PLANNING FOR YOUR FUTURE
Do you recall the conversation between Alice in Wonderland and the Cheshire Cat? Alice was lost and asked, “Would you tell me, please, which way I ought to go from here?” “That depends a good deal on where you want to get to,” replied the Cat. “I don’t much care where,” said Alice. And then the Cat’s inspired response, “Then it doesn’t matter which way you go.”
Lewis Carroll’s immortal words ring true. The road—your future—is before you. In the distance you can see it branch off in several directions. Which way will you go? Do you have a plan? Following are some ideas that may help you stay on the road to a sound and secure future.
DID YOU KNOW?
The U.S. Department of Commerce estimates that only 5 percent of Americans are financially independent at age 65. In other words, 5 percent of working Americans are able to maintain their current lifestyle into retirement.
THINGS TO CONSIDER
• Consider the following quote from the U.S. News & World Report’s Retirement Guide: “Consider yourself guilty of a criminal offense if you don’t take full advantage of your employer’s matching contribution.” Almost all financial planners agree that the number one way to save for your future is through an employer-sponsored savings program such as our Thrift Plan.
Checklist
Define your financial goals for your future
• Begin saving as early as possible to take full advantage of compounding growth.
• Once you define your financial goals, you may find you need to save more than 5 percent in the Thrift Plan. Our financial planners can give you guidance.
• Remember that when you turn 60, your Supplemental Group Term Life (SGTL) insurance will begin to decrease. Your SGTL premium will also go down.
• Life expectancy has increased over the years. The average male in the United States will live to age 82, while the average female will live to 86. And on average, our participants will live another 2½ years beyond that! Will your savings and other retirement benefits provide enough income for 20 to 25 years or longer?
• Consider the advantages of a Roth IRA or other investment opportunities, but only if you’re receiving the full match from your employer in the Thrift Plan.
• Disability insurance is an important part of any financial plan. Our disability insurance covers employees only. If your spouse works and you rely on that income, make sure he/she has disability insurance.
• You should have an emergency fund that you can quickly and easily draw upon in a crisis or for other, urgent needs. Recommended amounts vary, but a good rule of thumb is an equivalent of 3-6 months of income.
• If you feel things are too tight to save, consider these cost-saving options:
– Check out books, CDs, and videos from the library instead of buying them
– Take your spouse/date to a museum, park, gallery, free concert, etc.
– Drop comprehensive and collision insurance on older vehicles (but keep liability!)
– Increase the deductibles on your auto and home owner’s insurance policies
– Consolidate your credit cards onto one, low-interest rate card
– Wait to see movies until they’re at the dollar theater
– Bring a lunch from home
– Lower the thermostat in the winter, and raise it in the summer
– Avoid ATMs that charge a fee
FREQUENTLY ASKED QUESTIONS
Q. Should I have my savings deducted from my salary before or after taxes are withheld?
A. Generally, the before-tax option allows you to contribute more to your account than the after-tax option, with about the same take-home pay. This is because you’re reducing the amount you pay in income tax. To see which option is better for you, use the Paycheck Calculator in the Savings area of our Web site.
Q. Do I have to close my account when I quit or retire?
A. No. About the time you turn 70½, however, the IRS requires that you at least begin pulling out some of your money in what they call an “annual minimum distribution.” See your Benefits Handbook or call our Savings Department for more information.
Q. What is a lifestyle screening?
A. A lifestyle screening is a health assessment. You meet with a nurse, or other health care provider, to assess your health, as well as your lifestyle such as eating and exercise. Review your benefits to see if your insurance covers a lifestyle screening.
Q. What is Long-Term Care insurance and do I need it?
A. It can be very expensive to have a parent or spouse in a long-term care facility or even receiving care at home. In fact, average expenses run about $66,000 per year with an average stay of 2.4 years. Long-term care insurance can be an important part of your estate plan and can help protect your retirement assets.
Q. Besides a will, what other estate planning documents do I need to consider?
A. A proper estate plan includes: a will, power of attorney, living will, health care power of attorney, and a trust. Contact an attorney for more information about these important documents.
Q. What is a Roth IRA? Should I contribute to one?
A. Like most IRAs, money in a Roth IRA grows tax-deferred. But if you’ve had the Roth for at least five years and wait until age 59½, you can withdraw all of your money tax free! That’s what makes Roth IRAs an excellent way to save for your future. Before contributing to a Roth, however, make sure you’re receiving the full match from your employer in the Thrift Plan.
This information is provided as a service to help you make informed decisions. Nothing in this information should be considered legal, financial, investment, or medical advise. For a complete description of the plans. please refer to your Benefits Handbook. As with any major life event, you should consult with qualified prefessionals of your choice who can provide you with appropriate counsel and advise.
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