Live Long and Prosper

We all remember those famous words spoken by Mr. Spock of the starship Enterprise from the television series "Star Trek". Well, the truth is we may have reached the point where most of us will live long, but will we prosper? Or will we merely "get by" in our later years? The answer to these questions may lie in what we do in our younger years. At least in what we do as far as planning for our financial future.

When trying to put a meaning to the term "retirement" it is important to remember that the term has relative meaning depending on one's age. To a working person in their twenties, it may be just a vague idea or a dream of something far off in the future. To someone in their thirty’s is likely to be a term the financial advisors use occasionally when talking about Roths or IRA's. To a forties something person it has become an attainable goal, but still years away. However when one reaches the magic age of fifty, it is a very real and sometimes scary reality that will have to be dealt with sooner than later.

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And with today's financial climate and living costs, thinking about relying on Social Security is like hoping that lottery ticket is a winner. Chances are, you'll need more to survive.

Lately, there has been much talk and, unfortunately little else, about reforming or at least modifying our Social Security program as it exists today. Some dooms-day prophets declare that the system will be bankrupt or at least fundless by 2014, others say 2020 and so on. Others deny there are any real fiscal problems with the program and it seems there may as many opinions as to Social Security's viability as there are people with opinions. As with any government agency, there are so many variables and so much bureaucracy, that the fog is too thick for a clear picture. However, there is no question that Social Security benefits will not be enough to live a comfortable life. It certainly won't be enough to live the same style of life one had before retirement, even if it does survive the next few years.

If you choose to retire early, that is before your 66th birthday, there are disadvantages and advantages to taking your benefit before your full retirement age. The advantage is that you collect benefits for a longer period of time. The disadvantage is that your benefit is permanently reduced. Each person's situation is different, so make sure you contact Social Security before you decide to retire.

We all know that the first wave of so-called Baby-Boomers is on the cusp of retirement. The first really big numbers are expected in 2008 and increasing at the rate of approximately 13 million a year to a peak of 26 million in 2012 and 2013. The burden on the already tight social security budget will be a heavy one. It may very well be bankrupted by 2015.

What will you live on? Hopefully, all that money you stashed away in IRA's, Roths, 401 (k)'s or other financial savings or investment accounts or funds.

The key to any reliable retirement plan is to start whatever it is now. The sooner you start, the more likely it will provide for you in your "golden years". Even a simple bank savings account, if started soon enough, may be enough to get you over the 'hump' as far as meeting financial obligations after retirement.

For most people, to maintain the same standard of living after retirement, they will need from a minimum of 65% to 90% of their current income. That may not be an easy goal to achieve. However, that figure may also depend on what your idea of retirement is. It certainly won't take as much cash to sit on the porch and watch the birds play in the roses as it will to travel the world. Deciding on what retirement will be for you will go a long way towards your ultimate retirement plan.

First, assess your financial situation now. If you are deep in debt, especially credit card debt, you may want to consult with a debt expert and at the very least, switch to a card or cards with a lower interest rate. Paying off major credit card debt may need to be your number one priority.

One of the biggies when it comes to cash outlay for retirees is health care and medicines. Of course the best way to offset this is to live a healthy lifestyle. Beginning today, if you make just a few changes in habits and eating patterns, anyone, any age can start leading a healthier and thus less expensive life. You may also want to lock in a health insurance plan. These plans are always less expensive if started at a younger age. As you age, you will find the cost of insurance, and especially health insurance increases at a very dramatic rate. Many times, that rate is more per month than simple Social Security benefits. The alternatives, Medicaid, HMO's, etc are bewildering and usually less than adequate as well as being very non-user friendly.

Besides the monetary rewards of living a healthy retirement, it also allows you to enjoy retired life so much more. Being retired and bed-bound isn't what you've worked all those years for. A healthy retiree is a happy retiree.

If you are married, knowing your spouse's retirement plans, pensions and workplace benefits will help you decide on your own course of action. If you are included in those, all the better. Sometimes, one's spouse's benefits make up for a lack in the other partner's plan.

Opening an IRA is without a doubt, one of the first financial decisions one should make. Also, if you are in a plan at your place of employment where you can make a contribution to the plan, increase your part as much as you can afford. This is an especially good tactic if the employer provides matching funds.

Finally, you'll want to review your Social Security statement well before your retirement date. This is a summary of your earnings and benefits you have coming to yourself and your family. Remember, you're dealing with a huge government bureaucracy and if you do find a mistake it may take months, sometimes longer, to get it corrected.

Now, whether you're sitting on that porch or winging your way to St. Thomas, you'll enjoy it all the more without the worries that come with limited retirement funds.