm almost not ask but: whether you heard horror stories about each retirement lately? I know people who have cashed, the accounts worth $ 100,000 to get money at the earliest. This is the common? What other things dumb people do with their retirement savings?

This article is for planning, retirement

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