Retirement Related News for 12/31/2015

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From Treasurer Zweifel: Treasurer Zweifel’s End of Year Financial Tips for Missourians

Our day to day lives keep us very busy. And when we’re busy, we tend to focus on things which are immediately in front of us. It’s perfectly understandable, but it can be dangerous when we consider the planning and preparation it takes to make consistent, sound financial decisions. So as 2015 comes to an end, think about some of the simple yet meaningful things you can do to keep your fiscal house in order for the New Year and beyond.

From CNN Money: Don't Freak Out About Health Care Costs In Retirement

Planning for retirement is tough. Figuring out how much money you'll need for health care is even tougher.

More than half of people over 50 recently surveyed by Nationwide said they were "terrified" of the uncertainty.

Health care will likely be your biggest expense during the golden years. It's obviously a tough number to nail down and one that will vary by person, but there are estimates out there. A 65-year-old, healthy couple can expect to spend $266,600 over the course of their retirement on Medicare premiums alone, according to HealthView Services. An estimate from Fidelity is a little less: $245,000. Neither include out-of-pocket expenses or long-term care costs.

From PLANSPONSOR: As Investors, Women Have Unique Circumstances

Women in the workplace face special challenges. Over a lifetime’s career, they make less because of lower wages and sometimes stepping out of the workforce to care for children or parents. They lack confidence, but they are interested in saving and learning to invest for their futures.

Women could use a nudge to complete certain retirement planning activities, according to a report from the LIMRA Secure Retirement Institute. LIMRA research consistently shows that the top financial concern for both sexes is saving enough money for retirement (83% of women, compared with 77% of men). But women seem to have an especially difficult time getting ready for retirement, with just 20% of women surveyed saying they are comfortable with their level of financial knowledge.

From Forbes: 10 Resolutions for Your Retirement

If you’re planning to make New Year’s resolutions for 2016, there’s a good chance at least one of them will be related to your finances. Money management issues like big credit card bills or a small savings account balance may be more top of mind on a day-to-day basis, but the beginning of a new year is a great time to tackle more long-term goals like retirement. Here are some retirement-related action steps to consider resolving to do next year:

From Time: The Retirement Guide 2016

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State Employee Pay Raise?

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Hello - will Missouri state employees be receiving a raise in January 2016? Thank you.
MOSERS has no way of knowing if state employees will receive a pay increase, since our responsibilities only include retirement and other fringe benefits, not pay. Those decisions are made by the legislature and the Governor and will be considered during the appropriations process, which begins in January 2016 and ends in May 2016. Print Friendly and PDF

Public Pension Exemption

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My spouse is in LAGERS. He recently received information about something called Missouri Public Pension Exemption. Is MOSERS a part of this, too?
Yes, since MOSERS is a public pension plan, our retirees may qualify also.  We post information on our website as well as include an article each winter in RetireeNews about the Public Pension Exemption as many retirees start preparing their tax information.  MOSERS is required to mail 1099-R retiree tax forms by January 31st. To find out if you are eligible, you should speak to your tax professional or contact the Missouri Department of Revenue. They have a qualification chart on their website. Print Friendly and PDF

Military Service & BackDROP

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I have heard 5 different answers to the rumor that YOU CAN NOT USE MILITARY TIME BOUGHT TOWARDS BACKDROP. YOU CAN ONLY USE TWO OF FOUR YEARS MILITARY BOUGHT TIME TOWARDS BACKDROP.. So what is the true amount of purchased military retirement time that may be used towards backdrop?
Vested members of MSEP and MSEP 2000* are allowed to purchase prior active-duty military service at a subsidized rate.

Missouri law (Section 104.340.4 RSMo) specifies that after discharge under honorable conditions, but prior to retirement, a member may purchase all of their creditable prior military service, not to exceed four years. The more credited service you have, the higher your monthly benefit amount. Purchasing military or prior public service will increase your service with MOSERS, and in most cases, allow you to retire at an earlier date. See the Acquiring Service brochure online for more information. Purchased military service may be used to make you eligible for BackDROP.

We encourage anyone interested in purchasing prior active-duty military service to speak to a benefit counselor, who can provide cost estimates. The primary timing issue for you to consider when making a service purchase is that you need to know, the longer you wait the more it will cost. In other words, it is often to your advantage, in terms of cost, to purchase service sooner rather than later to avoid additional interest costs.

*Note: members of the MSEP 2011 may get automatic credit if they were employed by the state immediately prior to entering the armed forces and return to state employment within the timeframe specified by USERRA. However, purchase of prior active-duty military service credit is not available to members of MSEP 2011.

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Retirement Related News for 12/23/2015

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From The L.A. Times: Your Retirement Prospects Are Bleaker Than Ever

The vast majority of Americans who expect to retire in the next decade can count on little income other than their Social Security. This is true not only for low-income workers, who have struggled most of their lives, but also for millions of middle-income workers. Although Social Security is a tremendously important program, and provides a solid base that retirees can depend upon, its $16,000 average annual benefit doesn't go very far. Many if not most can expect to see sharp reductions in living standards.

Illinois is developing a state-run retirement program that will make it easier and cheaper for workers to save. Many other states, including California, are studying this option.

The reason for such bleak retirement prospects is the disappearance of traditional defined benefit pensions and the failure of 401(k)-type plans to fill the gap. A recent analysis by the Employee Benefit Research Institute found that, in 2011, only 14% of private-sector employees participated in a defined benefit pension plan. The participation rate has been falling quite rapidly, so it was almost certainly lower in 2015.

From Financial Finesse: Top 10 Financial Articles of 2015

I’m a huge fan of lists: to-do lists (yes, I sometimes add things just so I can check them off), best-of lists, pros and cons lists and yes, top 10 lists. Want a reading list to take you through the end of the year? Without further ado, here are my top 10 favorite money-related articles of 2015:

10. How Many Times Has Your Personal Information Been Exposed to Hackers? (New York Times) This article gets the 10 spot not because I dislike it. I find it incredibly useful and I think everyone should click over and take the quiz. It’s just my least favorite topic.

From BenefitsPRO: Parents Spending Retirement Savings on Kids’ Holiday Gifts

The picture of the doting parent, sacrificing to give the kids everything, has just gotten a little crazier.

Not only do parents admit to overspending on their kids’ holiday gifts, they’re tapping their retirement funds to do so.

That’s according to T. Rowe Price’s 2015 Parents, Kids & Money survey, which not only found that 62 percent of parents agreed with the statement, “I spent more for my kids over the holidays than I should have,” but that 7 percent of respondents actually admitted to using their retirement accounts as holiday spending cash.

From Forbes: Millennials: Your Strategic Plan For Life

Life seems to just happen, doesn’t it? Days turn into weeks, weeks into months, and months into years. Ask any Baby Boomer about where the time went. They’ll tell you about their plans to save money, which were pushed off for more immediate concerns. The kids wanted summer camp, the car broke down, the boiler blew up, or they lost their job. There is always another pull for immediate cash; real pulls, not frivolous ones.

When it comes to retirement, a 2015 study from the Insured Retirement Institute says it all; “… half of all retired boomers are living off Social Security income, pensions, and other forms of recurring income, rather than retirement savings…” And, according to Employee Benefits Research Institute, Baby Boomers have only saved about $150,000 for their retirement. These are the more wealthy Baby Boomers, by the way. Now, they have to keep working to be able to live

From PLANSPONSOR: Illinois Idea to Tax Retirement Income Gets Pushback

With the state’s deficit growing, Illinois lawmakers trying to establish a budget are batting around the idea of taxing retirement income.

According to news reports, no formal legislation has been put in writing. And, some state legislators and lobbying groups are trying to preempt any such legislation.

A resolution was recently introduced in the Illinois House urging the legislature not to consider taxing retirement income. “With many retirees on a fixed income and worried about how they are going to pay for healthcare, the last thing we need to do is suddenly tax their income,” says State Representative Dwight Kay, a co-sponsor of the bill.
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Marriage After Retirement

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What happens if you are single but marry after you retire. Is there a way to change your election so that your spouse receives your benefits after you die?
Yes, but only under specific circumstances. If you were single at retirement, and you elected the Life Income Annuity option, then you married after retirement, you have one year from the date of your marriage to change your election to either of the joint & survivor options (within the plan you elected at retirement). Please contact MOSERS for a Designation of New Spouse as Beneficiary for Retirement Benefits form. You must submit a copy of your spouse’s proof-of-age document and marriage certificate with this form.

There is one other situation in which you may change your benefit payment option after retirement:  If you were married at retirement and elected a joint and survivor payment option and your spouse died, resulting in your benefit reverting to the Life Income Annuity, and you remarry, you have one year from the date of remarriage to elect a joint and survivor option and name your new spouse as beneficiary. If your spouse dies, please notify MOSERS as soon as possible. You may be eligible for the “pop-up” provision, which would increase your monthly retirement benefit. Please contact a benefit counselor regarding your specific situation.

This information is included in the winter issue of RetireeNews.

Please note: This information primarily applies to general state employees. If you are a judge, administrative law judge, statewide elected official or a legislator, please refer to your MOSERS handbook or contact a MOSERS benefit counselor for specific guidelines.

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BackDROP Period

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Please explain backdrop. When looking a retirement date it may state 2 yrs and 2 months then another category will state 2 yrs, another 1 year.
The BackDROP is an option available to eligible members of MSEP or MSEP 2000 which provides a way for you to receive a lump-sum payment at retirement in addition to your ongoing monthly benefit. To be eligible for the BackDROP, you must work at least 2 years beyond your first normal retirement date but you may work longer.  Once you have worked at least 2 years or longer past your first normal retirement date you will have options for the BackDROP period including 1 year, 2 years, or more, depending on how long past your first normal retirement date you worked and the plan you elect (if applicable). The maximum BackDROP period is 5 years.  Generally speaking, if you elect a longer BackDROP period, your lump sum will be more, but your monthly payment will be less. You are not required to take BackDROP, and you don’t have to notify MOSERS of any decisions about BackDROP until you retire.
This graphic may help explain the big picture, or you can read the BackDROP brochure on our website for more information. We have also answered a variety of Rumor Central questions on the topic.
BackDROP is one of the benefits addressed in our PreRetirement Planning seminars, which are conducted around the state for members of the MSEP and MSEP 2000. Most members find that an in-person presentation and discussion of this topic is very helpful! View the 2016 schedule, and log in to register for a location in your area. You will also receive a benefit estimate by attending a PreRetirement seminar, and you can specify when you register that you would like the estimates to include BackDROP.
Remember, MOSERS benefit counselors are available by phone at (800) 827-1063 or in person M-F, 7:30 a.m. - 4:30 p.m., if you would like to discuss your options.  We understand that retirement is a big decision.

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Retirement Related News for 12/18/2015

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From Pensions & Investments: DB plans consistently outperform DC — Center for Retirement Research

Defined contribution plans consistently underperform defined benefit plans, most likely due to higher investment fees, said a new research brief issued Tuesday by the Center for Retirement Research at Boston College.

Even after factoring in plan size and asset allocation, defined benefit plans outperformed defined contribution plans by an average of 70 basis points per year between 1990 and 2012, the report found.

The full report is available on the center's website.

From CNN Money: How to Tell Whether You Can Afford to Retire Early

I'm 62 years old and concerned that I might lose my job. If that happens, would I be able to retire early on the $500,000 I have in my retirement accounts? --Michael M.

The answer comes down to how much annual income you can realistically expect to count on the rest of your life if you stop working now and whether that income would be sufficient to fund a retirement lifestyle you consider acceptable.

It's impossible, of course, for me to give you a definitive answer without having a lot more specifics about your finances as well as what sort of post-career life you envision. But I can suggest a process that should at least enable you to come away with a decent idea of how you might fare.

From The Huffington Post: The Year in Retirement Security: A Look Back at 2015

For years firefighters, nurses, teachers, social workers, roads crews and others across the country have paid a percentage of their salary toward their retirement security. Notably, in Illinois and New Jersey irresponsible politicians did not do the same. Instead, they skipped or reduced annually required contributions to their pension systems. Between 2001 and 2013, Illinois paid less than 80 percent of what it should have to its pension systems. New Jersey paid less than 40 percent of its obligation over that same time period.

In 2015, workers across the country learned if they work in a state that is naughty or nice. Responsible states that make their yearly required pension contributions, not surprisingly, have pensions that are fully funded and in some cases have surpluses. That protects both taxpayers and workers.

From Forbes: As Trillions Move Into IRAs And 401ks, High Fees Bite Retirement Security

A new study covering investment returns from 1990 to 2012 finds that 401(k)s and other defined contribution plans underperformed traditional defined benefit pension plans by an average of 0.70% a year, even after differences in asset allocation were taken into account. The likely explanation? The high mutual fund fees workers pay when they invest their 401(k) stash—fees that far exceed the investment costs of traditional company run defined benefit plans, conclude authors Alicia H. Munnell, Jean-Pierre Aubry and Caroline V. Crawford of the Center for Retirement Research at Boston College.

While a 0.70% difference might not sound like a big deal, it means a worker who contributes to a 401(k) over his whole 40 year career will have about 15% less in assets at retirement, the CRR calculates.

From BenefitsPRO: Women’s Pension Protection Act introduced in House

The House version of the Women’s Pension Protection Act (H.R. 4235) was introduced by Representative Jan Schakowsky, D-Illinois, and Senator Patty Murray, D-Washington.

Earlier in the year, Murray introduced the Senate version of the legislation.

Among the provisions of the proposed legislation is an increase in spousal protection that requires spousal consent before a married worker can take money out of a retirement account; currently, only defined benefit plans offer such protection, but the WPPA would extend spousal protections to defined contribution plans, including 401(k)s.
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Retirement Related News for 12/11/2015

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From MOSERS: Rick Dahl Receives Lifetime Achievement Award

MOSERS' CIO, Rick Dahl, was presented his Lifetime Achievement award from CIO Magazine at the Industry Innovation Awards on December 3rd.”

From the CIO award honoree information:

Rick Dahl's "investment acumen is light years ahead of many of his peers," according to Chris Ailman, CIO of California State Teachers' Retirement System. "His willingness and ability to develop synthetic portfolios and exposure is unique."

From the Jefferson City News Tribune: Our Opinion: State Workers Extend Spirit of Generosity

We commend Missouri’s state employees for extending their tradition of personal generosity.

The results of this year’s Missouri State Employee Charitable Campaign (MSECC) continue to be impressive. Consider these numbers reported Tuesday by the Missouri Office of Administration, which coordinates the campaign.

• State employees this donated more than $1,089,249 to 885 Missouri charities.

• This marks the 12th consecutive year contributions have exceeded $1 million.

• In its 31-year history, the state campaign has raised more than $28 million.

From CNN Money: Retired? How Much Money Should You Keep In Stocks?

Considering how many retirees must grapple with this issue and the fact that allocating one's assets between stocks and bonds is a key element of any retirement income plan, you might think that there would be a stocks-bonds mix that most retirement experts would generally agree is correct.

But there's not, so I can't give you a specific percentage to shoot for.

I can, however, point you to three ways that investors typically deal with this issue, and then tell you what I think you should do to arrive at a reasonable blend of stocks and bonds for your own nest egg.

From Forbes: Three Warning Signs Your Aging Parent Needs Help Handling Finances

Family get togethers can be eye openers. If you haven’t seen aging loved ones in awhile, the visible evidence that they are getting older can be a wake-up call. It can be hard for all of us to accept the effects of passing years on our minds and bodies. We want our aging parents to stay how they used to be. For adult children, and I’m one of them, we understand that our aging loved one just needs more help as time goes by. In our family, it’s about mobility. In other families with cognitive decline as an issue, it can be about taking charge of things you’ve never dealt with before. Finances are one of those things, always a touchy subject. But that’s an area where we need to be ever vigilant.

Holidays near year-end are a time when a lot of people feel generous and do their charitable giving. A lot of scammers know this and seek out the elderly, targeting them for special attention and attempts to get their money. The Federal government’s Office for Older Americans publishes warnings about this regularly. Somehow, these warnings do not necessarily reach the very ones they are intended to protect. So, it’s up to us, the family to be on the lookout.

From PLANSPONSOR: New Model of Retiree Spending Highlights Role of Marriage

New research from the Michigan Retirement Research Center shows important differences in the retirement outlooks of singles and couples.

Findings from a new research paper, “Couples’ and Singles’ Savings After Retirement,” by Mariacristina De Nardi, Eric French and John Bailey Jones, suggest singles “live less long than people who are part of a couple, but are more likely to end up in a nursing home in any given year.”

For that reason, the researchers suggest, a single should expect to have higher medical spending than a member of a couple.
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Deferred Compensation Match?

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What ever happened to the proposed $75.00 per month that was to be a benefit to state employees that are in the deferred compensation plan?
State statute (Section 105.927) provides for an employer match of up to $75 dollar per month, however this match is subject to annual appropriation approval by the General Assembly.  The maximum match that has ever been appropriated was $35.00 per month.  The state has not provided any match since 2010.

The General Assembly did appropriate a $25 monthly match in the FY15 budget, but that money was withheld and therefore the match was not provided.  Each year, there is a possibility of a match being appropriated, but until the state budget is passed in late April/early May, we do not know what is included in the final state budget and even then, that approved budget is subject to withholdings by the Governor’s office.  In the 2016 legislative session, the General Assembly will provide appropriation approval for the state’s FY 17 budget.

As always, we will keep our members updated on pension-related information on our website, Rumor Central, and social media. 
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Retirement Related News for 12/04/2015

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From The Transamerica Center: The Current State of Retirement: Pre-Retiree Expectations and Retiree Realities

This new study compares and contrasts the retirement outlook of age 50+ workers with the actual experiences of retirees. In TCRS' first-ever retiree survey, it finds that pre-retirees' ideas of retirement are different than the actual experiences of retirees. While many age 50+ workers expect to work beyond age 65 and/or work in retirement, those who are currently retired entered retirement at a median age of 62. Many retirees retired before they had planned to, often due to circumstances beyond their control.

View the study.

From CNN:: How much income will I need in retirement?

A widely accepted tenet of retirement planning is that you need to replace just 70% to 80% of your pre-retirement income to maintain your standard of living after you call it a career. And on the face of it, this rule of thumb seems to make sense. After all, since you'll no longer have to funnel money into 401(k)s and other retirement savings accounts and many of your expenses are likely to drop after you retire, you should be able to live as well, if not better, on considerably less income than you earned during your career.

But while "replacement ratios" may be useful for gauging how much you need to save each year to build an adequate nest egg when retirement is decades away, they're less helpful once you're within 10 or so years of retiring. At that point, you really want to base your planning on something more concrete -- namely, how much dough you'll actually have to come up with to cover your expenses and maintain an acceptable post-career lifestyle.

From The Wallstreet Journal: Why Recent Social Security Changes Make Sense

It took a few years, but Congress has eliminated the remaining loopholes that allowed people to game the Social Security system.

In 2009, we published three briefs under the title “Strange But True,” that described Social Security claiming strategies that allowed individuals to get more benefits. The idea was to show how they worked, who was most likely to benefit, and how much they could cost. Our hope was that publicity would compel Congress to close down these options.

The most egregious claiming strategy was what we called “Free Loan from Social Security.” The strategy allowed individuals to claim Social Security at age 62, invest those funds, and then reclaim higher benefits at age 70 simply by paying back what they had received to date interest free. In essence, the claimant received an interest-free loan from Social Security. The $6-$11 billion potential annual gain, concentrated among higher-income households, equaled a comparable cost to Social Security. In late 2010, the Social Security Administration (SSA) changed its regulations so that individuals had only one year to change their mind. In other words, score one for the good guys.

From Forbes: 7 Tips To Think Differently About Your Money And Become An Everyday Financial Superstar

One of my favorite types of articles to write is what I call “the financial feat story.”

As collected in the new Forbes e-book, “Money Hacks: Forbes Stories Of Superstar Savers,” which I cowrote with reporter Lauren Gensler, these are tales of people who took on and accomplished impressive, if not seemingly impossible, financial challenges.

From PLANSPONSOR: Retirees Share Realities with Younger Generations

In research from the Transamerica Center for Retirement Studies, retirees shared actionable insights about what they would have done differently in preparing themselves for retirement.
Reflecting on their working years, many retirees say they:
  • Wish that they would have saved more on a consistent basis (76%);
  • Wish they had been more knowledgeable about retirement saving and investing (68%);
  • Would have liked to have received more information and advice from their employers about how to achieve their retirement goals (53%);
  • Waited too long to concern themselves with saving and investing for retirement (48%); and
  • Should have relied more on outside experts to monitor and manage their retirement savings (41%).
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Retirement Related News for 11/20/2015

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From KOMU: Missouri insulated from nationwide teacher shortage by pension program

In an age where a nationwide teacher shortage is well-documented, many believe Missouri’s public school teacher retirement benefits have become quite the draw.

But, others are drawing a target on the system.

Kathy Steinhoff, a Hickman High School math teacher, who has been in the district for 28 years said, “It is the best kept secret even within the profession because, for most teachers, it doesn’t come on their radar until they’re teaching for about 25 years.”

Steve Yoakum, Executive Director for The Public School Retirement System of Missouri or PSRS, said other states are certainly paying attention.

From The Missouri Times: Pension Committee Proceeds Despite Lack of Quorum, Increased Security

The Joint Committee on Public Employment Retirement met Wednesday under two unusual circumstances. The committee did not reach a quorum, and an extra officer patrolled outside House Hearing Room 4, representing heightened security from Capitol Police.

Yesterday, Rep. Mike Leara, the committee chair, asked for increased security after Sen. Kurt Schaefer, R-Columbia, received a death threat on his office voicemail.

Leara said the move was more about making sure the enhanced media presence at a usually quiet committee did not bring out anyone seeking… well, enhanced media presence.

From Forbes: Three Secure Holiday Shopping Moves

You’re going to get annoyed this holiday season dealing with new chip-card readers, now making their way into stores. I know I have. It will take time before they perfect this technology.

In the meantime, there are some solid ways to avoid going into debt or being defrauded this time of year. You have to focus on savings instead of spending. You may not get the best deals on Black Friday or even Cyber Monday.

While the new chip readers are designed to reduce or eliminate point-of-purchase fraud — paying inside a store — there will still be ways thieves can get at your credit card information. You can protect yourself by using online encrypted sites that are certified by third parties for their security.

From PLANSPONSOR: Millennials Face Obstacles to Retirement Saving

An unwillingness to sacrifice things they believe add to their present quality of life is one of them.

Millennials face a unique set of obstacles when saving for retirement, says a new study by Schwab Retirement Plan Services.

Every generation has its reasons not to save for retirement. For Millennials, more than any other, an unwillingness to sacrifice things they believe add to their present quality of life—and crushing student debt—top the list. Schwab’s research echoes other studies of Millennial savings behavior, which find that they’re confused about the process, or squeezed by student loans, and generally need more financial education and support.

Millennials face several obstacles to meeting their retirement savings goals, which disproportionately affect this group more than any other. Moreover, although this younger generation believes they would benefit from help, they are using professional investment advice far less than their older counterparts. Forty-four percent are not saving more because they want to treat themselves to things like occasional dinners out and vacations, more than Gen Xers (34%) and Boomers (29%).

From BenefitsPRO: Spending Patterns Change in Retirement--But Not Always How You'd Think

While on average households spend less money in retirement, not all households do so—and they don’t all change their spending in the same ways.

That’s according to new research from the Employee Benefit Research Institute, which found that while households’ average spending in retirement falls during the first two years, almost half (45.9 percent) of retired households actually spent more than they did just before retirement.

Making retirement savings last may be easier in these 10 most tax-friendly states for retirees.

That spending does decline over time, the research found, and by the sixth year of retirement, only a third (33.4 percent) spend more than they did preretirement.
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Retirement Related News for 11/13/2015

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From LifeHealthPRO: Aging In America

One day, while flitting about on earth, the Greek goddess, Eos, met and fell in love with a mortal. Eos went to her father, Zeus, and said, “please, Father, give Tithonus immortality.”

“Are you sure that’s what you want?” Zeus responded.

“Yes, Father, more than anything.”

Like any father with a beloved daughter (goddess or not), Zeus bowed to her beauty and did as he was told, granting Tithonus immortality. Only there was one snag in the arrangement — Eos never asked for eternal youth along with immortality. Over the centuries, Tithonus, unable to die, but with a withered and crumbling body, lived on. Eos, blessed with eternal youth, watched her beloved age and wither, his bones reduced to dust, yet he lived on — he lived on and on and on, well beyond what anyone would consider an enviable quality of life.

Gerontologist and aging expert Ken Dychtwald loves to tell that mythical tale, the story a perfect metaphor to describe our aging population and the modern world’s God-like ability to keep people alive.

“On the first day of the 20th century,” says Dychtwald. “the average life expectancy was 47. As the century closed, it was 78. Today, it’s approaching 80 and continuing to rise.”

From The Kansas City Star: Former Missouri Lawmaker Ray Salva Says Federal Conviction Shouldn’t Affect His State Pension

Former Missouri lawmaker Ray Salva, a convicted felon, is locked in a legal dispute with the state of Missouri over whether he qualifies for a state pension.

Salva, 68, pleaded guilty in 2013 to a federal charge of illegally receiving Social Security payments while working as a state legislator. Missouri says the state’s constitution bars pension payments to public officials convicted of felonies, so it cut off his pension and has now asked a judge to order Salva to repay nearly $30,000 he has already received.

But Salva says he is entitled to the pension because his guilty plea came more than two years after he left the legislature. The constitutional prohibition on pension payments to felons only applies to convictions that take place while a public official is actually in office, he argues.

From Time: How To Solve America’s Retirement Crisis

Economist Teresa Ghilarducci knows firsthand how passionate Americans can be about their retirement dreams. In 2008, after she suggested Congress let workers trade in their 401(k) retirement accounts for annuities, talk-radio hosts accused her of trying to kill the 401(k). She got death threats.

She wasn’t deterred, though, from her decades-long crusade, via research and advocacy, to improve retirement security. Now teaching at the New School in New York City, she has, among other duties, served on the advisory board of the Pension Benefit Guaranty Corp. and been a trustee of the Indiana state employees’ retirement fund. Ghilarducci calls retirement the most important financial issue facing both families and governments. “Everybody knows that they will get old,” she says, “and everybody fears not having enough.” She offers solutions in her latest book, How to Retire With Enough Money, and How to Know What Enough Is. Read on for her proposals and practical advice.

From The St. Joe Channel: SJSD Receives New Federal Subpoena

The St. Joseph School District has received a new federal subpoena as the FBI continues its investigation into the district.

The district announced Tuesday that it received a subpoena Monday night to produce records from the St. Joseph School District to the United States District Court for the Western District of Missouri.

"This was really out of the blue and unbeknownst to us," said Superintendent Robert Newhart, during a news conference at district headquarters Tuesday afternoon.

Newhart said they received the subpoena during their Board of Education meeting Monday evening.

Many were hoping that the FBI was nearing the end of what has become a 19 month investigation. It began in April 2014 after an audit by the Missouri State Auditor's Office revealed a stipend system that paid out anywhere from $25-40 million dating back to 2000.

From Forbes: Social Security Q&A: How Can I Maximize Benefits Under the New Rules?

Social Security may be one of your largest assets. What and when you collect will make a huge difference to your lifetime benefits.

Today’s Social Security column explores twelve secrets to get the highest benefits now that Social Security’s rules have changed and answers other questions.

The 2015 Budget dramatically changed Social Security claiming options. ​Every day I get a host of emails from the victims of these changes. Most are like my 64-year-old secretary, who I wrote about last week, who, thanks to Congress and the President, lost her ability at age 66 to do three things: a) get a child benefit for her severely disabled child, b) a get spousal benefit for her non-working husband who has had to stay home and care for their child for years, and c) file for her retirement benefit, immediately suspend it and wait until 70 to collect her highest possible retirement benefit.

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Federal Taxes & Temporary Benefit

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Do you pay Federal and State taxes on both the retirement and temporary benefit? Is there a calculator that would help to give an approximation on what the taxes could amount to?
Yes, retirement benefits, which may include the temporary benefit, are considered taxable income for individual tax purposes. Missouri income tax and federal income tax can be withheld from your monthly retirement payments.

MOSERS will withhold state taxes only for Missouri residents. If you aren’t a Missouri resident in retirement, we recommend you contact the appropriate state and local tax authorities to determine the taxability of your MOSERS benefit.

At retirement, you may specify your federal and state tax withholding preferences by completing a Substitute W4-P form, which you can do by logging into your secure Member Homepage on MOSERS’ website. MOSERS has a federal tax calculator on our website to help estimate your withholdings:

In a recent RetireeNews article we described the public pension exemption. Depending on a variety of factors (including, but not limited to, income, filing status, and age) you may be able to deduct some or all of your public retirement benefit on your Missouri tax return, to the extent the amounts are included in your federal adjusted gross income. MOSERS recommends you contact the Department of Revenue or a qualified tax advisor for additional information or answers to your specific questions about the public pension exemption. Print Friendly and PDF

Cafeteria Plan & Final Average Pay

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I will be retiring in 3 years (1-1-19). I usually participate in the Cafeteria Plan at $2400/yr. By doing this does it decrease my monthly retirement and if so by about how much? I'm trying to figure out if the Cafeteria savings is worth the change in benefits.
No. Participation in the cafeteria plan does not decrease your MOSERS benefit. Your MOSERS benefit is calculated using the following formula:

Final Average Pay x Credited Service x Multiplier = Monthly Benefit Payment

Your question pertains to final average pay (FAP). FAP is arrived at by finding the average of your highest 36 full consecutive months of pay. We use your GROSS pay, that is, before taxes, health insurance, cafeteria plan, etc., so contributions to the cafeteria plan do not reduce your MOSERS benefit. You may wish to contact the Social Security Administration and find out from them if cafeteria plan contributions may impact your future Social Security benefit.  Print Friendly and PDF

Sick Leave & Retirement

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Is it true that I can retire sooner if I have sick time and vacation time that I don't want to cash in. I am retiring on April 1, 2016. But if I could retire sooner by using the time I have on the books I would. 
No. While your unused sick leave can* increase the amount of your monthly benefit, it cannot be used to determine eligibility for retirement or BackDROP (if eligible). You will receive one month of credited service for every 168 hours of unused sick leave reported to MOSERS by your employer once you have terminated your employment with the state. Since credited service is one part of the formula used to calculate your benefit, the more service you have; the higher your monthly payment will be.
Your unused vacation/annual leave has no impact on your MOSERS benefits. You should discuss your employer’s policy regarding payment to you for any unused annual leave with a knowledgeable person in your HR office.
We receive many questions about sick leave on Rumor Central, so you may want to read our previous answers for more information:

*For sick leave to count as credited service:

–– You must be eligible to retire on date of termination.
MSEP 2000
–– You do not have to be eligible to retire on date of termination.

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2016 Legislation

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Will the HB 1134 be resubmitted for a vote during year 2016?
During the January – May 2015 legislative session, HB 1134 was proposed to subsidize retiree health care premiums for certain state employees.
The next legislative session begins January 6, 2016 with pre-filing of bills beginning December 1.  At this time, we do not know what legislation may be proposed.
 To track pension related proposals, you may be interested in accessing the Legislative Status Report maintained by the Joint Committee on Public Employee Retirement (JCPER) at  which is updated daily once bills are pre-filed.

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Designating Retirement Beneficiaries

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Since I have no spouse and my children are over 21 can I withdrawal all the money I contributed over the years, without a fee or penalty, and invest somewhere else where I can be sure my children will receive the money when I die and it will not go to the state? 
MOSERS administers both defined benefit (DB) and defined contribution (DC) retirement plans. It is unclear which you are asking about, so we will respond about both.

The Defined Benefit (DB) Plan
The DB plan is non-contributory for members hired before January 1, 2011. As such a member, you do not pay money toward your DB plan. Your employer pays the necessary contributions to MOSERS while you are actively employed so that you may receive a future monthly retirement benefit and potential survivor benefits. Since you do not pay contributions, you are not eligible to withdraw funds from the retirement system. You do not have a separate account, rather the state’s annual contribution toward your benefit is pooled with investment returns and employee contributions (from members first employed on or after 1/1/2011) to fund the retirement system.

At retirement, you will elect a benefit payment option that determines whether or not a benefit will be paid to anyone after your death. Since you are single, one of the options you may wish to consider is life income with a set number of guaranteed payments. This allows you to name a beneficiary or beneficiaries to receive any remaining payments if you do not live long enough to collect the minimum guaranteed amount. Your monthly payment will be reduced in order to provide this potential survivor benefit. However, you will receive a payment each month for YOUR life, even if you live beyond the guarantee period. No survivor payments will be paid if you have received ALL payments in the guaranteed period (other than the final payment due at the end of the month in which you die).

For example, if you elect Life Income with 120 Guaranteed Payments (10 years), but die after collecting only 60 monthly payments (5 years after you retire), MOSERS will pay the remaining 60 monthly payments to the beneficiary(ies) you named.

It is true that as a member of MSEP or MSEP 2000, if you die PRIOR to retirement, with no eligible spouse or minor children, no DB retirement benefits are payable on your behalf. (Survivors of members first hired on or after 1/1/2011 will either receive monthly survivor benefits or a refund of contributions plus any interest, depending upon various factors.)

Please see our website to determine which plan you are in, find more information in your retirement handbook, or contact a benefit counselor to discuss all your options.

On a related issue, we encourage you to make sure your life insurance beneficiaries are current (if you have life insurance with MOSERS) so proceeds will be paid according to your wishes.

The Defined Contribution (DC) Plan
As for any money you’ve contributed to the State of Missouri Deferred Compensation Plan (the DC plan), you can keep those dollars invested in the Plan after you leave state employment. In order for your savings to be transferred to your children after you die, you must designate beneficiaries for your account. You can do this by logging on to your account at, clicking on My Profile in the left menu, then Beneficiaries. You can also call the Plan at 800-392-0925 to make your designations over the phone. The dollars you contribute to the deferred compensation plan are yours and will remain invested until you withdraw them. As a general plan guideline, you cannot access your savings in the deferred compensation plan until after separation from state employment. Those distribution guidelines differ when your beneficiaries assume control of your savings after your death. We encourage you to carefully read the Distribution Options Guide for more information.

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Retirement Cash-Out

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Because I am a vested employee, can I cash out a portion of my retirement now?
(Note: This member is in the MSEP 2000):

No. MOSERS is a non-contributory defined benefit (DB) plan for members hired before January 1, 2011. As such a member, your employer pays the necessary contributions to MOSERS while you are actively employed so that you may receive a future monthly retirement benefit and potential survivor benefits. Since you do not pay contributions, you are not eligible to withdraw funds from the retirement system.

Members hired in a MOSERS-covered position for the first time on or after January 1, 2011 are required to contribute 4% of their gross salary to help fund the retirement system. Those members, if they leave state employment, have the option of requesting a refund of the contributions they have made to the retirement system plus any applicable interest. Any member who receives a refund will forfeit service credit and the right to receive any future retirement benefits from MOSERS.

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Retirement Crash Insurance

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Forbes and other major financial magazines have declared "We are on the precipice of an unstoppable financial crisis," and RETIREMENT CRASH INSURANCE is being advocated. Does MOSERS have any such insurance? Is this a fraud? 
MOSERS does not have “retirement crash insurance” and prior to your question, we had not previously heard of such a concept or product.

We researched this topic and found a quote similar to the one you referenced in a 2013 Forbes article. However, nowhere in that article was “retirement crash insurance” mentioned. But we did find a blog post that quotes the Forbes piece and promotes a Retirement Survival Kit and Wealth Building Guide which includes so-called retirement crash insurance and other questionable investment products.

We reached out to the Missouri Attorney General’s office and the Secretary of State’s Investor Protection & Securities Division to find out if they have any information on “retirement crash insurance”. If we receive any information from them about this being an issue in Missouri, we will share on the MOSERS website.

While many people would agree that, as a whole, American workers are ill-prepared for a financially secure retirement, as a member who meets eligibility and retires under a MOSERS defined benefit (DB) pension plan, you will get a monthly benefit payment for as long as you live. It is calculated according to law and based upon a formula which is:

 Final Average Pay x Credited Service x a Multiplier = Monthly Benefit

While many state retirees receive modest benefits, they are assured of some level of financial security. Furthermore, the overall plan design is sustainable. MOSERS receives revenue from employer contributions, employee contributions (from members of MSEP 2011 & the Judicial Plan 2011), and investment income. The state of Missouri has consistently done the right thing by fully funding the contribution rate certified by the MOSERS board of trustees.

Because 1) MOSERS’ investments are professionally managed, 2) we have a long-term investment horizon, and, 3) our risks are pooled over a large population, we are better situated to withstand the ups and downs in the financial markets than a person who has less control over the timing of their individual retirement relative to the markets and economy. For more information, see our Key Facts regarding funding of MOSERS.

Social Security can also provide an additional level of guaranteed retirement income that, when coupled with a pension benefit, will form a solid financial foundation for state retirees. Simplistically speaking, both your MOSERS pension and Social Security benefits can be viewed as a steady, guaranteed stream of income in retirement.

To add some flexibility to that equation, more than 70% of state employees also save money in the State of Missouri Deferred Compensation Plan, which MOSERS administers. The deferred compensation plan provides a convenient way to save extra money for retirement through payroll deduction. Unlike pension and Social Security benefits, YOU have control over how much you save in this plan throughout your career, how your dollars are invested, and how you will withdraw those savings in retirement. While voluntary, many employees find this plan crucial for accumulating additional savings that can add another layer of financial security in retirement. We encourage all state employees to enroll or resume their participation in this plan as a smart, simple way to save for retirement.

Thank you for your question and for bringing this to our attention. Print Friendly and PDF

Retirement Related News for 11/06/2015

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From PLANSPONSOR: Fidelity Research Busts Five Common Retirement Myths

Retirement is a matter of when, not how much, for most people.

Conventional wisdom has it that workers plan their retirement around the amount of money they have saved. But nearly half of American workers plan to stop working on a specific date, regardless of how much they have for retirement. This is one of several myths debunked in new research from Fidelity Investments, which surveyed retirement savers and recent retirees on the nonfinancial factors that influence retirement decisions.

“It’s critical that employers understand these factors and design benefits to either retain or help transition pre-retirees based on their workforce strategy,” cautions Jim MacDonald, president of Workplace Investing at Fidelity Investments.

From The Gadsden Times: 72-year Employee of Goodyear Retires

Sid Richardson, a 72-year employee of the Goodyear-Gadsden plant and the longest-serving hourly associate in Goodyear Global history, officially retired Thursday at the USW Local 12 headquarters.

He was joined by friends, Goodyear-Gadsden leadership, USWA Local 12 members, former co-workers and family at a small celebration.

“I want to thank everyone for everything you have done for me. I’ll miss coming to work every day and seeing my family, because I spent a lot of time with my work family over the years,” Richardson said. “It’s really all I’ve ever known, so I will miss it. But the time is right.”

From Forbes: Men's Retirement Savings More Than 50% Bigger Than Women's, New Study Shows

Add this to the ongoing debate over pay inequality between the sexes: according to new research, men’s retirement accounts are more than 50% higher than women’s on average in the U.S. – despite women being far, far better savers than their male counterparts.

The results of a review of Vanguard’s retirement plan investors, released today, show men’s accounts averaged $123,262 while women’s accounts were $79,572; the median account balance for male participants was also substantially higher at $36,875 for men and $24,446 for women.

From BenefitsPRO: 10 Questions on Retirement Preparedness

How well prepared are American workers for retirement?

Not very, according to the vast majority of studies, which have found that not only do many people have nothing saved for retirement, but those who’ve managed to put money away are way short of the mark.

According to a Financial Finesse study, as people are increasingly made responsible for funding their own retirement, just 19 percent are confident that they’re on track to retire with enough money to do so.

From PLANSPONSOR: Retirement Investors Need to Understand Role of Risk

“Understanding how risk factors into your plan can help build financial confidence,” says Marcy Keckler, with Ameriprise Financial.

Seventy-three percent of American investors tend to avoid risk entirely or weigh risk very carefully when engaging in financial decisions, according to the Financial Risks & Investor Attitudes study by Ameriprise Financial.

The study found 31% of investors surveyed are what Ameriprise calls Risk Avoiders, who are the most guarded when it comes to financial risk-taking. Eighty-nine percent of this group view their outlook on risk as “cautious.” But, while nearly half (42%) of respondents in this profile claim they are not willing to take risks with their finances, many are unknowingly increasing their exposure to risk, Ameriprise says.
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Friday After Thanksgiving

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Is the Governor going to give State employees the day after Thanksgiving as a holiday this year?
We are sure many state employees are wondering this but to-date we have not received any official notice from the Governor’s office and, as the administrator of retirement, life insurance and long-term disability insurance for most state employees, such executive decisions are not within MOSERS’ purview.

If the Governor does decide to declare November 27th a holiday for state employees, we expect that he will issue an Executive Order like he did in 2014. You can subscribe to the email update list on the Governor’s website:

For our retirees who may be curious, regardless of the Governor’s decision, retirees will receive their monthly benefit payment from MOSERS on Monday, November 30, 2015.


Nov. 6, 2015
State offices will be closed on Friday after Thanksgiving, Gov. Nixon announces
JEFFERSON CITY – Gov. Jay Nixon today issued an executive order closing state offices on Nov. 27, the day after Thanksgiving.
The Governor said public safety and other essential services and facilities will continue their normal operations.
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Retirement Related News for 10/30/2015

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From The Center For Retirement Research: Fewer Boomers Get Social Security at 62

The best way for most individuals to increase their retirement income is by delaying Social Security – each year they wait significantly boosts their monthly benefit check.

It seems that baby boomers are getting the message. The share of people who claim their Social Security benefits at age 62 – as soon as they’re eligible – is falling, and falling more rapidly than previously thought.

From NBC News: 98-Year-old Man is Indiana's Oldest State Employee

Even at 98-years-old, the oldest Indiana state employee is still going strong. WTHR's Kevin Rader reports. Alternate YouTube Link

From BenefitsPRO: Seniors not doing enough to maintain cognitive health

Good news: Nearly everybody agrees that brains are important.

A recent survey by AARP finds that 98 percent of those over 40 believe that maintaining or improving brain health is somewhat or very important. The other 2 percent presumably believe that healthy brains are for nerds.

From The Missouri Valley Times: Retirement days ahead to bring Bingo and cards games

For many, retirement age usually comes along when people are in their mid- to late-sixties. However, many people do continue to work in some capacity – either in a different field or part-time way.

Marge Stirtz of Missouri Valley has worked a little beyond that norm – working for 65 years and into her early 80's as a legal secretary in the community. She will be retiring in late October from Missouri Valley’s Kellogg Law Firm. A few months following her retirement, Marge will celebrate her 83rd birthday – on Feb. 6, 2016.

She began her legal secretary career right after graduating from the Magnolia High School in May of 1950.

“I started out working for Kenneth Acrea,” said Stirtz, “and then I worked for John Kellogg’s dad, and then for John Kellogg for about the following 25 years. I’ve enjoyed every minute of it!”

From Ozarks First: Phil Collins announces end of retirement

Phil Collins wants you to take a look at him now. He's back from retirement.

"The horse is out of the stable and I'm raring to go," Collins told Rolling Stone in an interview published online Wednesday.
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Reemployment After I Retire?

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If I retire, rollover 2 year backdrop and then find out I can't live on my monthly benefit can I seek employment with state agency again? 
Yes. If you retire and return to work in a benefit-eligible position (normally requiring at least 1,040 hours of work per year and permanent in nature), covered by MOSERS or the MoDOT and Patrol Employees’ Retirement System (MPERS), your monthly payment will be stopped upon official notification of your re-employment. Your employer determines if you are working in a benefit-eligible position.
Once you again terminate and re-retire, your benefits will be recalculated and your benefit payments will resume. You are not allowed to accrue any additional BackDROP payments in connection with such additional service.
Alternatively, you may continue receiving your MOSERS pension benefit while working for any employer not covered by MOSERS or MPERS (including work for the state in a non-benefit-eligible position) and earn as much as you wish.  Such employment will have no effect on your MOSERS benefit.
Remember, MOSERS benefit counselors are available by phone at (800) 827-1063 or in person M-F, 7:30 a.m. - 4:30 p.m., if you would like to discuss your options.  We understand that retirement is a big decision.

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Friday Top Five: Retirement Related News for 10/23/2015

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From Governor Nixon: Gov. Nixon takes action to keep FY2016 budget in balance following loss of one-time tobacco settlement funds

Gov. Jay Nixon today announced that, due to the recent court ruling relieving tobacco companies of their obligation to pay the State of Missouri $50 million under the Master Settlement Agreement, spending will need to be restricted in order to maintain a balanced budget.

“Based on the St. Louis Circuit Court’s decision, both my administration and members of the General Assembly counted on these funds being available when the Fiscal Year 2016 budget was passed,” Gov. Nixon said. “Now that this ruling has been overturned, this unexpected loss of funds must be accounted for through spending restrictions to keep the budget in balance and our AAA credit rating intact. In taking these necessary actions, we have made every effort to minimize the impact on vital services by reducing spending from new programs yet to get underway and funding increases that would grow the size of government.”

From Forbes: An Early Start Can Lead To An Early Win In Retirement Saving

I recently ran into a blog post on dealing with money for Millennials that’s gone viral: “If You Have Savings In Your 20s, You’re Doing Something Wrong.” The message: enjoy life now, spend your money and quit trying to save so much since life is a gamble and living by the numbers sucks! That idea kind of makes me go, “Hmmm, how can that be right?” so let’s talk about it.

I’m totally in agreement with the idea that saving shouldn’t be a gloomy, hated thing. Diets with food we hate eating end up in calorie binges we love! The same thing goes for your money. If you can’t enjoy the journey, you probably aren’t going to the destination.

But there’s a balance in here somewhere, and an undeniable fact. Starting saving during your 20’s beats saving later hands down, all over town! And you can gamble on yourself with all your dough, but having enough to quit working someday doesn’t have to be a gamble at all!

From BenefitsPro: IRS 2016 Cost-Of-Living Adjustments For Retirement Plan Contributions

The Internal Revenue Service released cost-of-living adjustments for retirement plan contributions today.

As expected, contribution caps will remain largely unchanged from last year.

In a press release, the IRS explained that Social Security’s cost-of-living index did not meet the statutory thresholds required to trigger adjustments to plan contribution caps.

From Treasurer Clint Zweifel: For National Save for Retirement Week, Treasurer Zweifel Offers Advice to Make Your Retirement More Secure

Treasurer Zweifel is raising awareness of the steps Missourians can take to prepare for retirement.

State Treasurer Clint Zweifel is celebrating National Save for Retirement Week, (now know as National Retirement Security Week) October 18-24, with a few tips to help you save and plan for retirement. Individuals and families have more options now than ever before to save for their retirement. From employer-sponsored plans to private options, now is the time to understand what you will need in retirement and stick to a long-term plan to get there.

From News Leader: How To Pay A Pension Debt When Fair Isn't An Option?

There's big trouble brewing in a little corner of Springfield's police-fire pension plan. And despite repeated promises (and city ordinances) saying that public safety employees would foot the bill, taxpayers might be tapped again for help.

The problem goes back to 1999, when police and firefighters agreed to pay for a boost in retirement benefits through a payroll deduction. The cost of the benefit has been rising steadily for veteran employees, raising concerns those long-serving employees will resign or retire early, increasing the financial burden on the few that remain.

Bonus Article:

From The Wall Street Journal: Retired Women Are More Generous Than Men

Maddy Dychtwald: Are retired women really more generous than retired men?

That is one of the questions my firm, Age Wave, in partnership with Merrill Lynch, set out to explore in our just released study, “Giving in Retirement: America’s Longevity Bonus.” We surveyed 3,694 adults age 25-plus from all walks of life and socioeconomic strata to deepen our understanding of the role of giving in retirement and how giving back has the potential to both maximize social impact and provide personal fulfillment.
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