Secure Your Retirement Amid Current Economic Scenario

Fear of economy falling into another recession is causing consistent shocks in the stock market and the ongoing slowdown in housing market have raised uncertainties for the people who are about to retire. With jittery markets and property prices they do not have much of a reliable option left. In such situation should they try to avail maximum benefits from the IRA and 401(k)?  Is sticking to current job a better option than retiring?

What could spoil Retirement Plans of Individuals across US?

Retirements might turn out to be nightmare in the coming years.U.S.credit rating downgrade has made the markets quiet uncertain and the property slump on the other hand has shattered the retirement dreams of many people. The situations are worse for those who tempered with accumulation of their retirement funds in past.

Interest rates are stable almost near zero since 2008 and Federal Reserve plans to keep them unchanged till mid-2013 therefore one can not expect anything worthwhile from Treasuries and certificates. On the other hand those who invested their life’s savings in a home, the current house prices will give them a lot of less equity to tap, from what was expected.

Property market slowdown will make planned early retirement a distant vision for many Americans. For some who have used up their retirement account earlier to meet some necessities, times will be tougher. Taking up a part time or second job might be the only alternative left for those individuals.

With almost 50% of the working population aged from fifty to sixty plan to work till 65 because of financial concerns. But in the market where unemployment rate is on increase, finding new avenues would be quiet tough for elderly.

What you need to do to save your Retirement?

The best alternative is to stick with the current job and don’t let it go. Update yourself with the new technology as the retirement is postponed. Put your experience in use and guide the younger people in their problems, this will only help in strengthening your position.

In case of physical limitations, talk with the management regarding shifting your position to the position that is most suited to you and visa-versa. Phased retirement is another good option. Phased retirement will allow you to gradually reduce your working hours.

Finding a new job is again a big challenge. Your age might be a hindrance at the first instance but experience on the other hand will be on a positive note. Before applying for a new job prepare your plan to show how you can be a fruitful asset for the company rather than a liability? Other good options are to apply via channels that support elder people’s employment.

The Delimma

Working after the retirement age might affect your health insurance eligibility. Also if you avail benefits of Medicare, your increased earnings will increase your premium for Medicare as Medicare is based on your earnings. On the other hand if you don’t work you might not have enough money to pay the premiums.

Keep Saving

-          Working People above fifty can contribute additional $1000 to IRA $5,500 annually to 401(k).

-          Tax credit up to $2000 per annum is also entitled to people who contribute to retirement plan and make less than $55,500-Joint filing and $27,750 – single filing

-          As long as you are sticking with your current job or age of seventy years and six months, you are not required to take distributions from the 401(k)

-          After the above mentioned age you will be required to take annual distributions from regular IRA therefore plan ahead to re-invest those distributions.

-          Another good strategy is to avoid taking security benefits as long as possible because the monthly benefits will be increased by prolonged usage.

-          Availing benefits before retirement age might entitle them to federal income tax.

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