ElderLaw News — The Estate Planning & Elder Law Firm, P.C. — MD, VA, DC
ElderLaw News

ElderLaw News is a weekly e-newsletter that brings you reports of legal developments and other trends of vital interest to seniors and their advocates. This newsletter is brought to you by The Estate Planning & Elder Law Firm, P.C., William S. Fralin, Esq., President.

Savings and Retirement

The prevailing wisdom today is that one should work as long as possible--for instance until ages 65-70.

In fact, "just 8% of workers expect to retire before age 60, down from 17% in 2007," according to Eleanor Laise of Kiplinger's magazine (September 2012, p. 57), citing a statistic from the Employee Benefit Research Institute (EBRI). The theory is that it is necessary, and in this way an individual will have plenty of time to accrue the necessary savings needed for retirement. While this is a laudable goal, it can lull someone into a false sense of security. It can also create the impression that there is an unlimited amount of time with which to save for retirement, so that the individual doesn't begin saving as soon as they should. Why not buy that bigger house or take that month-long vacation right now? I'll still have another 10 years to work.

Unfortunately, however, many workers don't have the option of working as long as they would like. If their company is downsized, the older worker with possibly outdated skills is one of the first to go. A health crisis, which no one can predict, may occur. People engaged in physical jobs like construction workers or people with jobs that require one to be on one's feet for 8 hours per day, may not be able to work as long as they had planned. "Fully half of the retirees surveyed by EBRI this year said they left the workforce earlier than planned. (Laise, see above) Recently, it has happened that people age 55 and older, who loose their job, experience unemployment for a much longer time frame than their younger colleagues. In addition, if they are re-hired, it is frequently at a much lower salary than their previous job.

So the best recommendation is to save early and consistently. Saving is one thing you can control. Working longer is not always within one's control. But if you haven't been as wise about saving as you should, don't give up. One can blunt the impact of previously not saving and partially making up for lost time by putting the maximum amount allowed per year into a 401 (k) plan. T. Rowe Price, in the Laise article cited above, gives the example of a person aged 55 who earns $80,000 per year. By putting $22, 500, the maximum allowable amount, into a 401 (k) plan each year, the individual could accrue at least $400,000 by age 65, given the ideal conditions of a 3% employer match benefit and a 3% annual raise during that period. While that is not a fortune, it would be a healthy cushion to supplement social security benefits.


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The Estate Planning & Elder Law Firm, P.C.

The Estate Planning & Elder Law Firm, P.C. is an elder law firm. We represent older persons, disabled persons, their families, and their advocates. The practice of elder law includes estate planning, estate and trust administration, powers of attorney, advance medical directives, titling of assets and designations of beneficiaries, guardianships, conservatorships, and public entitlements such as Medicaid, Medicare, Social Security, and SSI, disability planning, income tax planning and preparation, care management, and fiduciary services. For more information about The Estate Planning & Elder Law Firm, P.C., please visit our website at http://www.chroniccareadvocacy.com.

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