Come On Back

The baby boomer generation has already turned 60 (at least the oldest of them) and is undoubtedly pondering their upcoming retirement.

Are they ready?

According to a 2006 study conducted by the Center for Retirement Research at Boston University, many are not.

The study shows that median assets in retirement plans-including 401k's and IRA's-are just $60,000 for workers in their 50's. While this is not an average, this figure clearly suggests that quite a few baby boomers might be unprepared to meet their retirement needs.

Most financial planners say that retirees should withdrawal no more than 4% to 5% from their nest egg each year to try and make their money last. At $60,000 this allows for about $3,000 each year in withdrawals (not counting earnings). That isn't even enough for play money.

What Happened to my Social Security and Pension Benefits?

While retirees can claim partial Social Security benefits at age 62, most baby boomers will have to wait until 66 or 67 before they can claim full benefits, not 65 as it used to be. Yet another bump in the rocky road to retirement.

Of course, there may be many baby boomers that are lucky enough to have a pension benefit waiting for them when they retire. But many more have experienced the disappointment of seeing their employer scrap their defined benefit pension plans in favor of the more common defined contribution style of a Profit Sharing or 401k plan. This move may have cost those relying on this benefit dearly.

What's a Boomer to Do?

Fortunately, not all is lost. But the obvious needs to be said: If retirement savings is lacking, people will need to work longer than they expected before they decide to hang up the suit and tie.

Here's an interesting fact from the same report by the Center for Retirement Research: For every year a worker delays retirement and continues to save and invest, monthly benefits increase by 7 - 8%.

Delaying retirement for 2 years? Go ahead and tack on an additional 15% in monthly benefits.

What about 4 years? Watch your potential benefits increase by one-third! You get the idea.

Looking Ahead

There is simply no replacement for disciplined saving and investing, and it's never too late to start. If you're young, start now-you'll be way ahead of the game.

If you're not as young and you feel you're behind, take heart. Revamp your budget to remove frivolous items and focus on packing away as much as possible into your retirement plans. It's a good idea to consult with a fee-based financial planner to discuss your situation. They will create investment programs tailored to your needs and will help put you on the right track.

Many baby boomers will have to modify their retirement goals and expectations to bring them down to more realistic levels. The younger generations should use this opportunity to learn and to take the time to consider where their own retirement is headed.

For more information on retirement plans, visit http://www.guide-to-retirement-plans.com

http://www.Guide-to-Retirement-Plans.com aims to arm retirement plan investors with the knowledge needed to understand retirement plans, pick the ones suitable for them, and save and invest properly to ensure a fulfilling retirement.

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Thinking about retirement planning you have a choice of options or plans from which you can choose, one of those is the Individual Retirement Arrangement plan (IRA).

What is IRA

An Individual Retirement Arrangement plan, I will be saying IRA plan from now on, which allows people to save money for their retirement and also delay paying taxes on the income that goes in to the plan. All savings in this plan can be invested in all sorts of different ways to make the money grow until the retirement age is reached. For example, the savings could be invested in funds or stocks just to name a few.

The reason an IRA plan works is because you can invest money as long as you stay under the limit that the tax law allows you to. Tax law calls these investments "contributions" and these are not taxed, a further benefit would be that under certain circumstances a tax deduction is available.

What type of IRA plans are there

You can choose from a few IRA retirement plans. First you have the usual IRA plan, this plans allows an individual to invest, or contribute if you will, an amount of not more then $2,000 a year. How much tax deduction you get on your income tax return all depends on your Adjusted Gross Income bur also if your retirement plan is sponsored by your employer in a qualified retirement plan.

The second type of IRA plan is the education IRA. This plan lets you contribute a maximum of $500 every year. This money will grow tax-free and upon distribution to the beneficiary also has preferential tax treatment. This beneficiary can then use it for authorised educational expenses.

Thirdly there is the SEP IRA. Simplified Employee Pension is what SEP stands for. This Simplified IRA is established for you and funded by your employer. The employer can put up a maximum of 15% of your compensation into a special SEP IRA account.

There are more choices where it concerns IRA retirement planning, you have Simple IRA and there is ROTH IRA. Both are good choices but we won't be talking about them in this article.

Every individual is free to choose an IRA plan and start making contributions to it. But it's best to learn about the different options you have and maybe a consult with a financial advisor could clear things up for you. Looking into IRA plans on your own can be very daunting, a financial advisor takes you by your hand and helps you make clear and good decisions. There is a lot of help for you available. This is an important step and you should think carefully before taking action.

An IRA retirement plan has many benefits as I have shown you, the tax benefit being one of them. Now it is up to you which form of IRA retirement plan you choose. Just start planning your retirement now so you won't be left with an empty bank account on the day you retire.

John Chomsky worked as a consultant helping other people plan for their retirement. Almost forgetting his own. He helps people out at http://www.planning-a-retirement.com

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