Category: Retirement

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7 Factors That May Affect Your Retirement

man on computer work3In 2010, a Pew Research report indicated that three out of every four members of the workforce expect to keep working for pay after they retire. 60% of them believe this will be by choice, not necessity – but pre-retirees may be more optimistic than justified in their expectations. According to the Center of Retirement Research, less than half of all households are financially prepared for retirement at 65; a quarter will need to work at least one to three more years; and almost one in ten will need to work past age 72 or longer.
 
Whether by need or choice, it’s clear that plenty of folks are likely to continue working in one capacity or another after they officially retire. The decision of whether or not to do so is dependent upon a range of factors.

Factors Affecting Retirement Security

Financial security for American citizens usually results from a combination of government programs, personal assets, and employer benefits. However, each of these factors is undergoing historical transformations right now. Unfortunately, these transformations may mean Americans have to move the goalposts back a bit when it comes to their retirement goals.

1. Investment Volatility

Conventional wisdom suggests that the average annualized return for common stocks over a period of 10 years or more is positive, somewhere between 7% and 9%. However, statistics have a way of disguising inconvenient truths: According to AllFinancialMatters.com, there is actually substantial volatility in the numbers – mainly related to start and end dates.
 
Suppose three brothers work for the same company and each invests $50,000 in its 401k plan over a period of 30 years. Joe, the oldest brother, begins investing in 1966 and – assuming the results mimic the S&P 500 return – retires in 1996 with $1,871,111 in his account. Bill, the middle brother, who began investing in 1976, retires in 2006 with $1,520,397 in his account. And Mike, the youngest brother, begins in 1983 and retires in 2013 with $1,050,416. These figures do not include the effects of inflation or the deduction of fees.
 
Older workers – those most likely to retire in the coming decade – found the impact of the last stock market decline to be especially harmful. Two-thirds of those between the ages of 45 and 60 reported at least a 20% decline, according to one survey. As Gad Levanon, director of macroeconomic research at the Conference Board, observed, “The older you are, it makes it more difficult to make up for [loss of value] and more people are delaying retirement as a result.”

2. Low Interest Rates

Many retirement professionals previously advised that an annual 4% withdrawal rate would result in sufficient funds to last through 30 years of post-work life. In other words, a fund of $1 million could provide $40,000 per year.
 
However, due to lower yields on fixed income investments, many retirement planners now recommend a withdrawal rate between 2.7% and 3.0% in order to achieve a 90% probability of not outliving your assets. Lowering the distribution rate means that income must now be replaced from other sources, and your standard of living must be lowered.
 
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Do You Have Something to Say?

writing a bookFrom the Neanderthals who left hand prints on the cavern walls of El Castillo, Spain more than 37,000 years ago, to the G.I.’s crude drawings of a long-nosed fellow peering over a fence announcing, “Kilroy was here,” humans have sought immortality through art. The same impulse that drives the graffiti tagger in Los Angeles drives the white-haired Hamptons matron to pen a letter to the local newspaper about animal leash laws: a desire to be seen, heard, and remembered.
 
The digital revolution gives us an opportunity to communicate and disseminate ideas, concepts, and opinions without intermediation. Today, every wannabe Stephen King, Tom Brokaw, or Larry McMurtry can write and publish as they please. Grandfathers and grandmothers can pass down family stories to younger generations. The entire world has an opportunity to become both more knowledgeable and more expressive than ever before.

Technology and Self-Publishing

The first electronic book – Peter James’ thriller “Host” – appeared on two floppy disks in 1993 and sold 12,000 copies. Five years later, the first e-readers appeared with mediocre market success. Amazon, the world’s largest book retailer, introduced the Kindle reader to America in 2007, forever changing the dynamics of book publishing. Today, electronic books can be viewed on a variety of readers, mobile phones, tablets, and computers.
 
In the first quarter of 2012, net sales of ebooks exceeded hardcover sales across the industry for the first time. While paperback books remain the industry’s most popular format, their dominance is likely short-lived – according to Mashable, Amazon’s ebook sales surpassed paperbacks in the fourth quarter of 2011. The reason for the ebook’s dominance is clear: Production costs are lower and profits are higher (despite the fact that ebooks typically sell for less than half of what hardcovers sell for).
 
With the full support of Amazon, authors have rebelled against traditional publishing houses, seeking a higher percentage of royalties or threatening to publish on their own – Bowker Identifier Services claims that self-published book titles grew 60% from 2011 to 2012 alone. Writers who never thought they would be able to publish are taking advantage of the new technology.
 
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How to Climb the Corporate Ladder – 5 Keys to Career Success

corporate-ladder1It’s good to be the boss. People in charge of an organization not only make more money, they also have happier family lives, are more satisfied with their work, and worry less about their financial futures, according to a Pew Research report. Those in the top levels consider their employment a “career,” not just a job that pays the bills.
 
Of course, promotions to those top levels are never guaranteed. However, there are a number of steps you can take to improve your chances of advancing your career—whether with your existing employer or a new one. Long-term success relies on having as many options as possible and ensuring that you’re prepared when an opportunity arises.

What You Need to Advance in Your Career

Getting to the top of the corporate food chain becomes increasingly more difficult in the higher tiers of management. In many organizations, average performers in the lower ranks can expect some promotions simply by being competent and building tenure. Attaining higher positions or advancing at a faster rate, however, require the following elements, at the very least.

1. Corporate Opportunity

The more opportunities available to you, the better. For example, a rapidly growing company is dependent upon numerous managers to implement its strategies, whether introducing new products, expanding into new geographic territories, or capturing a larger market share. On the other hand, mature companies that already dominate an industry may have slower career paths, but may provide valuable experience and security for those willing to wait for their turn in corporate leadership.
 
Some mature companies have policies aimed at inducing turnover at the top levels. They may offer early retirements, buy-outs, and titles with superior compensation but no authority or responsibility—a kind of in-place retirement—in order to retain younger, aggressive managers who might otherwise leave the company. Your selection of employer is a critical element in the speed of your progression up the ranks.
 
Surprisingly, according to the Pew report, a greater percentage of employees are satisfied in their current position (43%) than those seeking promotion (39%). Nevertheless, competition increases as you climb the ladder, simply because there are fewer and fewer jobs the higher you get. Many may hear the call, but few are chosen.
 
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12 Ways to Volunteer Your Time and Give Back to the Community

volunteer-hospitalDo you feel a personal responsibility to help others? Randy Lewis, author of “No Greatness Without Goodness,” claims that all people, including businesses, have the responsibility to make the world a better place. In his case, he spearheaded a Walgreens initiative to hire the disabled. In the five years following his initiative, similar programs were sparked across America and Europe.
 
In June 2014, Starbucks, the ubiquitous coffee cafe, announced a free online college program through Arizona State University for any employee working 20 or more hours per week. Duncan Campbell, an Oregon entrepreneur, started Friends of the Children to provide emotional and educational support to at-risk children, starting with kids in kindergarten and progressing with them through college. Of the kids involved, 83% graduate high school and 93% avoid juvenile hall for breaking the law.
 
While some leaders and companies receive considerable publicity and well-deserved accolades for charitable work, there are hundreds of thousands of regular Americans – your friends and neighbors – who donate to programs to make the world a “kinder and gentler place.” These activities are sponsored by churches, civic organizations, schools, and charities, with services ranging from Habitat for Humanity to Big Brothers Big Sisters. But despite the ongoing success of such efforts, programs always need volunteers and financial support.

Why Volunteer?

Some people claim that their personal success and secure position has been justly earned without help from others along the way. However, this attitude is selfish, egotistical, and naive. Studies, detailed in Malcolm Gladwell’s book, “Outliers,” have shown that the zip code of your birth is more predictive of success, health, and lifespan than IQ, college grades, or genetics. Nobody makes it through life entirely on his or her own merits, even if assistance is not obvious. As a consequence, everyone has a debt to repay – and a reason to give back.
 
In addition to fulfilling a responsibility, there are many benefits of charitable giving – primarily, it makes you happier. In fact, a Harvard Business School study confirmed that “happier people give more and giving makes people happier, such that happiness and giving may operate in a positive feedback loop (with happier people giving more, getting happier, and giving even more).”
 
While cash is always accepted in groups serving the needy, time and effort is just as important, if not more so. Plus, giving of your time, energy, and effort provides you with immediate feedback as to what your contribution means to those receiving it.
 
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