Home
In this issue
April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review

Retirement saving pitfalls --- and how to overcome them

By Jane Bennett Clark





When life takes a toll, here's how to brighten your prospects


One of the biggest threats to your retirement security is skimping on the amount you save each month. For the best chance of maintaining your lifestyle in retirement, the rule of thumb is to contribute 15 percent of your salary, including any employer match, to your 401(k) or other savings account throughout your career.

Ironically, your company may be encouraging you to save small. Close to half of employers who have 401(k) plans automatically enroll employees in the accounts, typically setting the contribution level at 3 percent. That's enough to get you started but not enough to build a big nest egg.

Stuart Ritter, a financial planner and vice-president of T. Rowe Price Investment Services, suggests kicking your contribution level up to 15 percent for three months. "At the end of the three months, you can lower it, if necessary," he says. But rather than dipping back to single digits, he says, go with 10 percent or 12 percent. "People find they can settle on a much higher amount than they were contributing before."

Procrastination is another risk. With each year you neglect to save, you lose an opportunity to fuel your accounts. Say you're 25, you earn $40,000 a year and contribute 13 percent of your salary annually, including the company match. At that pace, you would accumulate a stash of almost $500,000 (in today's dollars) by age 65, according to an example by T. Rowe Price (the calculation assumes a 3-percent annual raise and a 7-percent annualized return, discounted by 3-percent annual inflation). If you wait until age 30 to start saving, you would have to set aside 17 percent of your salary annually to arrive at the same amount.

So powerful is the effect of saving early that you could have less trouble catching up if you take a several-year break -- say, to pay for college -- than if you wait until midlife to start. Still, you can make headway, especially if your kids are grown and you have fewer expenses. Say you're 55, earn $80,000 a year and have nothing saved for retirement. You put the pedal to the metal by setting aside $23,000 in your 401(k) each year for the next ten years. That $23,000 combines the annual maximum for people younger than 50 ($17,500 in 2013) plus the annual catch-up amount for people 50 and older ($5,500). If your employer matches 3 percent on the first 6 percent of pay and your investments earn an annualized 7 percent, you'd amass $434,700 by the time you reach 65.

OVERCOMING RETIREMENT SETBACKS
Life sometimes has a way of disrupting even the best-laid retirement plans. Losing your job, for example, not only deprives you of current income, it makes it tougher than ever to save for retirement. And if you find yourself tapping, say, a traditional IRA to cover day-to-day expenses, you'll owe taxes on distributions plus a 10-percent penalty if you're younger than 59 1/2.


FREE SUBSCRIPTION TO INFLUENTIAL NEWSLETTER

Every weekday JewishWorldReview.com publishes what many in the media and Washington consider "must-reading". In addition to INSPIRING stories, HUNDREDS of columnists and cartoonists regularly appear. Sign up for the daily update. It's free. Just click here.


The best way to avoid that dismal situation is to have an emergency reserve that covers at least six months or even a year of living expenses, says Jim Holtzman, a certified financial planner in Pittsburgh. He acknowledges, however, that "that's easy to recommend and hard to implement." Avoid further disaster by hanging on to health insurance: If you can't get coverage through your spouse, look into keeping your employer-based coverage through COBRA. You can extend that coverage for up to 18 months, although you'll pay the full premium plus a small administrative fee. As of January 2014, you'll also have access to coverage through state health exchanges.

Losing a spouse can be financially as well as emotionally devastating. Married couples who depend on each other's earning power need life insurance to cover the gaps when one spouse dies. You can get a rough idea of how much coverage you'll need on each life by calculating what you each contribute to annual living expenses and multiplying that amount by the number of years you expect to need it, says Steve Vernon, of Rest-of-Life Communications, a retirement consulting firm.

If you have a pension, you'll have the option of choosing a single-life benefit, which ends at your death, or the standard joint and survivor's benefit, which pays less while you're alive but keeps paying (typically at 50 percent to 75 percent of the benefit) for the rest of your spouse's life. Your spouse is legally entitled to the survivor's benefit and must sign a waiver to forgo it. Don't be tempted by the higher-paying single-life option if your spouse will need the survivor's benefit later.

Decisions you make in claiming Social Security are similarly key. If you're the higher earner (typically, the man), "you will really help your spouse by delaying Social Security as long as possible," says Vernon. The benefit grows by about 6.5 percent to 8 percent a year for each year you delay after age 62, when you first qualify, until you reach age 70. If you die first, your spouse can qualify for a survivor's benefit up to the full amount you were entitled to, depending on the age at which she files.

Sign up for the daily JWR update. It's free. Just click here.

Interested in a private Judaic studies instructor — for free? Let us know by clicking here.

Comment by clicking here.

Jane Bennett Clark is a senior editor at Kiplinger's Personal Finance magazine.



All contents copyright 2013 Kiplinger's Personal Finance Distributed by Tribune Media Services. All rights reserved.

Quantcast