Life Planning and Retirement Readiness
Why Should I Learn More About Supplemental Retirement Savings Plans Like 403(b) and 457(b)?
Challenging economic conditions 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 on 10/12/2011 by BenefitsLink.com). 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.
Numerous organizations provide information that focuses 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:
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.
The Three-Legged Stool: Generally speaking, retirement income is generated from three sources:
- Employee Pension Plans [like PERS];
- Social Security; and
- 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.
Shaky First Three Legs: Even following careful planning and supplemental savings, many individuals approaching retirement find their expected retirement income to be insufficient to support their desired lifestyles. Moreover, even individuals for whom expected retirement income exceeds what would be required to support desired lifestyles find that they desire continued employment to fulfill psychological needs. Consequently, it has become commonplace for some individuals to delay retirement, phase into retirement, or simply continue working until they become unable to do so due to physical or mental decline. Continued part-time or full-time employment can be considered one leg of The Four-Legged Retirement Income Stool.
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.
Employee Logins and Interface
Retirement financial planning involves monitoring progress toward retirement income goals. Numerous tools are available for ‘do-it-yourself’ individuals and financial advisors have access to comprehensive planning tools for their clients. As a step in the direction of providing basic information to employees who participate in their employer’s supplemental retirement savings programs, CCC makes available Employee Login User Accounts and Employee Interface Website Pages that allow you to create a login account and securely login on the CCC website. If employee login user accounts are available at your employer, you have created a login user account, and you are logged in, then you can review:
- Your login account profile information and make changes when appropriate;
- The human resources information provided to CCC by your employer;
- Your applicable annual 403(b) elective deferral limit for the current year;
- Your year-to-date 403(b) elective deferrals to date if you are currently contributing;
- Your current and previous online salary reduction agreements if your employer allows CCC online enrollment;
- Any plan transactions in process or completed by CCC on your behalf (distributions, exchanges, loans, etc.);
- Account balances for accounts with Vendors that provide SPARK data to CCC;
- Distributions from accounts with Vendors that provide SPARK data to CCC; and
- Current year-to-date and previous year 403(b) & 457(b) contribution information provided to CCC by your employer.
If employee login user accounts are not available at your employer and you would like to request that they be made available, Contact Us and we will notify your employer of your interest.
Ongoing Focus On Educating Employees About Retirement Savings
Association of School Business Officials International (OASBO)
Two panel discussions at the 2011 ASBO Annual Meeting and Expo in Seattle focused on retirement plan education for employees, listing the following learning objectives:
- Importance of retirement education to district employees and the district;
- Resources available from investment providers and their value in employee education;
- The role of financial advisors in effective employee retirement education;
- Providing employees with easy access to plan providers facilitates the enrollment process; and
- Utility of ASBO's employee education resources.
The following ASBO resources are available as of 3/18/2017:
Consumer Education Links
New information becomes available regularly, so you are encouraged to Click Here for up-to-date Google search results or use your favorite search engine to search for ‘online retirement calculator reviews.’ Click Here for up-to-date Google search results or use your favorite search engine to search for ‘online retirement calculator.’
Starting Early with Retirement Savings is Important: The power of compound interest on savings makes starting to save early critical. New information becomes available regularly, so you are encouraged to Click Here for up-to-date Google search results or use you favorite search engine to search for ‘begin early with retirement savings.’
Retirement Readiness: New information becomes available regularly, so you are encouraged to Click Here for up-to-date Google search results or use you favorite search engine to search for ‘retirement readiness.’
Retirement Replacement Ratios: A common measurement of financial readiness for retirement is called a replacement ratio, which is an approximate ratio or percentage representing the income needed during retirement to maintain your pre-retirement standard of living expressed as a percentage of your pre-retirement income. It is generally agreed that somewhere between 70% and 100% of pre-retirement income is required. However, new information becomes available regularly, so you are encouraged to Click Here for up-to-date Google search results or use you favorite search engine to search for ‘retirement replacement ratio.’
Outliving Your Money In Retirement: New information becomes available regularly, so you are encouraged to Click Here for up-to-date Google search results or use you favorite search engine to search for ‘outliving your money in retirement.’ Pay particular attention to results that address the use of lifetime annuities as a component of retirement income planning, since lifetime annuities ensure that you will not outlive all of your money during your lifetime.
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 Vendor Educational Web Pages
Links to the Helpful Employee Resources websites of those Vendors that have provided URLs for such websites: