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Life Planning and Retirement Readiness

Why Should I Learn More About Supplemental Retirement Savings Plans Like 403(b) and 457(b)?

The challenging economic conditions over the last several years have led most employees to worry about whether or not they will ever be able to retire, and those who have lost their jobs have even bigger worries (see Findings from National Voter Survey: Americans Anxious About Retirement Security, published by BenefitsLink.com on 10/12/2011). Developing a better understanding of your own situation with respect to retirement, evaluating current lifestyle and desired retirement lifestyle, and charting a course to reach your goals are activities worthy of your attention. There is no time like the present to get started.

Recently numerous organizations have launched initiatives that focus on educating employees about retirement financial planning, and how 403(b) Tax Sheltered Annuities (TSA) and 457(b) Deferred Compensation Plans (DCP) are excellent supplemental retirement savings programs (see dedicated section below). Rewarding lifestyle choices, balanced between the working years and the retirement years, are isolated and emphasized on this page.

Life Planning vs Financial Planning

Financial planning, while important for both overall life planning and retirement planning, is not the only critical consideration. In fact, a good case can be made that finances aren't even at the top of the life/retirement planning priority list. One of the best resources we've found on this front is available at the following website, which lists "providing financial and physical shelter" as only one of six issues and concerns in its SPLASH model:

Retirement Readiness for Retirees and Near-Retirees

Spirit: What matters beyond the physical details of your life

Purpose: Activities that give meaning to your daily life

Love: Your connections to others you care about

Avocation: What else gives you joy and satisfaction

Security: Providing financial and physical shelter

Health: Taking care of your physical and mental well-being

See the Software for Financial/Life/Retirement Planning section below for information about RetirementWORKS (RW2 for You) software, which was rated "the most comprehensive retirement planning software for consumers" by nationally syndicated financial columnist Humberto Cruz in a column dated 1/18/2010.

Another resource rated highly by Humberto Cruz that emphasizes living standard and life-cycle planning is Economic Security Planner (ESPlanner), which states on its website that "ESPlanner builds a personal lifetime financial plan - whether you are just starting out, nearing retirement, or already retired." Mr. Cruz states in his column: "Unlike ESPlanner, which would appeal to adults of all ages, RetirementWORKS is specifically designed for those approaching or entering retirement." See the Software for Financial/Life/Retirement Planning section below.

Retirement Planning

The Three-Legged Stool: Generally speaking, retirement income is generated from three sources:

  1. Employee Pension Plans [like PERS];
  2. Social Security; and
  3. Supplemental Retirement Savings.
Ordinarily, the first two legs of this stool are insufficient for continuation of pre-retirement standard of living through the retirement years. Your employer offers excellent tax deferred supplemental retirement savings plans as one option for you to add this third leg to your "retirement income stool."

Shaky First Two Legs: For various reasons (e.g., generous guaranteed benefits and substantial investment losses), State Pension Plans are under pressure to reduce unfunded liabilities by reducing pension benefits to participants. The Social Security System is constantly under review and many fear that benefits will be less than anticipated. Hence, it is prudent to anticipate the need for additional retirement income and take action now to meet that need. Tax deferred savings through your employer's 403(b) and/or 457(b) plans is an excellent way to take such action.

Professional Advisors: Different Purposes Require Different Skills

Many of us secure the services of Attorneys to prepare last wills and testaments and handle other legal matters, CPAs to prepare our income tax returns, Realtors to guide us through the purchase or sale of our homes or other properties, and even Personal Trainers to help us shed unneeded pounds. Unless you are one of the very few who have the knowledge necessary for professionally managing your finances AND are willing to devote the requisite time and energy to do so, we believe it makes sense to secure the services of a qualified, licensed, and trusted Financial Advisor to guide you through the lifelong financial minefield we all must traverse. Moreover, recent emphases on holistic approaches to life planning have led to professionals generally called Life Coaches entering the field of professional advisors.

Financial Advisor Registry

CCC intends to develop a Financial Advisor Registry on its website, in hopes of assisting you to locate advisors near your location that might meet your needs. As of late October of 2011, this project is scheduled for development during 2013.

Employee Logins and Interface

CCC's founder Harvey Carruth served as Director of an Individualized Retirement Financial Planning project for faculty and staff of the statewide University of Tennessee System between 1980 and 1997. The trememdous success of this project stemmed primarily from the fact that employees were provided projections of retirement income purchasing power based on their own personal situations. As a step in the direction of providing similar reports to you, we intend to create an Employee Interface that will allow you to securely login on the CCC website and initially:

  • View your own service, pay, and contribution data
  • Review account balances for accounts with Vendors that provide SPARK data to CCC
  • Obtain certificates authorizing certain transactions
  • Submit forms for other transactions for which certificates do not suffice
  • Communicate with CCC staff

As of late October of 2011, this project is scheduled for development during early 2012.

Personalized Statements and Projections

The next step in the process will be to actually develop and offer you options to:

  • Generate personalized retirement income projections
  • Incorporate supplemental savings into your retirement income projections
  • Update your own supplemental retirement savings information
  • Modify assumptions about retirement date, earnings, and inflation rates
  • Obtain new retirement income projections based on modified assumptions
  • Maintain personal information securely on the CCC website

Of course, more comprehensive reports will always be available through financial planners and software companies (e.g., RetirementWORKS (RW2 for You) and Economic Security Planner (ESPlanner)), but our goal will be to get you started on what could be a life-changing journey toward retirement financial security. As of late October of 2011, this project is scheduled for development during 2012, after implementation of the basic employee login and interface.

Recent Focus On Educating Employees About Retirement Savings

Association of School Business Officials International (OASBO)
Two panel discussions at the ASBO 2011 Annual Meeting and Expo in Seattle focused on retirement plan education for employees, listing the following learning objectives:

  1. Importance of retirement education to district employees and the district
  2. Resources available from investment providers and their value in employee education
  3. The role of financial advisors in effective employee retirement education
  4. Providing employees with easy access to plan providers facilitates the enrollment process
  5. Utility of ASBO's employee education resources

Resources primarily for employers are available at ASBO 403(b) Retirement Plan Web Resource Center.

Diversified Retirement Corporation's Prescience 2015: Expert Opinions on the Future of Retirement Plans
This study was conducted in the first quarter of 2011, is the fourth iteration of a modified Delphi study—a study that uses input from a structured group of experts who share a common interest to make predictions about future trends. The purpose of the study is to present executives responsible for retirement plan management with insights on the industry’s future so they can develop and evaluate their organizations’ plans and strategies. Prescience explores trends in regulations, technology, investments, plan design, participant education and communication for the corporate, not-for- profit healthcare, higher education and Taft- Hartley markets. Diversified Retirement Corporation is a leading provider of customized retirement plan administration, participant communication and open architecture investment solutions for mid- to large-sized organizations. The company’s expertise covers the entire spectrum of defined benefit and defined contribution plans, including: 401(k) and 403(b) (Traditional and Roth); 457; nonqualified deferred compensation; profit sharing; money purchase; cash balance; and Taft-Hartley plans; and rollover and Roth IRA. Diversified helps two million participants save and invest wisely for and throughout retirement.

Consumer Education Links

Calculators

Online Articles

MarketWatch: Will you need 135% of your salary in retirement?
An interesting article about how much of your current salary do you really need to replace in retirement (replacement ratio). Within this article, Stephen Utkus, with the Vanguard Center for Retirement Research, is quoted as saying: "Happiness is broadly tied to intangible elements beyond financial security...such as family and social relationships, purpose of life, spirituality, and so on." Published online by MarketWatch.com on 9/8/2011.

AARP - Jean C. Setzfand: What Does Retirement Mean to You?
"Before you stop work, think about how you'll spend your time. When planning for retirement, having a balanced approach that considers both life (what it will look like on a day-to-day basis) and finances will help you achieve the most positive outlook. You must prepare mentally and emotionally for what happens when you actually retire." Published online by aarp.org on 7/12/2011.

AARP - Jane Bryant Quinn: Retirement Planning Amid Market Mayhem
Published online by aarp.org on 10/4/2011.

AARP: Retirement Planning
Links to current retirement planning articles.

Allianz: Rethinking What’s Ahead in Retirement
Americans face an era of transformation with a new emphasis on guaranteed income as they prepare for retirement. Article linked to from BenefitsLink.com on 10/13/2011.

CBS News: 5 Top Retirement Stories of 2011
Published online by cbsnews.com on 12/19/2011.

CBS News: 5 Hidden Retirement Trends of 2011
Published online by cbsnews.com on 12/26/2011.

Center for Retirement Research at Boston College - Brief: How Prepared are State and Local Workers for Retirement?
A widespread perception is that state-local government workers receive high pension benefits which, combined with Social Security, provide more than adequate retirement income. Article linked to from BenefitsLink.com on 10/18/2011. Full Paper.

Employee Benefit Adviser: Retirement Savings By The Numbers
Five retirement numbers for you to know and take to heart. Published online by eba.benefitnews.com on 1/1/2012.

Employee Benefit News: Financial Literacy Program Yields Encouraging Results for Retirement Plan Participants
Published online by ebn.benefitnews.com on 9/26/2011.

Human Resource Executive Online: Redefining Defined Contributions
Published online by hreonline.com on 10/3/2011.

Investment News: Delaying Social Security Benefits 'Best Deal in Town'
Published online by investmentnews.com on 5/24/2012.

Investopedia Financial Edge: Top 5 Underestimated Retirement Expenses
Published online by financialedge.investopedia.com on 9/29/2011.

IRS: 403(b) Plan Basics
Available online at irs.gov on 10/12/2011.

MSN Money: 12 Retirement Resolutiuons for '12
Published online by msn.com on 12/30/2011.

National Public Radio: Retirement: Reality Not As Rosy As Expectations
Published online by npr.org on 9/27/2011.

National Journal: Retirement Roulette
Saving for retirement used to be as simple as showing up for work. Now it’s rife with contingencies—and success is all on you. Published online by NationalJournal.com on 12/27/2011.

National Robert Wood Johnson Foundation: Retirees and Those Near Retirement Have Different Views of Golden Years.
Published online by rwjf.org on 9/27/2011.

Changing the Retirement Readiness Game.
Published online by onwallstreet.com on 12/1/2012.

USA Today Money: Retirement: Make Your Savings Last As Long As You Do
Linked to online by BenefitsLink.com on 12/5/2011.

USA Today Money: Some 403(b) Retirement Plan Advice for Teachers
Published online by USAToday.com on 9/6/2011.

USA Today Money: Design a Countdown-to-Retirement Plan
Published online by USAToday.com on 12/19/2011.

US Department of Labor, Bureau of Labor Statistics: Changing Landscape of Employment-based Retirement Benefits
Published online by bls.gov on 9/29/2011.

US News Money: Retirement Plans that Weather Economic Storms
Published online by money.usnews.com on 10/7/2011.

US News Money: 10 Steps to Fine-Tune Your Retirement Plan
Published online by money.usnews.com on 6/24/2011.

US News Money: Why Women Should Think Differently About Retirement
Published online by money.usnews.com on 10/12/2011.

Vanguard: Who Is Retirement Ready? Depends on How You Look at Data
Published online by Vanguard on 11/23/2011. Linked to online by BenefitsLink.com on 11/28/2011.

Wall Street Journal: Are You Your Retirement Plan's Worst Enemy?
Published online by wsj.com on 5/26/2012.

Wall Street Journal: Congrats, Grads! Get Ready to Retire
Published online by wsj.com on 5/26/2012.

Washington Post: Investment Guidance for Employees Long Overdue
By Columnist Michelle Singletary, published online by washingtonpost.com/business on 10/25/2011.

Software for Financial/Life/Retirement Planning

Economic Security Planner (ESPlanner) "ESPlanner builds a personal lifetime financial plan - whether you are just starting out, nearing retirement, or already retired."

RetirementWORKS (RW2 for You) "RW2 for YOU™, until now only available to financial professionals, is the most powerful retirement planning software anywhere."

Links to the Helpful Employee Resources websites of those Vendors that have provided URLs for such websites: