Chapter 9

Retirement Planning

 

      Years ago, it was common for men and women to work until they died. Just because a man turned 65 or 72 or even 85 wasn’t a reason to stop doing what he had always done to earn a living.

       In 1900, 81% of those over 65 years old were still working.  In 1950, just 27% were still working at 65 and the average retirement age was 70 years old.  Today, only 14% of us work beyond 65 years old, and the average retirement age is now 63.

      Today, a common goal is to quit working when you turn 59 ˝ and then move to Florida or Arizona.  Others sell everything, buy an RV and hit the road finding the adventure they have long looked forward to.

      After spending most of their lives working, commuting, and having the boss looking over their shoulder, this freedom sounds wonderful.

      100 years age, there were no pension plans or tax-advantaged retirement savings accounts.  It was about that time that businesses, unions, and government agencies began offering pensions to workers who gave many years of service to the organization.  Most workers, however, did not fall under such plans or did not work long enough in one place to become “vested” and qualify for the benefits.

       Even today, about half of American workers work for some kind of small business without a pension or retirement plan.  Many of these people, however, are taking advantage of tax-advantaged retirement accounts called Individual Retirement Accounts, or IRAs.

IRA’s (Individual Retirement Account)

 

      Our government has made it easy for anyone to begin saving, up to $3,000 each year using an IRA.  The maximum amount is to be raised each year until 2008, when a worker can put away ...