During the severe bear market that began in the early 2000s, shareholders collectively lost billions worth of pension savings. The value of stocks across the board fell by roughly half — a terrifying prospect for most investors if they are nearing retirement and much more so if they are already retired and living off a monthly pension. To hedge against potential financial damage, several people shifted the funds in their 401(k)s and TSPs into “secure” treasuries and bonds. However, they were unable to profit from the market’s recovery.
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Tammy Flanagan, an authority on employee benefits, recommends avoiding placing excessive emphasis on the upcoming economic downturn, regardless of how far in the future it may be. Her recommendation: “What about the upcoming recession? What about the subsequent recessions? Always be prepared for something, because it might be anything: a war, a recession, or even the collapse of your home’s roof. Something is always going on.” Consider delaying your retirement, particularly if you are on the cusp of eligibility for retirement or are already there. This is her piece of advice. A potential delay of two years is possible.
In a previous piece, she saw that a federal employee earning $80,000 per year who continues to work for two more years, from 60 to 62, will increase their starting annuity by over $30,000. This is especially significant since FERS retirees do not receive any cost-of-living adjustments (COLA) until they reach the age of 62. In contrast, CSRS retirees receive full COLAs regardless of when they retire. If inflation is more than 3 percent, the rate will be reduced by 1 percent. Now, it is significantly, noticeably higher. So, tell me, are you all set? For your golden years, the upcoming economic downturn, or both? According to the Employee Benefit Research Institute, many public and private retirees are not adequately prepared for their golden years.
In addition to a few other things, it states:
Most retirees express regret that they did not put away more money. That could appear to be common sense, but it might be too late when you figure out what they mean. Additionally, most retirees would fare better financially if they had a financial counselor, even though many do not. Or don’t until later.
According to the EBRI’s findings, nine out of ten retirees who work with financial advisors believe that the value they receive “outweighs the cost” of working with such an advisor.
During the severe bear market that began in the early 2000s, shareholders collectively lost billions worth of pension savings. The value of stocks across the board fell by roughly half — a terrifying prospect for most investors if they are nearing retirement and much more so if they are already retired and living off a monthly pension. To hedge against potential financial damage, several people shifted the funds in their 401(k)s and TSPs into “secure” treasuries and bonds. However, they were unable to profit from the market’s recovery.
To keep their professions, a significant number of people who worked in the private sector had to agree to absorb salary cuts that ranged from 5 to 25 percent. In addition, some businesses, including several well-known industry heavyweights in investment management, quit producing corresponding payments to their workers’ 401(k) plans to maintain their operations. Employees in the federal government were without salary increases for two years. However, there was not a single termination that could be attributed to the recession. Many organizations expanded. The Thrift Savings Plan (TSP) continues to offer participants a matching contribution from the state of up to 5 percent of their contributions. This is another piece of evidence that it is beneficial to participate in a plan that also covers members of Congress. And those who had accrued a certain amount of service time remained to get WIGs (within-grade raises) of approximately 3 percent for every one, two, or three years depending on their time working for the government.
Tammy Flanagan, an authority on employee benefits, recommends avoiding placing excessive emphasis on the upcoming economic downturn, regardless of how far in the future it may be. Her recommendation: “What about the upcoming recession? What about the subsequent recessions? Always be prepared for something, because it might be anything: a war, a recession, or even the collapse of your home’s roof. Something is always going on.” Consider delaying your retirement, particularly if you are on the cusp of eligibility for retirement or are already there. This is her piece of advice. A potential delay of two years is possible.
In a previous piece, she saw that a federal employee earning $80,000 per year who continues to work for two more years, from 60 to 62, will increase their starting annuity by over $30,000. This is especially significant since FERS retirees do not receive any cost-of-living adjustments (COLA) until they reach the age of 62. In contrast, CSRS retirees receive full COLAs regardless of when they retire. If inflation is more than 3 percent, the rate will be reduced by 1 percent. Now, it is significantly, noticeably higher. So, tell me, are you all set? For your golden years, the upcoming economic downturn, or both? According to the Employee Benefit Research Institute, many public and private retirees are not adequately prepared for their golden years.
In addition to a few other things, it states:
Most retirees express regret that they did not put away more money. That could appear to be common sense, but it might be too late when you figure out what they mean. Additionally, most retirees would fare better financially if they had a financial counselor, even though many do not. Or don’t until later.
According to the EBRI’s findings, nine out of ten retirees who work with financial advisors believe that the value they receive “outweighs the cost” of working with such an advisor.
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M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected].
