From Yahoo Finance
10 reasons you will never retire
Kiplinger
By Rachel L. Sheedy, Managing Editor, Kiplinger's Retirement Report
Retirement is the payoff at the end of a long career, the end game most workers are striving for. But these days, with corporate pensions disappearing (only 11% of Fortune 100 companies offered traditional defined-benefit plans in 2012, down from 89% in 1985) and life spans on the rise (65-year-olds in 2010 had remaining life spans of 19.1 years, nearly two years longer than folks who turned 65 in 1990), you're likely to be on your own when it comes to building a nest egg that may have to last 30 years or more.
Will you ever save enough to retire comfortably? Many Americans aren't so sure. In fact, 48% of workers don't expect to retire by age 65 -- up from only 33% in 2005, according to a recent CBS News poll. And 22% of Americans don't think they'll retire until they're over 70.
We talked with financial planners from the Financial Planning Association about the common problems that trip people up on the road to retirement. Here are 10 reasons you might never retire, as well as the steps you can take to avoid these roadblocks.
1. You're Not Saving in a Retirement Plan
When starting a new job, one of the first benefits to ask about is the company retirement plan, such as a 401(k), 403(b) for teachers and nurses, 457 plan for police officers and other local-government workers, or the Thrift Savings Plan for federal workers and military personnel. If your employer doesn't have one -- or you just want to set aside more money -- you can save in an IRA. If you're self-employed, you have retirement-plan options, too, such as the solo 401(k). Regardless of the route you take, saving in a retirement plan allows your money to grow free of tax and compound more quickly.
"One of the easiest ways to accumulate wealth is to always take advantage of tax-deductible and tax-deferred savings vehicles," says Steve Doucette, a certified financial planner in Sherborn, Mass. But although 64% of employees for private employers have access to retirement plans, only 49% actually participated in 2013, according to the Bureau of Labor Statistics. Of those with no plan, 73% said their retirement savings totaled less than $1,000, according to the Employee Benefit Research Institute's 2014 Retirement Confidence Survey.
2. You Are Neglecting the Company Match
Many employers will match a certain amount of your savings in the company retirement plan. If you don't contribute -- or don't contribute enough -- to the plan to earn the match, that's additional compensation you're throwing out the window. "It is a huge mistake if you do not find a way to take advantage of an employer retirement-plan match," says Doucette.
The average company contribution to retirement plans in 2012 was 4.5% of pay, according to an annual survey by the Plan Sponsor Council of America. But about 34% of employers said that more than half of their plan participants are not contributing enough to take advantage of the full employer match, according to a 2013 report by WorldatWork and the American Benefits Institute.
A company match is one of the few free lunches around. Don't let it go to waste!
Read more from Yahoo Finance >>
10 reasons you will never retire
Kiplinger
By Rachel L. Sheedy, Managing Editor, Kiplinger's Retirement Report
Retirement is the payoff at the end of a long career, the end game most workers are striving for. But these days, with corporate pensions disappearing (only 11% of Fortune 100 companies offered traditional defined-benefit plans in 2012, down from 89% in 1985) and life spans on the rise (65-year-olds in 2010 had remaining life spans of 19.1 years, nearly two years longer than folks who turned 65 in 1990), you're likely to be on your own when it comes to building a nest egg that may have to last 30 years or more.
Will you ever save enough to retire comfortably? Many Americans aren't so sure. In fact, 48% of workers don't expect to retire by age 65 -- up from only 33% in 2005, according to a recent CBS News poll. And 22% of Americans don't think they'll retire until they're over 70.
We talked with financial planners from the Financial Planning Association about the common problems that trip people up on the road to retirement. Here are 10 reasons you might never retire, as well as the steps you can take to avoid these roadblocks.
1. You're Not Saving in a Retirement Plan
When starting a new job, one of the first benefits to ask about is the company retirement plan, such as a 401(k), 403(b) for teachers and nurses, 457 plan for police officers and other local-government workers, or the Thrift Savings Plan for federal workers and military personnel. If your employer doesn't have one -- or you just want to set aside more money -- you can save in an IRA. If you're self-employed, you have retirement-plan options, too, such as the solo 401(k). Regardless of the route you take, saving in a retirement plan allows your money to grow free of tax and compound more quickly.
"One of the easiest ways to accumulate wealth is to always take advantage of tax-deductible and tax-deferred savings vehicles," says Steve Doucette, a certified financial planner in Sherborn, Mass. But although 64% of employees for private employers have access to retirement plans, only 49% actually participated in 2013, according to the Bureau of Labor Statistics. Of those with no plan, 73% said their retirement savings totaled less than $1,000, according to the Employee Benefit Research Institute's 2014 Retirement Confidence Survey.
2. You Are Neglecting the Company Match
Many employers will match a certain amount of your savings in the company retirement plan. If you don't contribute -- or don't contribute enough -- to the plan to earn the match, that's additional compensation you're throwing out the window. "It is a huge mistake if you do not find a way to take advantage of an employer retirement-plan match," says Doucette.
The average company contribution to retirement plans in 2012 was 4.5% of pay, according to an annual survey by the Plan Sponsor Council of America. But about 34% of employers said that more than half of their plan participants are not contributing enough to take advantage of the full employer match, according to a 2013 report by WorldatWork and the American Benefits Institute.
A company match is one of the few free lunches around. Don't let it go to waste!
Read more from Yahoo Finance >>
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