Long-term care insurance (LTC) article
If you're a member of America's largest generation, the baby boomers, you'll be entering into retirement in the coming years. With this in mind, now may be a good time to review some of the retirement planning choices you're bound to encounter in the years ahead.
Pension Payout Options
If you have a company pension plan, you will need to make some decisions about how you wish to receive your pension proceeds when you retire. Generally, you'll be given the choice between receiving income for the rest of your life (single life option), receiving an income for the life of you and your spouse (joint and survivorship option), or receiving a lump sum distribution.
Each option presents its own potential advantages and disadvantages. For instance, a single life option will pay a higher income than a joint and survivorship option. However, if you take the single payout option, income will cease upon your death, whereas if you take the joint and survivorship option, payments continue for the life of both you and your spouse. With both payout options, you give up your pension balance in exchange for income.
If you would prefer to have full control over your pension assets during retirement, or are concerned that your pension income will not keep pace with the cost of living or your intended lifestyle, you might consider taking a lump sum distribution. You can receive the pension proceeds net of income taxes or roll them over into a traditional Individual Retirement Account (IRA) where retirement assets will continue to benefit from tax deferral (mandatory minimum withdrawals must commence at age 70½). Either choice allows you to actively manage your own retirement assets. In this respect, you'll find yourself in the same situation as those individuals who are participants in employer-sponsored plans.
Qualified Plan Proceeds
If you're a participant in an employer-sponsored retirement plan (for example, a 401(k)), you'll also have the option of receiving a lump sum withdrawal net of income taxes or rolling over the proceeds into an IRA. Once you retire, you'll be required to actively manage your retirement assets. Therefore, it will be crucial to make prudent savings decisions that are consistent with your goals and objectives.
Shortfall Planning
As you approach retirement, you should continually reevaluate your planning to help ensure that you will meet your retirement funding goals. For most individuals, retirement plan assets alone will not cover retirement income needs. Therefore, personal savings become equally important to your long-term success. Before you begin your personal retirement savings program, be sure you are fully maximizing contributions to your tax-advantaged, employer-sponsored plan.
There are a number of savings vehicles available to help you close the gap on a retirement funding shortfall. But, without a disciplined approach to saving, it will be difficult to achieve the goals you have set for yourself.
Before You Pass Go...
As you can see, there is a vast array of decisions you'll have to make as you approach the homestretch to retirement. Another important point to consider is that if you were forced to retire today, would your resources be adequate to provide a comfortable retirement? What if you suffered an untimely death? Would your current retirement assets be enough to support your spouse or family? For these and many other reasons, it's important to make life insurance a continual part of your financial and retirement savings program.
As you solidify your retirement goals and objectives, it may be prudent to make regular reviews a major component of your savings program.
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