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Tuesday, 20 October 2015

Your boss can talk you into loving your salary-By Sarah Grant


Asking for a raise
All workers think they should be getting paid more—that's nothing new. But two recent reports suggest employers may not have to compensate their workers well to keep them happy.
A survey of 71,000 employees in the U.S. by PayScale, a website that tracks salaries, showed that employees who were underpaid—that is, paid less than the market rate for their position—were more satisfied with their work when their company was transparent about compensation. The percentage of underpaid employees who were satisfied with their compensation jumped to 82 percent from 40 percent when a manager simply sat down and discussed their pay.
On the other hand, 64 percent of employees who were paid fairly (at market rate) believed they were underpaid, and would consider looking for higher-paying work elsewhere. The research shows that dissatisfied employees left even if their pay went up.
More from Bloomberg.com: China's Selling Tons of U.S. Debt. Americans Couldn't Care Less.
"There is a huge disparity of information," said Tim Low, vice president of marketing at PayScale. "It used to be that employers had all the information when it came to compensation, and employees had the least."
With salary data more readily available online, it's easier for employees to learn what their colleagues might be making, he said. That should motivate companies to clarify what they're paying and why, especially since the report shows most employees' expectations are off.
More from Bloomberg.com: Volkswagen Offices Searched After Ex-CEO Quits Post at Porsche
Even though it's easier than ever to look up pay rates, most workers don't understand how their paycheck compares to the market rate.
The most confused employees were the ones paid above market rate. About half of this group felt they were being paid at the market rate, and a third of them said they were underpaid. Only 21 percent of the people in this group knew that they were taking home a higher-than-market paycheck.
The only people that overwhelmingly got it right were the underpaid workers. Of that group, 83 percent knew they weren't paid at market rate.
"Fixing the perception gap in pay doesn’t cost any money for companies," said Low. "But it requires companies to teach managers how not to run away from the conversation."
 

It's relevant news for companies, which worry about how to keep their best employees. In a separate PayScale survey of 5,530 companies about how they were compensating workers, 63 percent of employers called retention their top concern.

Still, less than half of the companies PayScale surveyed train managers on how to have tough conversations with employees about compensation. One way to make those conversations go smoothly, said Low, is to provide benchmarks for the different positions offered at the company, with salary ranges to show employees where they fall in the spectrum. Giving real-time salary data is also useful; however, companies would have to invest in systems that track the market rate for salaries.
The survey also showed most companies weren't openly talking about pay. As of this year, less than half of employers said they had or are working on improving transparency with new salary tracking software or manager training.
Companies concerned about holding on to their most valuable employees are incorporating more feedback into their management styles. The annual performance review is being ditched, in many places, for more frequent discussions about compensation and ways to change your pay like acquiring more skills, said Low. "There's not this magical one-year cycle," he said. If companies wait up to a year to discuss giving their star players a raise, they may find those stars are already on their way out. 
Culled from Bloomberg.com
Posted by Odunze Reginald at 07:55 No comments:
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Wednesday, 14 October 2015

Here's why Americans say they're not spending more - By Janna Herron


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The economy may be expanding with rising wages and a steady drumbeat of newly created jobs, but that hasn't been enough to persuade Americans to open their wallets a little more. A majority still limit their spending, according to a survey that accompanied Bankrate's Financial Security Index for October.
When asked about their monthly budgets, 62% said they were motivated to keep their spending in check. They gave a variety of rationalities for holding back, including the following reasons that were offered in the survey:
  • 28% said their income hasn't changed.
  • 25% needed to save more.
  • 18% cited a general concern about the economy.
  • 10% said they were wrestling with too much debt.
  • 7% worried about getting fired from their jobs.
Another 4% had an explanation that wasn't offered in the survey, and 6% answered "none of the above."
The survey responses varied greatly depending on the age of the person answering the question. And retirement seemed to play a role in whether people were spending more. Those nearing retirement age (between age 50 and 64) were the most likely to curb spending, while those who were already of retirement age (65 and older) were the least likely.
"These results are not entirely surprising, since the 50-to-64 age group is in 'catch-up' mode," says Leon LaBrecque, CEO of LJPR Financial Advisors. "In my experience, clients in that age segment are catching up from funding college, career changes and raising kids."
It gets a little easier by the time they hit their mid-60s, says Hank Mulvihill, principal at Mulvihill Asset Management. By that time, many Americans have already dealt with a number of financial challenges. They've raised their children and cared for elderly parents. They've downsized their living arrangements, completed accumulating assets and determined their monthly cash flows. They also may see more money in their pockets because Medicare often reduces their overall health insurance and care costs.
"At that point, they can spend fairly freely within their known budget, with fewer likely demands or surprises," Mulvihill says.

When can I start spending more?

The best time to increase spending is when you get a raise, says Austin Frye, a financial adviser in Florida, because you can swallow extra expenditures without shortchanging your savings goals.
But that's difficult in an environment of slow wage growth. The average hourly wage for American workers slipped a penny from August to September, according to the federal government. Wages are up roughly 3% this year when compared with the same time last year -- a big improvement over the past couple of years, but still not as strong as the 4% to 5% growth that workers enjoyed before the recession.
If you're lucky enough to get a raise, Frye says you probably shouldn't spend all of that extra cash. This is also an ideal time to pad your savings account. "It generally takes $1.30 in income to increase $1 in expenses," he says. "So, the $1.30 in income should translate to 50 cents in savings and 50 cents for spending."

The who and why of limited spending

Bankrate's FSI survey broke down why certain groups didn't increase their monthly spending. For instance:
  • For those younger than 50, the reason most often cited for limiting spending was the need to save more. Those older were most likely to cite stagnant income.
  • Stagnant income was the most common reason to limit spending for Americans who earned less than $50,000 a year. Those making above $50,000 more often cited needing to save more.
  • Lower-income Americans were more likely than higher wage earners to limit spending based on worries about job security.

Overall financial outlook

Savings isn't just a reason why Americans are capping their spending. It's been an area of general concern for the past few years. According to Bankrate's October Financial Security Index, only 19% of Americans reported feeling more comfortable with their savings, compared with 28% who felt less comfortable.
Overall, the FSI slipped to its lowest reading in the past 12 months. Americans noted improved job security, net worth and overall financial security compared with a year ago. But, in some cases, the general level of optimism was lower than the previous month.
"A disappointing September employment report undercut feelings of job security," says Greg McBride, CFA, chief financial analyst for Bankrate. Still, he said, "The 19% of Americans feeling more secure in their jobs still outpace the 14% feeling less secure."
Culled from Bankrate.com
Posted by Odunze Reginald at 08:00 No comments:
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Tuesday, 13 October 2015

Top Retirement Savings Advice for Everyone By Leslie Kramer

 
Most people, in the midst of their working years, don’t spend too much time thinking about retirement. It feels so far away — until it doesn’t. That’s why it’s important to plan ahead, so when would-be retirees are at the finish line they're not panicking at not having saved enough. The truth is that everyone should be saving as much as possible while they still have the earning power to do so.
For those who want to get on track now, here's a checklist that should help.

Deploy a 401(k) or IRA ASAP

For those just starting out, it may be tempting to avoid investing in a retirement account, thinking that there's plenty of time later for that. But these years are important ones to start saving because time is on their side, even if earnings aren't at a high level. Creating good savings habits early is key to enjoying the time value of money.
If savers have the option of investing in a 401(k) plan at work, and if the company offers an investment-matching plan, take advantage of it to the full amount. By matching contributions, the company is essentially giving away free money. Many (though not all) employers will match at least 3% of any investment in a 401(k). And if savers are lucky enough to get a raise, don’t pocket it or spend it all right away. Instead, savers should consider raising their contribution level.
If an employer doesn’t offer such a plan, savers aren't off the hook. This is when you should open up a traditional IRA or a Roth IRA. The government limits the amount that can invest in an IRA to $5,500 a year until the age of 50. At that point the amount increases to $6,500.
Deploying retirement accounts as soon as possible means taking advantage of compounding growth, or earning money by investing any dividends or interest on initial investments back into the investment itself. The beauty of compounding interest is that if when you start investing early on, you'll gain more because you'll have more time for your investments to grow. So rather than spending any profit or interest your investment may bring in, leave it put and let it grow.

Set Up Various Savings Funds

Every saver should have an emergency fund that they can rely on in case they lose their job or are faced with an expensive emergency. It’s a good idea to put aside three- to six-month’s worth of your salary in an accessible savings account. This way, you won’t be forced to take money out of your retirement fund if calamity hits. Having a cushion to rely on will also give you peace of mind, and that's priceless. Keep in mind that having too much cash socked away in a low-interest savings account is counterproductive. If, at the end of the year, you have more cushion money than you need, you can put it to work in an IRA or other investment.
When the saver hits their 30s, there will be additional accounts at their disposal. Setting up a tax-advantaged 529 savings plan when your child is born is key. These plans, also known as qualified tuition plans, are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.
Contributions to 529 plans are not tax deductible, but as earnings in the fund grow, they will not be subject to federal taxes and therefore will not be taxed when savers take the money out to pay for a child’s college tuition.

Wills and Insurance Investments

Everyone in their thirties should have a will. It should be updated each year or as assets or situation changes. Hopefully, no one will get a look at it for a long, long time, but it’s important to have as no one can predict the future.
You should also purchase life and disability insurance, especially if you are married or have children. Even if there are two parents working, the loss of one of those incomes could have a big impact. Having an insurance plan will give you the reassurance that your family will be protected if one parent becomes unable to work or if there is a sudden death.
In terms of investing style, most financial advisors suggest that people invest more aggressively when they are younger and move to less risky investments as they age. That means investing heavily in stocks early on while there's still time to ride out the market's waves, and then start scaling back the risk as you start accessing your retirement fund. Bonds are a good alternative to equities, as are stable-value funds.

Always Keep Saving

Typically, people find that their prime earning years start in their 40s. So rather than spending more on luxuries, you should use this time period to save more. As of 2015, the IRS allows people to save up to $18,000 annually before taxes in their retirement savings account until the age of 50. Not everyone can afford to do so, but anyone who can should saving as much as possible at this time and even try to increase that savings by 1% a year. Remember the benefits of compound interest? This is where the benefits will begin to become apparent.
Once savers pass the age 50 mark, the IRS lets savers increase their retirement savings through a catch-up contribution. That means that an extra $6,000 before taxes, increasing the total pre-tax savings amount to $24,000.

Don't Quit Working Too Soon

Once people reach their 60s, they may start thinking about retiring. But before taking the plunge, they should be sure they are financially ready. People are living much longer today than in previous generations, so retirement could wind up being much longer than expected. Retirees must be sure they have saved enough to comfortably and enjoyably retire. Don’t forget about the rising cost of health care, or the possibility of needing home healthcare or a care facility.

The Bottom Line

It’s never too early to start thinking about saving for a secure retirement. The key is to start early and not leave things to chance. Ideally, everyone should save as much as possible while younger so that they won’t have to spend as much time and money catching up later in life.

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Culled from investopedia
Posted by Odunze Reginald at 07:52 No comments:
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Monday, 12 October 2015

Women are a quarter million dollars short of retirement Bloomberg -By Suzanne Woolley





Lower earnings and longer lives—it's a powerful one-two punch, and it threatens to keep women on the ropes in retirement.
A recent study measured the retirement savings divide between 45-year-old men and women. It found that women, on average, are more than $268,000 short of what they need to retire comfortably at 65. For the average man, it's $212,000. For every $100 a man sets aside, a woman needs to set aside $126. That's a 26 percent gender gap.
What can be done? Women need to begin their retirement planning all the earlier, to determine what goal would realistically suit them (most people don't even run projections). While estimating future expenses is hard, the websites of large fund companies have calculators to help investors figure it out, and better planning tools are showing up on more 401(k) plan sites.

For the study, Financial Finesse analyzed data on median income, retirement savings, life expectancy, 401(k) salary deferral rates, and projected health-care costs to find out how much men and women would need to save to retire at 65 and live on 70 percent of pre-retirement income.

"Lower Social Security benefits, longer life expectancy, and lower retirement savings balances because of lower-paying jobs all compound into this incredibly large shortfall for women," said Gregory Ward, a senior financial planner at the company. 
Culled from Bloomberg.com
Posted by Odunze Reginald at 07:42 No comments:
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Friday, 9 October 2015

Everything: Here’s How Much Retirees Are Paying for Health Care - By Aimee Picchi


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It may come as a surprise to some younger Americans that health care isn’t exactly free for retirees on Medicare, but the sticker shock may be downright alarming.
An average 65-year-old couple who retires this year will face out-of-pocket health-care costs of $245,000 in their golden years, a jump of 29 percent since 2005, according to a new study from Fidelity Investments. The surge in expected expenditures is due to longer life spans and the rising costs of prescriptions and medical care.
The bottom line, Fidelity says, is that younger Americans need to be saving now to cover their health-care costs when they turn 65, in addition to paying for the basics such as food and housing. Given that three-quarters of pre-retirement Baby Boomers aren’t aware that Americans covered by Medicare pay a monthly premium and have deductibles and co-pays, it’s no wonder that a majority isn’t considering health-care costs into their retirement planning.
Only one out of five couples polled by Fidelity said they are factoring health-care costs into what they need to save for their retirement.

Fidelity’s estimate may actually be on the conservative side, given a forecast earlier this year from retirement-services company Healthview Services that a couple retiring this year will encounter health-care costs of almost $267,000.
Adding to retirees’ pain is the fact that health-care costs are rising at a much faster rate than Social Security’s cost-of-living adjustments, which means older Americans will likely need to devote larger portions of their Social Security payments to cover their health-care costs, according to Healthview. That will place “incredible stress” on retirees’ budgets, the group said.
So how can Americans prepare? Fidelity, which is in the business of managing money, naturally has a few suggestions relating to opening new accounts, such as a health savings account, which can be rolled over into subsequent calendar years to cover medical expenses.

Culled from Fiscal Times
Posted by Odunze Reginald at 11:21 No comments:
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Wednesday, 7 October 2015

A Performance Review May Be Good for Your Marriage-By Elizabeth Bernstein



A formal evaluation can help a couple set goals, affirm what works and avoid entrenched conflict

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Getting your annual performance review from your boss can be awkward and irritating. Can you imagine getting one from your spouse?
A growing number of marriage therapists and relationship researchers recommend that spouses and romantic partners complete periodic performance reviews. Couples typically wait too long to go to therapy for help, they say. By taking time to regularly evaluate and review their relationship together, partners can recognize what is and isn’t working—and identify goals for improvement—long before problems become entrenched and irresolvable.
“It’s the relationship equivalent of the six-month dental checkup,” says James Cordova, professor of psychology and director of the Center for Couples and Family Research at Clark University, in Worcester, Mass.
This isn’t an exercise to be taken lightly. Couples have to be careful, and constructive, when sharing their assessments. Fairness is crucial. And for couples in a relationship crisis, a performance review is unlikely to help.
Research shows that regular checkups improve relationships. In a study published in Sept., 2014, in the Journal of Consulting and Clinical Psychology, Dr. Cordova and his colleagues gave 216 married couples questionnaires asking them to assess the biggest strengths and weaknesses in their relationship. Half the couples then saw a therapist for a checkup of two sessions to go over their evaluations and brainstorm a plan to address their concerns. The other half were told they were on a waiting list and didn’t discuss their assessments in a checkup.
The researchers, who followed up with the couples after one and two years, found those who had performed the checkup saw significant improvements in their relationship satisfaction, intimacy and feelings of acceptance by their partner, as well as a decrease in depressive symptoms, compared with the couples in the control group who didn’t perform a checkup. In addition, the couples who had the most problems in their marriage before the checkup saw the most improvement.
Kathlyn and Gay Hendricks, relationship coaches and authors of multiple books on marriage, who have been married 34 years and live in Ojai, Calif., schedule informal discussions with each other every Tuesday and Thursday, where they talk about problems or conflicts that have arisen in the past few days. In one recent discussion, Mr. Hendricks told his wife he has been feeling “left out” because she has been traveling so much for work lately, and she assured him that her schedule was going to lighten up soon.
“It gives us a safe, sure place to talk about our emotions,” says Ms. Hendricks, a psychologist, who is 67.
The spouses sit down for a more formal marriage review once every few months, but they are careful to focus on the relationship and not cast blame. They ask themselves, “How are we doing working together as a partnership?” and discuss areas where they need to improve. They examine their top three goals—for example, “working together as a team for our children,” “working together toward financial goals” or “being together so we both have a great sexual experience.” And they talk about how they can make their differences work for them. “It’s like taking the pulse of the relationship,” says Mr. Hendricks, 70, and a psychologist.
Dr. Cordova says while men often resist marriage therapy, they tend to appreciate marriage reviews, because they focus on a couple’s strengths and goals, as well as solving problems without blame.
But how do you review your marriage?
Remember that this is the person you love, and don’t be too critical. “You can’t approach it as you would a subordinate you supervise at work,” says Shannon Battle, a marriage and family therapist in Fayetteville, NC. “You can’t fire your spouse. This is ‘til death do us part.’ ”
Multiple research studies on people’s reactions to performance reviews show that when people feel they have been treated unjustly, they become hostile, But when they feel they have been treated fairly and respectfully, they accept the message of the review.
Rebecca Chory, a professor at Frostburg State University’s business school, in Maryland, who studies reactions to negative feedback, has identified six strategies for giving an effective performance review:
Address the behavior, not the person. Couch your comments with affirmation. “Do not put down your partner,” Dr. Chory says. She recommends saying, “I love you and want to be with you, but there are these behaviors…” or “When you did this, I felt this…”
Explain why you came to your conclusion. What contributed to your assessment? Provide a rationale.
Show that you are aware of the other person’s situation. Is your partner stressed, overworked, sick? Acknowledge the challenges he or she has been facing and how they may have contributed to the behavior you don’t like.
James Cordova James V. Cordova, Ph.D, professor of psychology and director of the Center for Couples and Family Research at Clark University, has studied how regular relationship checkups affect partners’ satisfaction.
Be consistent over time. This doesn’t mean you can nag. But you should never criticize your spouse for something one time and laugh it off another. “A person needs to know what to expect, the rules of the game” says Dr. Chory.
Allow the other person to respond and provide input. The review should be a conversation, not a lecture. And a lot of misunderstandings can be cleared up when people talk openly.
Be clear about what you would like to change. What can be done to improve the situation?
As for the review itself, Dr. Cordova says you should always begin by identifying your strengths as a couple. “It is the positive foundation that keeps a relationship happy and healthy in the long run,” he says.
Then move on to discussing your concerns—but limit yourself to one or two. “You don’t want to kitchen-sink the thing,” Dr. Cordova says. And you don’t need to come up with a solution right away. Aim to understand your partner and to have your partner understand you.
If the review makes your relationship worse, or causes a lot of arguing, you may need relationship counseling. “If you are doing it well, you can tell because you will feel closer to each other and will each feel understood,” Dr. Cordova says.


Culled from The Wall Street Journal
Posted by Odunze Reginald at 07:50 No comments:
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Friday, 2 October 2015

Closing In On Retirement? Read These Tips By Roger Wohlner


Many of the people who engage the services of the financial planner tend to do so as retirement approaches. This is natural; retirement is big step. From my experience in working with this type of client over the years here is a financial planning to-do list if you are within 10 years of retirement.
Sock Away as Much as Possible
For many retirement savers these are the highest income years of their careers. This is the time to contribute the maximum amounts possible to your employer’s retirement plan, IRA accounts, and the like. While these contributions will not have the years to compound as those made in your 20s and 30s, every bit helps.
Check Social Security
While there is some discussion as to the future solvency of Social Security, it's likely that those currently in their 50s will receive their benefits. You can get your statement and check your benefits here. The Social Security Administration has also indicated that they will resume mailing statements, so keep an eye out for yours. I suggest saving them, and always check to ensure that you have received full credit for all of your earnings.
Moreover it is important to know and understand what your benefits will be if claimed at various ages. If you are married there are a number of strategies to consider in terms of the timing of claiming your benefits. Here are a pair of good calculators from Social Security and AARP.
Gather Info for All Retirement Accounts
These days it is not uncommon for someone to have worked at five or more jobs over the course of their career. This can lead to a number of retirement plans with former employers. If you are married and your spouse works this number can easily double. This is of course in addition to your Social Security benefits.
Over the years I’ve seen people with old pensions in which they have a vested benefit, old 401(k) plan accounts that they have basically left with their old employer and ignored over the years, multiple IRA accounts, etc. This is a good time to make sure that you have a list of all of these old plans. It's an even better time to develop a strategy to make sure that old 401(k) and IRA accounts are consolidated and being properly invested and that your old employer has your current contact information regarding any old pension accounts. While many of these old accounts might be relatively small, if you have several this can add up to real money for your retirement.
Figure In Your Other Financial Resources
This is also a good time to get your arms around your other financial assets that are potentially available to support your retirement lifestyle. Here are a few items that you might have: taxable investment accounts; an annuity; life insurance with cash value; interest in a business; stock options from your employer. If your 401(k) account contains company stock you might benefit from the use of the Net Unrealized Appreciation (NUA) rules. Additionally, determine if your company offers retiree health insurance. Will you work full or part-time during retirement?
It's not uncommon for companies to offer incentives for longer tenured employees to take an early retirement. If you are the recipient of such an offer consider taking it on two counts. First, the offer might be quite financially attractive, and second, if you don't take the initial offer the next such offer in most cases is not nearly as lucrative. And make no mistake, after that first offer you likely are "on the list," so to speak.
Some folks might be lucky enough to be in line for an inheritance from parents or others. I generally urge caution in including this as a retirement asset. Things can happen. Your parents might live longer than expected and the cost of their care could eat away at much of their wealth.
Determine How Much You'll Need to Support Your Lifestyle
This is the time to start making some choices about how you will live in retirement, and more importantly, to put some dollar figures to this lifestyle. Will you be moving and/or downsizing your house? Will you be debt-free by the time you hit retirement? Will you have adult children to support?
Another way to say this is to start thinking in terms of a retirement budget.
Do a Retirement Projection
There are many retirement calculators available online, perhaps even through your company’s retirement plan provider. Some are better than others so do a little checking in terms of the methodology and the underlying assumptions. The better ones are great tools to give you an idea if your plans for retirement are realistic or not.
Most retirement projection tools will ask you to input your retirement plan assets, any pensions and Social Security, other investments, etc. Based on variables such as your investment allocation and other factors these programs will give you an idea of how much retirement cash flow your resources might be able to support. While you may not like the answer, it is far better to know you have a potential shortfall as early as possible prior to retirement.
This might be a good point to engage the services of a competent fee-only financial adviser to assist you. Besides their expertise, a qualified adviser can add a detached third-party perspective to your retirement planning.
Think About a Withdrawal Strategy
One of the more complex aspects surrounding retirement can be determining which of your accounts to tap and in what order. Different types of accounts have different income tax consequences. Traditional IRA account and 401(k) account withdrawals are generally taxed as ordinary income. Roth IRA accounts will generally not be taxed as long as certain rules are followed.
Annuities are may be taxed in part or totally depending upon how you take the money. Taxable investments can qualify of preferential long-term capital gains treatment if certain rules are followed. The point is that the rules can be complex and making poor choices can result in adverse consequences to your financial health in retirement.
Consulting with a qualified tax or financial adviser is a really good idea here, especially if you expect to be in a high tax bracket during retirement.
Stress-test Your Plan
Even the best-laid plans don’t always go according to plan. Give some thought as to what could go wrong. What happens if you suffer a serious medical setback that prevents you from working until retirement? What if your company decides to lay you off prior to your desired retirement age? Will your plans for retirement still work financially? (For more, see: How an Advisor Can Help Cut Your Healthcare Costs.)
The Bottom Line
The 10 years leading up to retirement are the time for investors to get their “retirement ducks in a row,” so to speak. Get a handle on all of your resources for retirement including Social Security, pensions, retirement accounts, and other assets. Determine what you will need to support your lifestyle in retirement and determine if your financial resources will support your lifestyle. If you need the help of a financial professional, get it. A successful retirement takes planning and this time period is crucial to help ensure a successful retirement.

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Culled from Investopaedia
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