Posted by admin on Apr 22, 2011 in
Politics Pension Plans are finally getting reformed, which is a wonderful thing to the American economy. Pension plans were a huge drain on many big businesses in America forcing companies to declare bankruptcy. Ford Motor Company, Delta, and GM are having huge problems making a profit when they have to give away almost a billion dollars a year to pension retirees. The old pension system would force companies to increase their revenues so they would be able to pay pension benefits. This would force businesses to re-evaluate their businesses plans and try to cut costs just to try to break even. What did businesses do to cut costs? Terminate thousands of good employees, purchase lower cost goods making their products have inferior quality, and a whole lot of out sourcing. Realistically, before the year even starts a lot of big businesses were one billion dollars in the hole. Big American businesses were almost doomed right from the start.
Example: Why is AirTran much more profitable then Delta? Before cutting cost Delta was a wonderful company. They were always ranked highest in customer satisfaction, and had a loyal customer base. Did poor management really destroy the company? I doubt it. After September 11th, their sales decreased, and their pension plan inflated because there were more people about to retire.
America was in a catch 22 system before the pension plan reform. American companies have to cut cost, and reduce prices just to compete with foreign companies (that still might be producing a better product). Foreign companies can increase spending in advertising, quality management, and research and development to improve their product and sales, while American companies have to cut that out of their budget to fund pension plans of present and future retirees.
A lot of Americans rely on big businesses for jobs, community development, and competitive prices. I am not saying that pension plans should be cut for present retirees, or people currently contributing, but the pension reform plan will enable big American businesses to be competitive again.
*Next post will be about the financial side of the pension reform. Read this article to see what will be talked about next week*
Tags: Reform, Retirement
Posted by admin on Apr 15, 2011 in
Finance A new study has shown that in 132 of the 250 of the largest U.S. counties only about 50% of retired people live comfortably. Read this editorial to learn what effects are causing people not to retire on time and discover how to be proactive with your future. This article also breaks down how American cities are ranked one against each other when it comes to retirement. See where your city is ranked.
Retirement 101
At what age do you intend to retire?
How many years will you expect live in retirement?
How much are you currently earning?
What will be your main sources of income during retirement?
How much money do you need (or want) to spend each month in retirement to achieve your goals and maintain your lifestyle?
How much have you already accumulated in employer benefits?
How much have you already saved or invested for retirement?
How comfortable are you taking risks with your investment dollars?
How many people must you support financially now and in the future?
Questions created byUniversity of Illinois at Urbana-Champaign
If you think you are prepared for retirement these questions should be a breeze to answer. If you are not prepared and you are struggling to come up with answers make sure you read some previous posts I made about retirement.
Tags: Retirement
Posted by admin on Dec 13, 2010 in
Finance,
Real Estate I know many of you might not be looking at the day you retire, but maybe by planning now you could be very rich later on. Most people when they are young (high school ’til graduation year in college) have most of their things purchased and paid for by their parents such as: car, insurance, cell phone, medical, rent, clothing, and probably some other things. This is the perfect time in life to begin saving the most you can. There are three saving methods that people age 18-25 should consider. They are easy, flexible, and will benefit you in the long run.
First being an IRA (Individual Retirement Accounts), specifically the Roth IRA. This retirement account is aimed directly at younger people trying to save money while they are working. *Go to this website for the specifics* The most important benefit about the Roth IRA is that the money that is put into the account will grow TAX-FREE for life by using after tax money. This is the only true savings vehicle that you will never have to pay taxes on EVER as long as you follow the guidelines properly. Here is a real example on what can happen if you put $150.00 a month into an Roth IRA at age 18 at 10% compounded yearly. At 50 years old you will have $421,250., and at the tender age of 59 you will have 1,117,325. Why such a huge jump in 9 years? The incredible miracle of compound interest. It is what makes starting to save early such a wonderful thing. This website shows you how powerful a retirement account can be. Even if you end up having a hundred million dollars in interest you will NEVER pay any kind of taxes. INGDirect, Sharebuilder, Scottrade, and Fedelity are great companies that will offer you some great deals on IRA’s. Check them out and start as early as you can.
Saving for a home of your own should be a priority in most people’s lives. I don’t know many people that want to live in their parent’s house or an apartment till the day they die. Most people make the mistake of saving much too late for their homes and have to take out a bigger mortgage then originally planned. Saving early in a high yield savings account through INGDirect can really help you make the transition from an apartment to a house much easier. Usually, you want to have either 10-20% of the purchase amount in cash when buying a house. Realistically, 10% is a great down payment, so aim for 10%. For example, if your first house costs $130,000 you will need $13,000 to purchase it unless you have wonderful credit. Remember your first house doesn’t have to be your dream house, so DO NOT buy a house that you know you cannot afford, even if the mortgage company says you can. Houses make some of the best long-term investments possible. Read “ The Automatic Millionaire Homeowner” if you really want to start jumping in the real estate market.
The final savings vehicle usually will only be offered if you work for a medium or large company, but this savings program alone will make you want to work for corporate America. It is called the 401(k) plan (or 403(b) if you are working for non-profit). If you’re company offers a matching contribution plan, you CANNOT pass up this golden opportunity to make a ton of money. When you purchase in to the 401(k) Plan, most companies will match a certain amount, usually 4-6%, of your eligible contribution. For example if you were to make $2000 a month and you put 5% of your pay into the 401(k) plan (a hundred dollars a month) your company would usually match that contribution of $100. That is a direct 100% return on your money. You can’t get much better than that. So if you work for a company that offers a matching contribution (do not enroll unless they offer a matching program – I will talk more about this in a later discussion) enroll in it today!
These savings vehicles will make you so completely rich that you will not have to worry about Social Security at all. Remember if you want to be rich follow my advice, but if you want to work ’til you’re eighty and live paycheck to paycheck be my guest. Just don’t complain when all your friends are sitting at the beach while you are still working because they read this post and started saving.
Tags: 401(k), IRA’s, Retirement