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Right now, 30 million Americans are still covered by a traditional pension plan, according to a recent CNN Money article. If you’re one of these people, then at some stage you have to decide whether you want to receive your pension in one lump sum on retirement or by monthly checks for the rest of your life. Apparently, it’s not such an easy decision.

If you had a crystal ball and could forecast the year of your death, then the calculation and decision would be clear. Unfortunately, we don’t have that crystal ball, so you need to do some hard thinking. The Money gang actually summarize that in most cases, the monthly check will work out financially better than a lump sum - yet 90% of people choose the lump sum.

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Though women live longer than men, they typically earn less than their male counterparts. Of course longer lives and less pay makes saving for retirement difficult, and new studies show that women aren’t saving enough for retirement.

On average, women live 22 years after retirement, 3 years longer than the average male. Women are also likely to invest more conservatively, take extended periods of time off (without pay), and begin saving 2-4 years later than men. Indeed, for every $84,000 that men make, women make $57,000. On top of their existing salary handicap, women typically don’t take advantage of company savings-matching programs that go a long way toward building a solid retirement nest egg. However, the study also shows that approximately 90% of women are unsure about managing finances, making this problem even more severe.

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Self-employed people are often a bit bamboozled over the whole IRA idea, but it’s not as hard as it sounds: the best way is to set up what’s known as a SEP-IRA, which stands for Simplified Employee Pension. Daniel Sorid recently wrote an overview which made the SEP-IRA process clear. (more…)

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Only 30 million Americans are lucky enough to be covered by a traditional pension plan, and if you’re one of them, you’ve probably wondered whether taking a lump-sum payment would be better than your monthly pension check. Though it may seem complicated, when you take the facts into consideration, the answer is clear: (more…)

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While most conventional wisdom has long said you should start saving money as soon as you start earning it - because over time, it will compound and be much more valuable when you reach retirement age - there are also people who say that you’re better off not stressing too much and just saving later when your income is higher. An article at Yahoo Finance looked at both sides of the coin and came up with these points to think about: (more…)

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Asking yourself if you’re on the route to having enough money to comfortably retire is not only responsible, but necessary. You know how much you have in your 401(k), IRA, and savings account, you know how much Social Security you’ll receive and what your pension will look like, but you need to look at several puzzle pieces determine whether you have enough to retire. (more…)

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A recent post at CNN Money had a lot of useful information for Americans who are either approaching retirement or who are younger and working and should be thinking more about how to fund their retirement. The three key points they made were: (more…)

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When you’re planning your retirement – and some of us dream about finishing work from practically the first day we start – it can be complicated to think about how you will fund it. A Gallup survey found there are ten main sources of income for retirees, with some being more significant than others. Have a look at the list and consider where your retirement income is going to come from: (more…)

If your retirement is lurking just around the corner, you may be worried about how you’re going to pay for it. With an economy on the downturn, it’s important to choose a location that will be a good investment as well as one that will meet your medical, safety, and cost-of-living needs, to name a few. To help you with your search, Money Magazine suggest 7 places to retire during an economic downturn.

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As mortgage payments grow increasing unmanageable and credit card balances don’t seem to get any lower, Americans have been cutting budgets, making sacrifices, and developing creative solutions to their personal finance woes. But if you’ve considered borrowing against your 401K, you might want to rethink that decision.

The IRS views hardship withdrawals from a 401K account before the age of 59 1/2 as income, and the money is taxed as such. Furthermore, all funds are subject to a 10% penalty. These two factors combine to create several consequences. To begin, taking money out of your 401K will obviously reduce your retirement savings. Even though retirement may seem like a distant future event, you may be surprised at how difficult it is to refund your account while continuing to grow your savings. Beware that your emergency withdrawals don’t bump you into a higher tax bracket, as well — the taxes alone could cancel the benefit of your extra income.

Even if your withdrawal isn’t considered a hardship loan, experts say that taking money out of your 401K may run you the risk of not being able to support your lifestyle during retirement. In fact, experts say that based on current savings statistics, 43% of savers are in danger of living a simpler lifestyle when they reach retirement age. It’s a difficult task to pay back a loan while continuing to pay into your retirement savings.

Though budgets are tight and temptation is high, resist your urge to withdraw from your 401K account. Instead, consider alternatives like selling your car and buying used, eating at home more often, and turning your lights off when you leave a room. When age 65 rolls around, you’ll thank yourself.

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