March 27, 2010

Retiring at the End of This School Year?

If you are retiring at the end of this school year, you have been counting down to this moment for probably the last 30 years. You have been dreaming of the days where you would be free from your profession while collecting a nice pension. Relaxing, traveling, or starting a second career are all within your grasp... yet, take some time to make some final plans first. There are several decisions to make, and all of them can have lasting impacts on your life and retirement.

First and foremost, there is your Georgia TRS pension. The best thing to do is to make an appointment with TRS to discuss your benefits and options. By all means, please listen to the various options. Once you start on an option, you cannot simply go back and change your mind later. For instance, if your pension will be the backbone of your retirement and your spouse's retirement, please look at the various joint options. Do not think that since Plan A offers you the most money that it is the best option. Think of your spouse and family, and by all means, consult with an advisor.

Depending on whether or not you contributed to Social Security, you should also look to meet with them to discuss your potential benefits at full retirement age (FRA) or early retirement. Social Security really is one of the services that goes out of its way to help answer questions and project your benefits. You may have an opportunity to help yourself by working part-time in between your retirement and collecting benefits, or you may be somewhere around the maximum you will collect, but the main idea here is to have some projection and not be surprised later.

Your other retirement accounts like a 403(b), Roth 403(b), IRA, or Roth IRA also need to be reviewed. If you plan on taking distributions from these accounts, there are tax implications and diversification changes that need to be considered. There is a big difference between being 52 and 60 when discussing these possibilities, so research, an accountant, and an advisor are definitely important.

Also, your current retirement account provider may try to "sweeten the deal" and have you make changes to your accounts that could have an impact later. Research any offers and really try to ask questions about surrender charges, fees, liquidation rules, withdrawal guidelines, etc. These companies have been pretty notorious about not disclosing the hidden fees and explaining the ultimate changes that are being made to your account.

If you need a job to allow your finances to work, then start making those contacts now. I know of several retirees that took part-time jobs to supplement their pension. They found something they enjoyed, and they started doing it.

Finally, make plans. Make plans to do some of the things you couldn't before and enjoy your life. My last bit of advice though is to try to make sure that you have thought things through. If your plans will require some extra funds, then plan how you will be able to make it work.

Congratulations! You worked hard to get to this point so enjoy it.

March 12, 2010

The Issues Facing Us - National Level

Being a student of history, this past year has been one fraught with huge national issues for President Obama and 111th Congress. From tackling a financial crisis (that President Bush and the 110th Congress started battling) to healthcare and global warming to unemployment, it has not been an easy term.

The "mood" of the nation has changed somewhat over the past year as well. The promise of change and excitement of the first minority President has given way to more partisan politics from both sides. The Republicans stand to gain numerous seats in the House and Senate based on the current polls, so there is a "push" to get various bills through Congress and on the President's desk. No matter which party you are for, the stalemate in Congress has both good and bad consequences.

Honestly, there does need to be a reform of the healthcare and financial systems. On healthcare, costs are spiraling out of control for numerous reasons, and the drug companies, insurance companies, legal system, and uninsured are all to blame in some part. Does a fix exist? I personally fail to see how a government run healthcare system can be any more efficient due to the layers of bureaucracy that are sure to follow, but I also understand the notion that insurance companies are out to make a profit. As with various industries though, who is to say what margin is out of line?

On the financial front, there is much needed reform. Previous administrations and Congresses urged home ownership for all, and with that, safeguards were lowered to allow those with riskier credit to own homes. Home ownership boomed and was lauded by politicians, but it was eating away at the credit worthiness of consumers and banks. When it crashed, it took numerous industries and jobs along with it. Over regulation will stifle growth, but deregulation will sometimes exaggerate it. There needs to be a good mix to allow risks to be taken, but risks that are minimal and do not threaten the system as a whole.

Unemployment stands at 9.7%, but there is no "quick fix." What most Americans do not realize is that it is the economic cycle that will drive unemployment. As the economy starts to grow, employers continue to be slow to hire new staff, but as the current staff gets overworked and starts to fall behind on productivity, employers will start hiring again. The same is true in downturns. Employers hold on to employees longer than they should thinking things will change until they finally have to lay people off. We are currently in the beginning of the growing economic cycle, but it could still be another six months before employers really start to rehire employees. Not great news, but it is better than still being in the downturn.

On the Social Security front, I continue to receive emails regarding WEP/GPO reform. Unfortunately, I can almost 100% guarantee that Congress will NOT tackle this issue prior to the elections in November which means it will be pushed on to the 112th Congress (starting next January). We all know that Social Security needs to be reformed, but with other pressing issues on President Obama's plate, I do not see a way that this issue moves to the forefront. Healthcare, financial reform, and the economy are too large to bring up another large issue - Social Security.

Finally, I had a good discussion with an old college professor a few weeks back. While I was in college and grad school, we would frequently discussed politics, so this was a trip down memory lane for me.

Anyway, one of the points that both of us came to was that when you have one party controlling both the Executive and Legislative branches, it is not always a good thing.

Numerous commentators have pointed to Obama as being very liberal, but if you will look at some of the things that he has said recently, you will notice he has started to try to move a bit more towards the middle. The current problem though is a super majority in the House headed by Speaker Nancy Pelosi, and a majority in Senate headed by Majority Leader Harry Reid. The House generally puts forward much more liberal bills that cannot pass through the Senate, so you run into a wall.

Our discussion focused more on former President Clinton and Newt Gingrich though. They were "adversaries," but they needed to come together to get items through Congress and to be signed by the President Clinton. Clinton and Gingrich could both stand their ground, but when push came to shove (like the budget) the two had to come together to make things work. I know it is a strange concept nowadays.

As we look at a potential change in the structure of Congress next term, will it actually be a positive? Would the need to make things more bipartisan help Obama and Congress? Time will tell, but history tells us it may be so.

Next up... State level issues...