Rather than depending on pension or Social Security benefits, you should be responsible for your own retirement planning. Here are some measures that you can implement so that you can have more control over your retirement:

• If you are employed by a company that offers matching through a retirement savings plan, then it is to your advantage to participate in such a plan. Many employers currently offer retirement plans consisting of matching contributions in lieu of a pension.
• By starting to save early, you can realize the benefits of compound interest. However, even if you begin saving late in your career, you may still be able to retire comfortably. You may have to compensate for the late start by increasing the rate at which you save, reducing your expenses, or working a few more years than you had anticipated.
• In addition, you may need to change your lifestyle by living below your means, and establishing a budget that permits you to accumulate a savings that is intended for your investment in retirement. Every month, you will have to spend a lesser amount than that which you earn, and invest the difference.

By living below your means, you will realize your objective of applying more funds toward your retirement and choosing a lifestyle that encourages you to live on a reduced budget. This will allow you to realize your retirement goals more quickly.

• Furthermore, it would be advantageous for you to make full use of your tax deferral options for retirement, including IRAs and retirement plans through your employers, such as 401(k)s, 457s, 403(b)s or the Thrift Savings Plan. In some instances, you can use a health savings account to help fund your retirement.

Tax-deferred accounts help you increase your retirement income more rapidly because no taxes are owed on the funds or the growth until such time as when you make withdrawals during your retirement. Moreover, delaying payment of taxes on the dividends, interest and capital gains every year permits your retirement account to grow at a faster rate. While you will likely be able to benefit from Social Security or a public pension plan, it is recommended that you not rely on either choice, but rather, take control of your retirement planning.

It would be helpful for you to consult a financial advisor who can develop a plan that will enable you to meet your retirement objectives. Some fundamental questions that you should consider are:

• the age at which you would like to retire;
• the number of years you wish your retirement income to last;
• the amount of income you anticipate receiving from Social Security, pension, dividends, rental properties, and other sources.

One rule to keep in mind is that people require 70 percent to 100 percent of their income prior to retirement in order to keep the same lifestyle on a yearly basis. However, this is subject to change, depending on such factors as whether you wish to travel and whether your mortgage is paid off. You should also consider the cost of living and unforeseen expenses, such as health care. A financial advisor can assist you in confronting these issues, and establishing a workable retirement plan.

The elder law attorneys at Hook Law Center assist Virginia families with will preparation, trust & estate administration, guardianships and conservatorships, long-term care planning, special needs planning, veterans benefits, and more. To learn more, visit http://www.hooklawcenter.com/ or call 757-399-7506.

To some, it may be equally unfathomable why veteran benefits should be tinkered with at all. But the rif today over possible veterans benefits changes comes from the fed’s ongoing strategy to meet new military budgeting requirements.

Veterans Administration Pensions

For example, cuts to the traditional pension payouts is seen as a way to help fund a yet-to-be-approved 401(k) for those retirees leaving military service “without receiving any retirement pay.”

No surprise, but the ongoing proposals to make these changes to the existing military benefit’s system has brought together a swirl of concern from vet advocacy groups; the latter has their own take on how any proposed change will do harm, or actually help retired/retiring vets.

Unfortunately, there is no hope of returning to the traditional way vets have received their health and pension benefits. Indeed, the tsunami of modifications stem from the congressionally Military Compensation  and Retirement Modernization Commission.

Beefing up the Thrift Savings Plan

One proposal has to do with the military’s Thrift Savings Plan (TSP). Amendments would require automatic enrollment for military personnel, allowing full vesting after two years of service. The backbone TSP’s fund offerings would include default investments deemed “age-appropriate” by choosing among a number of target-date funds.

Underlying these broad range of proposals will be a renewed commitment to promote better “financial literacy,” not only when it comes to retirement options, such as lump-sum payments, but also in understanding the workings of their health plan.

Possible ‘age-appropriate’ target date funds.

Overall, the ‘winners’ in this new development could well be those vets who have put in their 20 years of service, thereby making them eligible for their military benefits, but who need to rely on a their defined-contribution plan instead of the traditional military pension.

Consequently, their retirement would consist of a 401(k), including a proposed 5% match, to help fund their retirement during civilian life; this, with a ‘rollover option’ into a sponsored plan within the private sector—a financial fiduciary akin to a Vanguard-or-Fidelity-type institution.

But the possible outcome from changing the existing defined-benefit pension plan could be numbing. Under current law, officers and the enlisted who exit the military after 20-years of service, are set to receive one-half of what’s considered their “final basic pay.” Furthermore, they can count on that payment for their lifetime.

Reducing the traditional pension by 10%

But the commission is drilling-down on ways to balance the proverbial ‘budget’ by proposing to reduce it from 50 to 40 percent; this, to help fund those “eight in 10 service men” who leave the military without any retirement benefits.

A major disincentive might well be fewer ‘re-ups,’ or extended military service beyond the current 20-year requirement to receive benefits

Veterans Benefits Health care

Why would anyone want to try to change the mother-of-all health care packages provided to military personnel: TRICARE benefits, given the wide range of family coverage; the medical outlets and medical services for the retiree and their survivors?

A move is under foot by the ‘reserve associations’ to actually deep-six Tricare. This may seem beyond extreme, but by offering a slew commercial insurance options, the association feels their members would be better served (One member on a blue-ribbon panel said a common phrase that characterizes Tricare is “try-to-find care.”)

But the commission will not let Tricare go silently into the night without a heap-more discussion on the impact of severing this plan. Ultimately, though the goal might be to mirror the present-day Federal Employee Health Benefits plan.

With veteran benefits facing a multitude of changes, it might well make a lot of sense to sit down with an experienced Elder counselor to help explain the changes as they happen. Contact us for more guidance in this area, and to start the discussion about your estate planning goals.