Why do you need a pension plan A, B and C



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Mt. Tam Van and bike

Stephen Chen

Did you know that according to a recent survey by Charles Schwab, only 25% of people have a financial plan and that 60% of them live from one paycheck to the other ?

Aditionellement:

  1. People in the top 10% of wealth tend to have plans and be active planners (so it's good practice to build and maintain a plan).
  2. 45% of people without a plan feel that their finances do not deserve it (which is wrong – everyone can benefit from the education and control that comes with building a plan).

Plan A

Most people rely on the smooth running of their retirement plan. For most people, their A plan looks like this: work and ideally save / invest up to age 65, qualify for Social Security and Medicare, and then live at least 25 years in retirement with income from a pension (for about 30% of people), from social security (Social security accounts for half of retirement income for about 50% of the population) and uses savings (with the exception of 20% about people who have not saved anything).

Why do you need a plan B (and maybe C)

If you dissociate the assumptions underlying Plan A, you will understand why building a Plan B makes sense.

Work longer – for many people, the main goal of their plan is to work in-depth until the traditional retirement AND earn as much as they have earned over the course of their careers. According to this recent New York Times article, about 67% of people plan to work after 65 years. This hypothesis poses two problems:

  1. First – most people are retiring earlier than expected & nbsp; because of their health, dismissal, family status or care& nbsp; & nbsp; Pera Pew Trust's recent survey& nbsp;"Although the expected median age of retirement is 65, the number of people who actually retire is 62. "& Nbsp;
  2. Second, many people reach their peak income around age 50 at about the same time they start thinking about retirement. However, the key word here is spike – assuming you continue to earn the same salary or more, your peak income for the next 10-15 years is a mistake. The inconvenience can be very uncomfortable even for people with high incomes with high knowledge of white collar and working at Harvard. & Nbsp; & nbsp;

Backup & amp; Invest – based on recent census data, the average retirement income and the wealth of people aged 65 and over by quintile show how surprisingly low retirement income is.

Retirement and asset income by quintile

Stephen Chen

Source: AARP Public Policy Institute

Assuming that half of the net worth of the population is at home, only 40% of the population is left with more than $ 100,000 in cash savings. & nbsp; Even for people with $ 1 million saved for retirement, their lifetime income could range from $ 40,000 (4% reduction) to $ 60,000 (in annuity), probably much less than they were winning recently.

Social security and health insurance – these programs are essential, but they are underfunded and a combination of tax changes, start dates and possibly benefit reductions will need to be implemented soon. Social security should only be able to pay 75% of promised benefits in 2035 and the Medicare trust fund should be exhausted by 2026.

Retirement income by source

AARP

What levers are available for your plan B and C

Here is a list of things to consider when preparing for your retirement:

  1. Spending – This is the main lever for most people, because the more you spend, the more you need revenue and savings; and conversely, the more you save by working. Many people are considering moving or downsizing within the United States or & nbsp; internationally, as your location results in housing costs, expenses, taxes and health care costs.
  2. Work is by far the biggest source of income for everyone, but you have to be ready to think flexibly about work and ideally find a retirement job that you like!
  3. Save & amp; Invest Effectively – Start with savings first and then invest effectively to create a low-cost, well-diversified portfolio. Today, investments have been trivialized and you can invest and rebalance for & lt; 0.35% using multiple robo advisors or do it yourself for & lt; 0.15%. Fees matter a lot – if you pay someone with 1% to manage your money – know that it can cost you about 33% of your long-term returns (assuming 4% returns per year and the fact that you lose future returns the fees paid today.)
  4. Be smart about social security: Many tools and services are available to help you assess the optimal way to claim Social Security based on your work plan, your spouse, and other factors. (In fact, we're now adding it to all our users.) It's an important lever that can provide you with a much higher lifetime benefit.
  5. Be smart about health care & amp; Health insurance – this is the first concern of retirees and for good reason – it is expensive and complex. Since most people retire from their main job before Medicare starts at age 65, they need to find a way to move health care from one job to another, then smartly choose parts A, B and D from Medicare versus Medicare Advantage. & nbsp;
  6. Home Equity – this generally non-cash asset represents about half of retirees in net worth. Recently, a wave of Fintech companies have been funded to help people take advantage of this. The most widely used option is downsizing, but more and more people are exploring how much they could get from a Reverse Mortgage Calculator.
  7. Stay involved in your community – a key factor for people in transition to retirement is to have thought about what they want to do after retirement and with whom they want to do it. While you're expecting to potentially 25-30 years after your main career, it's worth thinking about how you want to use your most scarce resource, your time.
  8. Scenarios – life rarely works as we think, so it's worth thinking about what your plans B and C will be if things do not go as planned in plan A. You'll sleep better at night knowing you're prepare.

While the good news may seem like a lot to the coordination, there are new low cost online solutions that allow you to easily create and manage a plan for all these things, whether you're alone or with the help of Experts, for an additional fee. If you wTo check how you are doing, you can run a easy retirement calculator right here.

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Mt. Tam Van and bike

Stephen Chen

Did you know that according to a recent survey by Charles Schwab, only 25% of people have a financial plan and that 60% of them live from one paycheck to the other ?

Aditionellement:

  1. People in the top 10% of wealth tend to have plans and be active planners (so it's good practice to build and maintain a plan).
  2. 45% of people without a plan feel that their finances do not deserve it (which is wrong – everyone can benefit from the education and control that comes with building a plan).

Plan A

Most people rely on the smooth running of their retirement plan. For most people, their A plan looks like this: work and ideally save / invest up to age 65, qualify for Social Security and Medicare, and then live at least 25 years in retirement with income from a pension (for about 30% of people), from social security (Social security accounts for half of retirement income for about 50% of the population) and uses savings (with the exception of 20% about people who have not saved anything).

Why do you need a plan B (and maybe C)

If you dissociate the assumptions underlying Plan A, you will understand why building a Plan B makes sense.

Work longer – for many people, the main goal of their plan is to work in-depth until the traditional retirement AND earn as much as they have earned over the course of their careers. According to this recent New York Times article, about 67% of people plan to work after 65 years. This hypothesis poses two problems:

  1. First – most people retire earlier than expected because of health problems, layoffs, family circumstances or caregiving . Pera Pew Trust's recent survey "Although the expected median age of retirement is 65, the median age at which people actually retire is 62. "
  2. Second, many people reach their peak income around age 50 at about the same time they start thinking about retirement. However, the key word here is spike – assuming you continue to earn the same salary or more, your peak income for the next 10-15 years is a mistake. The inconvenience can be very uncomfortable, even for senior Harvard employees who have received a higher education.

Saving & Investing – Based on recent census data, the average retirement income and the wealth of people aged 65 and over by quintile show how surprisingly low retirement income is.

Retirement and asset income by quintile

Stephen Chen

Source: AARP Public Policy Institute

Assuming that half of the net worth of the population is at home, only 40% of the population is left with more than $ 100,000 in cash savings. Even for people with $ 1 million saved for retirement, their lifetime income could reach $ 40,000 (4% reduction) to $ 60,000 – probably much less than what they've had. won recently.

Social security and health insurance – these programs are essential, but they are underfunded and a combination of tax changes, start dates and possibly benefit reductions will need to be implemented soon. Social security should only be able to pay 75% of promised benefits in 2035 and the Medicare trust fund should be exhausted by 2026.

Retirement income by source

AARP

What levers are available for your plan B and C

Here is a list of things to consider when preparing for your retirement:

  1. Spending – This is the main lever for most people, because the more you spend, the more you need revenue and savings; and conversely, the more you save by working. Many people plan to relocate or downsize within the United States or abroad because their location leads to housing costs, expenses, taxes, and health care costs.
  2. Work is by far the biggest source of income for everyone, but you have to be ready to think flexibly about work and ideally find a retirement job that you like!
  3. Save and invest effectively – start by saving and then invest effectively to create a low-cost, well-diversified portfolio. Today, investments have been trivialized and you can invest and rebalance less than 0.35% using many robo advisers or do it yourself for less than 0.15%. The fees are very important – if you pay someone with 1% to manage your money – know that it can cost you about 33% of your returns in the long run (assuming 4% returns per year and the fact that you lose future returns on the market). fees paid today.)
  4. Be smart about social security – there are now a number of tools and services available to help you assess the optimal way to claim social security according to your work plan, your spouse and other factors. (In fact, we're now adding it to all our users.) It's an important lever that can provide you with a much higher lifetime benefit.
  5. Be smart about health care and medicare – this is the first concern of retirees and for good reason – it is expensive and complex. Since most people retire from their main job before Medicare starts at age 65, they need to find a way to move health care from one job to another, then smartly choose parts A, B and D from Medicare versus Medicare Advantage.
  6. Home Equity – this generally non-cash asset represents about half of retirees in net worth. Recently, a wave of Fintech companies have been funded to help people take advantage of this. The most widely used option is downsizing, but more and more people are exploring how much they could get from a Reverse Mortgage Calculator.
  7. Stay involved in your community – a key factor for people in transition to retirement is to have thought about what they want to do after retirement and with whom they want to do it. While you're expecting to potentially 25-30 years after your main career, it's worth thinking about how you want to use your most scarce resource, your time.
  8. Scenarios – life rarely works as we think, so it's worth thinking about what your plans B and C will be if things do not go as planned in plan A. You'll sleep better at night knowing you're prepare.

Although the good news may seem like a lot to coordination, there are new low cost online solutions that allow you to easily create and manage a plan for all these things, whether you're alone or with the help of Experts, for an additional fee. If you wTo check how you are doing, you can run a easy retirement calculator right here.

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