| ||July 01, 2007 |
|Planning For Retirement - Part II|
In a previous column I wrote specifically to baby boomers regarding the “r” word: retirement. I presented some dire facts regarding the current state of employer-provided pension plans. That was the bad news. The good news - you can do something about it.
Think of retirement as a three legged stool. In order to maintain balance, you need all three legs…or there is a real possibility of a crash!
One leg consists of the benefits the government offers you. Debate rages about the viability of future benefits, and my best advice is to stay tuned to the discussion and make sure you are aware of what is planned for those benefits. Any change in future promises should be accounted for when we get to the third leg.
The second leg is your company’s pension plan, either defined benefit (such as a traditional pension: you work so many years and the company provides you with so much monthly benefit) or defined contribution (such as the popular 401K plans). Again, some of these plans, particularly traditional, are under stress. Learn how yours works; read the plan description; stay on top of the news coming from the company. On the 401K side, become a good investor. Teach yourself the fundamentals of good diversification and know how much you have and when you will need it.
Finally, the third leg, and the one that you can exercise the most control over. The saving you do yourself.
Everyone – everyone – needs this third leg. It consists of the money you yourself set aside on a disciplined basis to help in retirement. You don’t directly control government benefits and you don’t directly manage your company’s pension plan. But you do manage your own life.
Establish a retirement plan of your own. Here at the Knights of Columbus, you can open a retirement annuity for as little as $300. Consistent and disciplined savings placed into that annuity over time can guarantee you an income that you cannot outlive at retirement. That’s right – guarantee you an income you cannot outlive. That really will provide you with piece of mind.
As you ponder all the things that may not work out as you proceed toward retirement, think about the one thing you can do to help yourself. It’s reasonably priced ($300 to start), guaranteed, and controlled by someone you trust: you!
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