Tuesday, June 21, 2011
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Countdown To Retirement
A good number of people reading this title right now are thinking this article won't apply to them. Retirement, once as standard a phase of life as the teen years, is eluding the grasp of baby boomers.
This generation began their working years at a time when folks often retired from the first job they ever held. They were rewarded for their loyalty with a company pension and retiree medical benefits that carried them through as they aged. They also watched the demise of this system and had to scramble to start saving on their own. A full 40 percent define themselves as being far behind in saving what they'll eventually need to live on.
The nest egg they did start to build took a beating during the economic crisis. And while economic indicators look encouraging, near-zero interest rates prohibit growth. There just isn't enough time to recover. Even those who thought they were on the path to successful retirement have found detour signs along the route.
This age group saw the largest number of lost jobs. Extended unemployment hampers their ability to land a new job, they only have limited time to devote to a new career. No income means no money to stash aside for what should be the golden years.
Retirement is no longer an option in the minds of many workers today.
Yet those golden years hinge on much more than how much you have saved. And with some planning, mixed with a little creativity, you may still be able to spend those years exactly how you've always dreamt.
Certainly money plays a huge factor in what you can and can't do. While you won't be able to calculate a precise figure, you can estimate pretty close.
Start a plan to eliminate debt at least 10 years in advance if possible. You won't have income to pay those monthly bills once you're not working full time.
How do you and your spouse want to spend your retirement years? Think about hobbies and interests you've shared over the years. Do they include travel? Community service? Now's your chance to consider all those things you've always wanted to do but never quite had the time.
Determine how much it will cost to do these things. Factor in living expenses. Don't forget to include taxes, insurance premiums, food, utilities, transportation, housing, etc.
You'll need a cushion for emergencies. Medical bills will increase as you age. Your home and car will age right along with you, each with its own maintenance costs.
Conventional rule of thumb suggests you'll need 70-80 percent of your current income to carry you through retirement. Other experts think it's closer to 100 percent.
Use the several retirement planning calculators on our website to help you do the math. Or consider using a financial consultant to make certain you've covered all the bases.
Despite reports to the contrary, Social Security will be around for a long, long time. Check your annual Social Security statement to learn how much you can count on receiving each month. Those over the age of 55 will receive benefits at the current level. They won't be affected by future program changes. You're safe in including these benefits into your calculations.
Deciding when to start taking Social Security benefits can be tricky. You're eligible anytime between the ages of 62 and 70. But your benefits increase the longer you wait. SocialSecurity.gov offers excellent tips and planning tools to help guide you through this process.
Obviously reaching your goal is more attainable the earlier you start working toward it. But this isn't always an option. Especially when those detours keep popping up.
Start researching retirement options at least four years in advance. Do you plan to relocate? You may want to be closer to family or live somewhere you can indulge in your favorite activity like a golf community.
It may just make economic sense to downsize your home, move to an area with a less expensive standard of living or better public transportation. Visit different communities to find the right fit.
Will you want or need to continue working part time during retirement? Consider a hobby or interest that may be profitable. Take a course on running a business or any other additional training you'll need at least two years in advance. Start networking.
Try living on the budget you set for retirement to see if it's feasible. Now's the time to make any changes it may require.
Schedule doctor visits while you still have medical coverage. Items like hearing, vision and dental aren't covered under original Medicare.
Just as we've had to redefine what it takes to retire, so do we need to redefine the actual meaning of the term itself. We can choose how to spend these precious years. By planning in advance and working toward specific goals, retirement may not be quite so elusive after all.
Here's another chapter in our influential entrepreneur series, beginning with a stroll down memory lane.
Like a lot of women, my mother loved to shop. It didn't matter what she was shopping for. Or even if it was something we really needed. If a bargain were to be had, my mom was the first to know and first at the stores as the doors opened.
This was before the Internet made such communications a normal event. It was even before color television so we weren't yet bombarded by ads for a sales event every 30 seconds.
We loved to join her on certain excursions. Particularly when they included a trip to the dime store. We would sit on a stool by the counter with an ice cream sundae while she perused the merchandise. She could keep an eye on us from anywhere in the store. She had no need for concern, the frozen treat in front of us kept our full attention.
Our trips to Woolworth were a special time for us all.
Perhaps that's exactly what Frank Winfield Woolworth had in mind as his stores grew in prominence.
Woolworth was born in 1852, the son of a New York potato farmer. He grew up poor with aspirations of becoming a merchant.
He attended two terms of business college before starting work in a dry goods store. Woolworth worked for free for the first three months because the owner didn't think he should pay the young man for teaching him the business. He stayed with him for six years.
During that time, he noticed a special table with leftover items marked down to five cents. The idea stuck with Woolworth. So he borrowed $300 from his employer to open a store of his own where all items were priced at five cents.
The store, in Utica, NY, failed within weeks. He opened a second store in Lancaster, PA within two months, expanding his inventory to include items priced at ten cents. This one was a hit.
He brought his brother Charles into the business and opened a number of five-and-ten-cent stores throughout the area. They became so successful that Woolworth made his original employer a partner.
Until this time, merchandise prices were set by haggling. Woolworth pioneered today's method of buying goods directly from manufacturers at a fixed price.
By 1911, the chain included 586 stores. He merged with five of his closest competitors that same year to form a $65 million corporation.
They built the Woolworth Building in New York City the following year. It was the tallest building in the world when it was built, at a cost of $13.5 million in cash.
He had come a long way from the potato farm. At the time of Woolworth's death in 1919, the company owned more than 1,000 stores worldwide.
Times change. By 1997, the original chain he founded had only 400 stores. Other divisions became more profitable than the five-and-dime. U.S. stores ceased operating, turning full resources toward their now successful venture of Foot Locker, Inc.
Other divisions still operational include Champs Sports, San Francisco Music Box Company and Kinney Shoes.
Stores in the U.K. ceased operations in 2009. The brand was bought by a company who chose to run the store online only. They continue to operate as a brick and mortar operation in Germany only.
What Frank Winfield Woolworth lacked in money, he made up for in business savvy. He was certain that offering a variety of goods was the key to success. And for him, it was. Today, 130 years after he opened his first store, the company continues to operate successfully as Foot Locker, Inc.
All it took was one idea, and a man who had the courage to make it a reality.
The economy can't figure out who it wants to be yet. In the long-term, growth and recovery seems to still be the target. In the short-term, we are bouncing around a little.
Retail sales had mixed reports today as ICSC-Goldman reduced annual sales reported by a percentage point to 2.5 percent without gas, and 3.5 percent with gas. They measure sales at major retail chains according to the International Council of Shopping Centers every week. However, Redbook reported a 1.0 percent increase in annual sales to 4.2 percent during the week with warm weather sales of durables identified as the major contributor.
Consumer sentiment was reported by Reuter's/University of Michigan at 71.8, dropping 2.5 points from the high in May. On the other hand, the leading indicator published by The Conference Board rose by 0.8 percent. Jobless claims continued to improve as well.
The National Association of Realtors reported that existing home sales dropped 3.8 percent in May to an annual decline of 15.3 percent. The quantity of homes available for sale dropped, but the supply increased to 9.3 months from May's 9 months as this is measured relative to a lower level of sales. Some commentators are guessing that this may lead to pent-up demand that may lead to a bit of a housing rush in the future.
So, buckle-up. The ride may still be bumpy.
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