Talking Retirement

Retirement Options for Small Businesses: The 2007 Version

The 2006 Pension Reform Act changed some of the rules that govern the retirement saving options for all companies, including small businesses. Business Week, in New Rules for Retirement Plans, takes a look at what a small business owner should do for him/herself and the employees. Read the article.

Marketing Trends Indicate More Power for You in the Workplace

Gail Sheehy warns that companies will need to shift their management models to retain their boomer employees, or risk a dangerous loss of institutional knowledge and sudden reduction in their work force.  She also encourages boomers to use this situation to create the work experience they desire.

“There is a hidden brain drain in the American work force,” she says.  “Corporate America is beginning to wake up to a seismic demographic change.  If it lets boomers retire early or drop off the radar, corporations won’t have the people power to remain competitive in a global marketplace.  The rate of growth in the U.S. work force will fall drastically over the next 20 years.  This change offers a golden opportunity for skilled boomers to reverse age bias and transform the corporate model to suit their needs to continue working for meaning & money.” (emphasis added)

There are 4 more trends in the story, but I’ll let you discover those for yourself. Read the entire article here.

Not Retiring to Save Your Retirement

Fool.com has an article called 9 Retirement Killers. It’s got a great laundry list of things that can throw your retirement plans for a loop. The last retirement killer caught my attention because it’s really about not actually retiring at all. Retiring permanently when you really just needed a break.

If you’re in your 60s, you should plan on living at least another two decades. Can you stand full-time leisure for 20 years? Sure, it may sound good now, but many retirees find they get pretty bored after a while. But by then, they have severed many of their professional ties. Before you decide to retire fully and permanently, discuss a phased or gradual retirement with your employer or business partners. Or the possibility of working on a project basis, allowing you to take several months off each year. Or maybe just a one-year sabbatical. Explore your options before you no longer have them.

What to know the other 8 retirement killers? Read the article.

Another Look at Small Business Employee Savings Options

There are potential bright points in working for a small business, especially if you’re the owner and sole employee. In that case, you can open an Individual 401(k) plan and put away money as both and employee and an employer, putting away as much as $44,000 a year, more if you’re over 49. Of course many people won’t fall into that situation, and the article outlines options for those people as well.

There is also a good sidebar to the story that gives a few bullet points of the different plans that apply for the small business employee. Good stuff. Read the article.

The Benefits of a Gradual Retirement

Ease Into Retirement, a Motley Fool article featured on MSNBC, takes a look at a gradual approach to retiring. The idea of being a full-time employee one day and a full-time retiree is a thing of the past for many people.

The article discusses the benefits of phasing down your time at your job, like negotiating to keep your health insurance for a longer time. Working part-time may also allow a person to delay the start of collecting Social Security. Why would you do that? “If you start receiving Social Security at age 62, your benefits will be reduced by $1 for every $2 you earn above a certain limit, which happens to be $12,960 for 2007.” Want to know more? Read the article.

The Change in Early Retirement Dreams

Early retirement requires a greater level of planning from the Chicago Tribune explores the change in attitudes (and the change in reality) towards retiring early over the past decade or so. Basically, the tech stock bubble made many feel rich with dreams of checking out of their careers early to retire to a life of leisure at the gold course. That’s changed, according to the article, with “a more likely scenario than early retirement is finding part-time employment to supplement savings and pensions.” Read the article for the full story.

Cheaper Long Term Care Insurance.

Got a few minutes today? It won’t take long to read Three Major Retirement Hazards to Avoid from Senior Journal. One “min-tip” is at the end of the first tip. We’ve all probably noticed that healthcare is getting more and more expensive. It’s easy to assume it will be a significant part of our expenses during retirement. But did you know this? “Buying long-term care insurance early on can help lower its costs immensely.” Good advice. Read the article for the rest of the tips.

What You Need To Retire, From a Non-financial Perspective

I realize that I post many financial related things here about retiring. Obviously, it’s an important part of retirement planning, but there are other sides to this story. An oddly-titled story from ABCNews, Working Wounded: Planning for Retirement, offers some perspective on other parts of retiring.

Retirement is not only a financial decision, it’s also a question of how you’ll spend your time. What are your interests? Retirement can be the best time of your life, but only if you have a great way to pass the time.

How will you spend your time that used to be taken by work? How will you socialize without co-workers? Is your spouse or partner in agreement with this life-change? They’re all important to consider in addition to being able to get by financially. Read the story for more on the topic.

How safe are your 401(k) savings? The answer might surprise you.

Are you ready for a scary story? If so, read So you think your 401(k) money is safe from the LA Times. It’s about theft from 401(k) plans and how little money can be recovered for those whose money has been stolen.

By law, all assets in 401(k) plans must be covered by private insurance policies known as fidelity bonds. But the bonds are required to cover just 10% of the retirement plan’s assets or $1 million, whichever is less.

At companies with fewer than 100 employees… the plans are not subject to annual independent audits that could deter embezzlement.

The story does say that theft from the 401(k) plans of “large companies” is rare. It’s in smaller companies, when an employer directly manages his or her employee’s retirement funds that the risk is most prevalent.

We’ve talked before here about the Pension Benefit Guaranty Corp. that guarantees pensions, but that doesn’t cover a 401(k) plan at all. If it’s gone, the PBGC can’t do a thing for you.

Want to know more? Read the story for more shocking details.

The Wave of Boomer Retirement Gathers Momentum

In Baby boomers reaching point of mass retirement, one employer sees a rapid change in her workforce. “My eyes opened,” she said. “I was about to have 150 years of experience walk out the door at any time. In the U.S., someone turns 60 every seven seconds.”

What’s an employer to do? Just as we talked about in a previous entry, companies can meet this dilemma by making older workers want to continue working longer.

Read the article.