Stretching Savings

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Catch-Up Strategies For Late Savers Game


Stretching Savings
Special Issues

Retirement Basics
Savings Tax Incentives
Increasing Savings
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The Answer is
Commonly quoted retirement income replacement
percentage for retirement savings planning
purposes.
3
The Question is
What is 70 to 80 of pre-retirement income?
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The Answer is
Two examples of household expenses that often end
or decrease upon retirement.
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The Question is
What are commuting costs, business travel, union
dues, retirement plan contributions, business
clothing, auto expenses, income taxes, mortgage
payments
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The Answer is
Two examples of expenses that often begin or
increase in retirement.
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The Question is
What are travel, entertainment, hobbies, medical
expenses, dental expenses, health insurance,
long-term care insurance, volunteer expenses,
gifts?
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The Answer is
The investment time horizon for retirees when
making asset allocation decisions.
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The Question is
What is the rest of your life (lifetime)?
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The Answer is
Term for workers right to earn retirement
benefits because they worked long enough for an
employer to qualify for benefits.
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The Question is
What is vesting?
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The Answer is
Age at which workers qualify to make additional
catch-up contributions to an IRA or a
tax-deferred retirement savings plan through the
year 2010.
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The Question is
What is age 50 (by December 31 of the calendar
year)or older?
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The Answer is
Retirement savings plan open to all workers with
earned income and their spouses (whether or not
the spouse is employed).
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The Question is
What is an individual retirement account (IRA)?
There are two types Roth and Traditional.
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The Answer is
Name of the tax-deferred retirement savings plan
for employees of schools, colleges, and
non-profit organizations.
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The Question is
What is a 403(b) plan?
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The Answer is
Name of a tax-deferred retirement savings plan
available to the owner of a small business,
whether it is a full time job or work on the
side.
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The Question is
What is a SEP, SIMPLE, or Keogh plan?
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The Answer is
Maximum household adjusted gross income (AGI)
level for a married couple filing jointly to
receive some tax credit for their retirement plan
contributions (through 2006).
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The Question is
What is a 50,000 AGI?
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The Answer is
Simple technique used to estimate how long, or at
what interest rate, it takes a sum of money to
double.
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The Question is
What is the Rule of 72?
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The Answer is
The practice of investing regular amounts at
regular time intervals, such as 401(k) plan
deposits taken out of a workers paycheck every
pay period.
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The Question is
What is dollar-cost averaging?
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The Answer is
The reduction of investment volatility when
retirement assets are held for long time periods.
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The Question is
What is time diversification?
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The Answer is
Two good times when it is easier to increase
contributions to retirement savings plans because
it doesnt affect household spending patterns.
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The Question is
What is 1. When you receive a raise or pay
increase? 2. When household expenses decrease?
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The Answer is
A method to accelerate debt repayment to free up
money to save for retirement and/or to decrease
borrowing costs.
31
The Question is
What is contacting creditors to request a lower
interest rate, transferring balance to a lower
rate credit card or loan, using a PowerPay
analysis, and paying more than the minimum
required payment?
32
The Answer is
Lower maintenance costs, property taxes, and
utilities are a benefit of this catch-up
retirement planning strategy but a major
trade-off is less space and storage.
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The Question is
What is trading down (downsizing) to a smaller
home?
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The Answer is
Postponing withdrawals from savings and increased
Social Security and pension benefits are two
advantages of this retirement catch-up strategy.
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The Question is
What is delaying (postponing) retirement?
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The Answer is
Age at which withdrawals from tax-deferred
accounts, such as Traditional IRAs and 401(k)s-
if a worker is retired- must begin.
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The Question is
What is age 70 1/2?
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The Answer is
Age that homeowners generally must attain to
qualify for a reverse mortgage.
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The Question is
What is age 62?
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The Answer is
Type of retirement assets (by method of taxation)
that generally should be withdrawn first to make
money last longer.
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The Question is
What are taxable accounts (i.e., savings made
with after-tax dollars) and tax-free assets such
as municipal bonds?
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The Answer is
Name of an important estate planning document
that should be prepared, especially after someone
has an uncertain health prognosis.
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The Question is
What is a will, living will, and durable power of
attorney?
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The Answer is
Popular name of a federal law that provides the
opportunity for continued health insurance
coverage to qualified workers who separate from
their employer and agree to pay the premium.
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The Question is
What is COBRA?
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The Answer is
Length of time that unemployed workers and early
retirees can receive continued health insurance
from a former employers group plan if they pay
the premium.
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The Question is
What is 18 months?
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The Answer is
Term used to describe a wide array of services
ranging from assistance with daily activities of
living at home to admission to a nursing home.
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The Question is
What is long-term care?
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The Answer is
Reason why potential inheritances should not be
counted upon and included in a retirement savings
calculation.
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The Question is
What is the fact that there are no guarantees
youll actually receive any money and that there
are too many unknown factors, such as a donors
health and longevity?