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Social Security's Retirement
Estimator has just been rated the best online service in government. You can
find it online at www.socialsecurity.gov/estimator.
The typical investor who has eight years until
retirement and plans to use his nest egg to supply 75% of his retirement income
will have to save 23% more per year or work two-and-a-half years longer to make
up for the market declines of the past year, according to Steven Sass, Associate
Director of Research at the Center for Retirement Research at Boston College.
His analysis
assumes a 5% annual return on investment above inflation, which is in line with
historic returns for a portfolio with two-thirds in stocks and the rest in
bonds. Any smaller return would mean working even longer, saving even more, or
making other big sacrifices, such as spending less money in retirement.
Relief for Retirement
Accounts
Sixty-one Members of Congress
have urged President Bush to help senior citizens whose retirement accounts have
been hit by market losses this year.
The President will reportedly
sign this pension bill suspending the minimum distribution requirement for
retirement accounts for 2009. Bachus and Frelinghuysen coordinated a bipartisan
letter asking the President to direct the Secretary of the Treasury to waive the
rule for retirement accounts for 2008 and allow those who have been forced to
remove funds to recontribute in order to give their savings time to recover from
the down market.
“While the
Internal Revenue Code requires retired individuals to begin taking withdrawals
the later of the year after they retire or the year after they turn 70 ½, it is
our understanding that Treasury regulations set the specific intervals and
penalties, and therefore the distribution requirements could be adjusted for
2008 without Congressional action,” the letter stated.
Paul Schott Stevens, president and chief executive of the Investment Company
Institute, a mutual fund trade group, is advising retirement investors to "Stick
with it. History tells us that markets will recover - and your accounts will
rebound along with them."
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Catholic parishes throughout
the United States conducted the 21st annual national appeal for the Retirement
Fund for Religious on December 14.
This appeal, which
is conducted by the National Religious Retirement Office (NRRO) of the U.S.
Conference of Catholic Bishops in Washington, benefits 482 of the nation's
Catholic religious institutes of women and men. Since the first national annual
appeal took place in Catholic parishes in 1988, the National Religious
Retirement Office has raised more than $550 million.
More than 37,000
Catholic religious are now past age seventy. More than 4,900 of them require
skilled nursing care.
Teresa Ghilarducci
of the New School for Social Research in New York City is advocating a plan that
would end tax breaks for 401(k)s. Her plan, in lieu of the 401(k) tax break,
would give all workers an annual $600 inflation-adjusted tax credit for
retirement and have them invest 5% of their pay into a government-run retirement
account managed by the Social Security Administration.
Dartmouth College
is facing its own financial crisis. To resolve its budget shortfall, it is
proposing a retirement incentive plan. Under the program employees age
fifty-five with ten years of continuous service may retire from the College with
an additional six months of pay. There are about six-hundred employees eligible
for the program. The plan does not apply to faculty members, who have an
existing retirement option connected with the tenure process.
Nevada's Public
Employees Retirement System has lost more than $4 billion on investments since
July. The value of the system's retirement fund has dropped 19% since July 1,
from $22.2 billion to $18 billion, because of the decline in the stock market.
FedEx Suspends
Matching Funds
FedEx Corporation
has slashed the pay of more than 35,000 employees, including a 20% base pay cut
for its chairman and chief executive, Frederick W. Smith. The delivery company
will also stop contributing to employee retirement plans for at least a year.
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