Retirement planning as a do-it-yourself job
Retirement planning as a do-it-yourself job
Daily Record and the Kansas City Daily News-Press, Dec 19, 2005 by Mike Trask
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The traditional pension plan appears to be in danger of extinction.

Once prevalent in corporate America, many companies have converted their defined pension plans into 401(k) savings plans while others, like bankrupt United Airlines, have turned them over to the federal government's Pension Benefit Guaranty Corporation, an entity Congress created in 1974 that insures companies' pension plans and is funded by companies' premium payments. Because of a spate of bankruptcies and other factors, the PBGC is now some $23 billion in the red.

The money available to pay benefits is eventually going to run out unless Congress enacts comprehensive pension reform to get plans better funded and provide the insurance program with additional resources, PBGC's Executive Director Bradley Belt said in a written statement last month.

For much of the 20th century people had to be concerned only with staying with their employer long enough to collect a pension benefit that would provide a reasonable standard of living in retirement. Today, most employees today have to take responsibility for providing for their retirement.

The government has made it very clear: Here are 401ks. Save for yourself. Here are Roth IRAs. They will be tax free when you get to retirement, said Bob Blattel, who operates a financial and estate planning firm in St. Peters.

The government is putting a sign out saying, 'If you don't do it yourself, you're screwed.' The government has been telling us this for 20 years . . . and people are not picking up the signals. While savings rates in Japan, Germany, France and other countries are over 10 percent, in this country the rate is under 3 percent, he said.

Blattel said his clients aren't as concerned about retirement savings as they should be. When Social Security began in the 1930s, there were 40 workers for each Social Security recipient. The ratio now is three to one. In addition, people are living much longer today, enjoying 10, 20 or even 30 or more years of retirement, he said.

People aren't recognizing the length of retirement, Blattel said. I don't think they recognize how long they're going to need their money.

Also, people generally don't account for inflation when saving for retirement. For example, the amount a person thinks he might need to live on actually could be double that amount because of the effect of inflation over a 20-year period, he said. That is especially true when it comes to medical costs, he added.

Social Security is relied on by way too many people as being the sole provider of retirement funds, Blattel said. There's talk about Social Security going broke by 2017 unless changes to the system are made, but there's not a politician living that is going to allow it to go bankrupt, he said.

However, Blattel is concerned that Congress will keep raising the age for people to start receiving benefits and do more means testing, or determining Social Security payments based on recipients' income levels.

Part of the problem is that people are spending more than they should. They other part of it is they're not getting the basic education that they need concerning savings and investment, he said. People are fooling themselves if they think they can wait until their children are raised before they start saving for retirement. It can't just happen that quickly, he added.

For all these reasons, employees need to become educated about retirement savings. And they need to get their education and advice from objective sources, he said.

We were at the GM plant [in Wentzville] in 1996 doing a seminar for them when they were shut down, and these workers had no concept in what they were investing in, he said. Blattel said that when he quizzed some of them about their investments, they told him that they invested on the advice of co-workers.

Most employers with 401(k) plans bring in the investment companies overseeing those plans to talk to employees. It's like going to the cow and asking if the milk is good, he said.

Blattel thinks that will change before long. There is a regulation on 401(k) plans that requires companies to provide employees with more objective information about their plans.

I don't think it's going to take long for them to see the light. All we need is an attorney with a class action suit saying, 'My client should have hit $400,000, but he wasn't properly educated. He kept his in a money market for 30 years. I think the company is responsible.' It's coming, he said.

This article was originally published in The Daily Record, St. Louis, Mo., another Dolan Media publication.

Copyright 2005 Dolan Media Newswires
Provided by ProQuest Information and Learning Company. All rights Reserved.
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Light of Truth from the Lamp of Love: Confirm your love toward him
Light of Truth from the Lamp of Love: Confirm your love toward him
Christian Stories Online
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Home Mortgage Interest Rates: How to Compare
Home Mortgage Interest Rates: How to Compare

Whether you are looking to purchase your first home, sell your current home and purchase a new one, or you are wondering whether or not you should refinance your existing mortgage, it is beneficial to compare current home mortgage interest rates from several companies to be sure you get the best deal possible. They can be researched very easily online, and you can tailor your search to give you accurate rates based on the state that you will live in, whether you are buying or refinancing, and the amount of the loan.

While you are researching the current home mortgage interest rates, you can also learn about the different mortgage loan options, as you have many to choose from. When you think of mortgages, especially if you have never purchased a home before, you probably think of a 30-year loan, typically with a fixed interest rate, with the payments and interest spread out over the life of the loan.

Other options exist, and they may make more financial sense depending on your home ownership plans. For instance, if you don't plan to keep the same house for 30 years or more, why would you set your mortgage up on the basic 30-year payment plan? Some mortgage lenders will set up plans that allow you to pay interest only for a specified number of years, or a combination of adjustable rate mortgage plans with more flexible payment options.

You can compare current home mortgage interest rates of different companies by asking for quotes based on the home you are looking to buy or refinance, the state the home is in, and the type of mortgage loan you are looking for. On most websites you will be able to utilize a mortgage calculator that mortgage lenders have set up to indicate the current home mortgage interest rates of your state, and how the monthly payments are effected by the interest rate.


About the Author


****************************************
Brad Triggs provides more information and
free mortgage quotes at his website:
e-Loans-Now.com - Home Mortgage Interest Rates
****************************************
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