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Reasons not to retire


Posted: April 18, 2008 5:46 p.m.
Updated: June 19, 2008 5:02 a.m.
More and more present and future retirees are finding that the traditional idea of retirement is passé. What's more, there's plenty of evidence that keeping your hand in the game, or even finding a new calling, will yield a longer, healthier and happier latter stage of your life. And given rising health care costs, that adult child who suddenly has returned home or the aging parent who needs care, working a little longer may well be as much a need as a want.

The best reasons not to retire:
* Financial. No matter how small the income your job generates, it will help stretch your resources to fund a longer and probably better retirement.

* Saving. Working longer gives you more time to save. Not only does it give you more time to save, if you are 50 and older you can make catch up contributions to your IRA and 401(k) plans.

* Delay taxes. Withdrawals from pension plans are taxed as ordinary income. If you work longer, you won't have to withdraw as much or you can delay withdrawals and give your portfolio more time to grow.

* Delay Social Security. By waiting until your "normal" retirement age you can boost your payments by as much as 50 percent versus someone who taps his benefits early.

* Reducing withdrawal rate. The biggest reason retirees run out of money is they overestimate how much they can safely withdraw each year. Based on historic returns, the withdrawal should be 4 to 5 percent if you want your money to last more than 25 years.

* Maintain health coverage. With health care costs rising and the need for long term care, having some portion paid by an employer can be a considerable cost saving.

The bottom line is the first few years of retirement are the most critical in preserving your nest egg.
Our present financial crisis and world problems are having a negative impact on retirement funds, and present retiree's are feeling the crunch on their retirement savings.

The only way individuals can truly safeguard their savings is to be willing to work through the choppy times in the investment markets.

Today, many older workers are more than happy to do that. And, plan ahead and save more. Remember, "Pay yourself before you pay everybody else."

Jim Lentini, CLU, ChFC, IAR is president of Lentini Insurance & Investment. His column represents his own views and not necessarily those of The Signal.


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