When you retire from your cooperative you have several options on how to receive your R&S pension. For example, you can take it as series of payments, you can take it as a lump sum distribution or you can do a combination of both. For those of you interested in the lump sum distribution, I want to make sure you avoid a critical mistake that I have seen retirees make.
Let's Make A Deal! (With your R&S Pension)
You probably hear the term “financial plan” often, but what does that mean?
Many of you are blessed to be employed at a cooperative that offers a defined benefit pension plan that provides you with a lump sum payment or a monthly pension payment for life when you retire. Congratulations! Such plans are uncommon today. Many of you will face a challenging decision at retirement. Should you take the lump sum payout or should you take the monthly annuity payment for the rest of your life and, in some cases, the life of your spouse and beneficiaries as well?
The U.S. Postal Service announced price increases for 2023. The cost of a postage stamp will increase from 60 cents to 63 cents. That's a 5% increase! What lesson can we learn from a postage stamp that also applies to your retirement plan?
Considering early retirement from your cooperative? Here are two options that can make that a reality.
In the Book of Genesis, God gives Adam and Eve authority over the earth, forbidding them of only one thing. They are forbidden from tasting the fruit of the knowledge of good and evil. And for a few moments, their innocence is perfect. Then it happens. They taste the fruit and commit the original transgression. And after that, everything bad and wrong with earthly life suddenly enters the world: sin, shame, struggle, sickness and death. They only made one little mistake, but it was the only mistake they couldn't afford to make.
It's March 2023 and we're smack dab in the middle of a Bear Market. What should you do with your investments? Should you do anything? Do you have time for them to recover? Let's talk about that for a minute..
As I write this blog in February 2023, the last 14 months have given us a master class on how inflation can affect retirement planning and your purchasing power in general. Probably the biggest misconception I see when talking to retirees or soon to be retirees is that they worry about losing their "money" in retirement but they don't worry about losing their purchasing power.
It's January 23, 2023 and all the media pundits are trying to predict a recession as if they have any idea about anything at all. In my opinion, and by definition, the American economy was and is already in a mild recession. Let's define what a recession is and what the Gross Domestic Product is and what this means to you. Then we will talk about tips to help you through a recession. And before we start, I urge you not to panic. Recessions are common and often they are exactly what can cure a struggling economy. They are NOT to be feared!
If you'll recall, the original Secure Act was passed at the end of 2019. It raised the Retired Minimum Distributions (RMD) age to 72, limited Stretch IRAs to just 10 years, allowed you to pay off $10,000 of your student loans with a 529 plan, and mostly encouraged employers to provide better 401(k)s. Secure Act 2.0 provides additional changes, almost all of which are great for savers, investors, employees, and employers. Let's go over them.
Being "in" a certain tax bracket doesn't mean you pay that federal income tax rate on everything you make. The progressive tax system means that people with higher taxable incomes are subject to higher federal income tax rates, and people with lower taxable incomes are subject to lower federal income tax rates.
If Congress passes this massive year end spending bill, sometimes referred to as the Omnibus, it could have potential changes to Retirement Plan rules. I'll quickly run through the potential changes on this blog.
The co-ops are a great place to work, no doubt about it, and I'm sure you love your job but would you do it for free? Because if you are considering retirement soon and wondering if you should retire this year or next year that may be exactly what you are doing. One thing I've found that people totally disregard when they think about retirement is interest rates. Interest rates directly affect your R&S Pension amounts and the dollar amount between retiring this year versus next year could mean that you end up working for free when you could have retired.
If you are an electric cooperative employee and you are 55 or over there is a perfect retirement storm brewing right now until the end of 2022. Here are 2 reasons why you should retire in 2022.
A 30 year retirement means more than likely facing many surprises with which a flat monthly payment isn't going to help. The lump sum option, invested properly, offers flexibility to meet those surprises, can be strategically invested to provide regular income, and most importantly could possibly change the lives of the loved ones you leave behind.
