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How to Prevent Working in Your Retirement Years

By plrprousers | February 14, 2009

The Golden Years: the time you imagined sleeping in every day, tending to the garden, golfing with your other retired buddies, and traveling the world.  How did you end up working part-time 30 hours a week at the local discount store just to keep up with monthly bills?

 

Is this a likely scenario for you?  Will you end up needing to continue working after you retire from work in order to stay afloat financially?  For many Americans, this is the sad reality.  401(k) funds are drying up, pensions are diminishing and blowing away in the winds of corporate failure, and Social Security is no longer a stronghold net for retired individuals.  A retirement spent in leisure is no longer the norm.

 

However, despite the current economic climate and bleak futuristic outlook, there are options for you to enact right now, while you’re still in the work force, to help ensure that your retirement can be one of leisure.

 

Work a Little Longer

 

Many people lose their retirement advantage by retiring early.  Those with corporate sponsored 401(k) funds can begin withdrawing regular payments as early as 59-1/2 years of age.  Workers can withdraw Social Security at 62.  However, is it wise to race for the finish only to realize there’s not enough money to last throughout your full retirement age span?

 

The benefits of working past what is generally regarded as “early retirement” can be tremendous.  By just working at your regular job a few more years until age 65, your Social Security benefits could increase nearly 25%.  Work until age 67 or even 70, and those benefits increase to even more than 30% of what you would have earned at age 62.  Additionally, by holding off on Social Security, new laws allow you to enjoy full benefits at age 65 or older, while you can still work up to full time.

 

In addition, by holding off on withdrawing your company sponsored 401(k) plan, or similar individual retirement account, your invested amount has even more time to compound and expand.  The additional investment returns for just another five years could be the difference between a $750,000 retirement fund and a $1 million fund.

 

Take Full Advantage of 401(k) benefits

 

While you are still young and working, take full advantage of 401(k) benefits.  Most people do not contribute the full percentage of their paycheck as allowed by law.  In addition, a great number of workers do not take advantage of company 401(k) matches.

 

Though retirement may be years away, just think for a moment how much money you will need to live a comfortable retirement.  Will it be $50,000 a year?  $80,000?  $100,000?  If you want enough money to live better than comfortably and enjoy travel, you may need a great deal more of a retirement fund.

 

In order to reach that goal, you need to contribute more of your current paycheck into a retirement fund.  As of 2009, those who are 49 and younger can contribute $16,500 per year into a 401(k) fund.  Yet even those who earn about $50,000 a year only contribute $3,500 on average into their 401(k).

 

Additionally, most companies will match your contribution, usually up to 3% to 6% of your monthly earnings.  That’s free money for your retirement fund.  Why pass up free money for your golden years? 

 

Although retirement is just a dream for most people, planning for retirement takes effort and careful consideration of the present.  Invest even just one hour with an investment advisor like www.iamllc.biz or a retirement asset management company who can counsel you about your retirement dreams and what you need to do now to live truly golden years.  Check out the blog www.kenhimmler.com for other articles.

 

 

Authored by Ken Himmler, Sr.

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