On the same day as the 401K announcement, the IRS also announced that the 2012 IRA contribution maximums and income limits.

The maximum IRA contribution did not increase, but the income limits did for both the Traditional IRA and Roth IRA. Here are the details…

2012 Maximum IRA Contribution

The 2012 IRA contribution maximums did not see a similar increase as 401K and other employer sponsored retirement plans, unfortunately.

They will remain the same as the 2010 and 2011 IRA maximum contribution limit at $5,000 for the 2012 tax year.

That’s three years in a row with no changes. I’d be really disappointed if there were no changes for 2013.

The 2012 Maximum IRA Catch-up Contribution

For those age 50 and over, the 2012 IRA catch-up contribution is still the same as 2010 and 2011 at an additional $1,000 over $5,000 ($6,000 total).

You begin to be eligible for the catch-up contribution if you turn 50 during any day in the calendar year.

Roth IRA Income Limits in 2012

IRA’s provide a great way to limit your tax liability in the present (Traditional IRA) and in the future (Roth IRA). There are, however, contribution phaseout limits based on your income that can limit how much you can contribute. The good news is that those limits (tied to inflation) will increase in 2012.

2012 Traditional IRA Income Limits

Traditional IRA income limits vary slightly from Roth IRA’s in that they are tied to whether or not you your employer sponsors a retirement plan for you.

If you do have a retirement plan with your employer:

• Single or head of household: If your MAGI is $58,000 (up from $56,000) or less, you can take a full deduction. If more than $58,000, but less than $68,000 (up from $66,000) – you get a partial deduction. If over $68,000, you cannot take a deduction.
• Married filing jointly or qualifying widow(er): If your MAGI is $92,000 (up from $90,000) or less, you can take a full deduction. If more than $92,000, but less than $112,000 (up from $110,000) – you get a partial deduction. If over $112,000, no deduction.
• Married filing separately: If your MAGI is less than $10,000, you can take a partial deduction. If $10,000 or more, no deduction.

If you DO NOT have a retirement plan through an employer:

• Single, head of household, or qualifying widow(er): Any MAGI permits a full deduction.
• Married filing jointly or separately with a spouse who is not covered by a plan at work: Any MAGI permits a full deduction.
• Married filing jointly with a spouse who is covered by a plan at work: If your MAGI is $169,000 or less, you can take a full deduction. If more than $173,000 (up from $169,000), but less than $183,000 (up from $179,000), you can take a partial deduction. If $183,000 or more, no deduction at all.
• Married filing separately with a spouse who is covered by a plan at work: If your MAGI is less than $10,000, you can claim a partial deduction. If $10,000 or more, no deduction.

If you have not yet started a Roth or Traditional IRA, I house both of mine at TradeKing because there are no account maintenance or inactivity fees, trades are only $4.95, and their customer service is great.

Happy contributing!

2012 Traditional & Roth IRA Maximum Contribution Limits is copyrighted by 20somethingfinance.com without consent to republish.

The Maximum 401K Contribution in 2012 is

$17,000! That’s right, we finally got an increase for the first time in 4 years from the IRS.

The 2009, 2010, and 2011 maximum 401K contribution limits had all been stuck at $16,500. A 3% increase isn’t much, but I’ll take it. The last increase was when 2009′s 401K maximum had increased $1,000 over 2008′s $15,500 maximum.

403B and 457B plans will receive the same bump in limits in 2012.

The maximum 401K catch-up contribution per year for those over 50 years old, however, stays the same at $5,500 over the standard contribution limit in 2012.

The History of 401K Maximum Contributions 

Believe it or not, the maximum contribution level has increased in all but six years going back to it’s beginning in 1987 (75% of the time). Three of those six years without an increase were the last three years.

It’s somewhat surprising we didn’t get increases while cost of living was seemingly trending upwards – but I guess that’s what happens when the government wants to encourage spending.

It’s also worth nothing that the maximum 401K contribution amount has never declined.

How to Max Out your 401K in 2012

If you would like to max out your 401K in 2012, take $17,000 and divide it by your total salary from your employer. For example, if you make $68,000 per year (includes bonuses), then take $17,000 and divide by $68,000 to calculate the percentage of your pay you would need to contribute to max out your 401K.

In the above example, it would be 0.25, or 25%. Next, work with your HR department or your 401K administrator update your 401K contribution percentage.

Going Beyond your 401K?

I realize not many folks will be able to contribute the maximum. If you do, however, it’s probably in the top 5 things you can do for your financial future, especially when a possible employer 401K match is at stake.

If you do max and want to contribute more, you can create a Traditional or Roth IRA. I moved both of mine to TradeKing, who has zero maintenance or inactivity fees and trades are only $4.95. If you have left an employer and have old 401K’s sitting around, you may want to consider a rollover. You’ll probably be saving money on fees in an IRA versus your 401K.

401k Discussion:

• Do you plan on maxing out your 401K this year or in 2012?
• Have you ever maxed out your 401K?

Related Posts:

• 10 Free Financial Services
• Roth 401K Basics
• The Complete Guide to Choosing Between a Traditional 401K and a Roth 401K
• Choosing Between a Traditional 401K and a Roth 401K, Part II: How will my Choice Effect Early Retirement?

2012 IRS Maximum 401K Contribution Increase Announced is copyrighted by 20somethingfinance.com without consent to republish.

But… what if your parents decided to live a very extravagant lifestyle and made zero effort to boost their retirement savings? And were ignorantly or purposefully negligent in their financial decisions. Should you support their retirement then?

Family is family, but you didn’t exactly have a choice about supporting yourself when you were brought into this world. You were a dependent with no alternative and really no freedom of choice to earn an income. You were entitled out of necessity.

Parents who don’t make conscious decisions to invest in their retirement and live below their means DO have a choice. They are choosing present or future financial entitlement and opting to think about themselves instead of the family members that they eventually become dependent on.

Taking that a step further, what if they were 100% capable of earning an income to delay withdrawing from a tiny nest egg, but instead choose to not work at all and live now off of their paltry savings, knowing full well that in a few years they would be 100% dependent on their children or other family members? Do you still owe it to them to support them and that behavior?

Like it or not, I think this is going to become more and more of the norm. Baby boomers are going to demand retirement (ignorantly or not), and as I explored last week in my inheritance post, their average retirement savings are dismal:

• Only 15% aged 44-54 have over $250,000 saved
• Only 19% aged 55+ have over $250,000 saved.
• 44% aged 44-54 have less than $10,000 in total savings.
• 29% aged 55+ have less than $10,000 in total savings.

Even if your parents are in that stark minority (15 or 19%) with a decent amount of savings, would you feel safe having them retire to never work again on that amount of savings? I sure wouldn’t.

The thing is, you may not even have a choice. Unbeknownst to me until I was researching for this post, as many as 30 states have filial responsibility laws that mandate adult children to pay for their parents basic life needs, should they need it, including nursing home care.

But… for the sake of discussion, let’s imagine you DO have a choice and your parents lives aren’t entirely dependent on your decision. If your parents were negligent in their financial decision-making and you had your own family and self to financially look after, would you still foot their bills for them?

Would you Support your Financially Negligent Parents? is copyrighted by 20somethingfinance.com without consent to republish.

Perhaps inheritances don’t need to be taboo any longer though. Why, you may ask? Because they will be very rare.

Nobody is entitled to an inheritance. But I am anticipating that anyone who does receive one will be considered part of an increasingly rare few.

If you’re a gen x’er or gen y’er, there are a few huge trends going against your chances of ever getting an inheritance:

1. The Boomer Generation isn’t as Concerned with Sharing their Wealth

In a recent U.S. Trust study, only 49% of millionaire boomers said that it was important to leave an inheritance to their children when they die. That was the millionaires – aka the ones who actually have money. For those who don’t have money to give? We’ll get to them in a second.

Boomers think they’ve earned their wealth and have every right to spend every last penny of it. And they are probably right (until we end up financing their debt).

2. The Boomer Generation Doesn’t Really have Much Wealth to Begin with

A very small percentage of boomers will actually have money to give.

In a study done by the Employee Benefit Research Institute on the total average retirement savings per American,

• Only 15% of respondents aged 44-54 have over $250,000 saved
• Only 19% aged 55+ have over $250,000 saved.
• 62% of those aged 44-54 have under $100,000 saved.
• 60% over the age of 55 have under $100,000 saved.

These numbers jumped out at me the most though:

• 44% of those aged 44-54 have less than $10,000 in total savings.
• 29% of those aged 55+ have less than $10,000 in total savings.

And of those, there is a good chance many of them are in debt.

3. Boomers are Living Longer

Boomers will live longer than any previous generation, on average.

The average life expectancy for someone born between 1919 and 1921 was 56.4. The average life expectancy for someone born between 1949 and 1951 is 68.1. That’s a 12 year jump. 12 additional years of living funded by savings is not cheap.

I don’t expect the boomers will take well to the fact that they may never be able to enjoy a relaxing retirement as their parents did. They will retire. And any savings they have left will quickly vanish.

4. Don’t Forget the Rising Cost of Health Care

Health care inflation has outpaced overall inflation in almost every year for the last 60 years. As boomers live longer, it’s going to cost a lot more to keep them alive and to put them into nursing homes. The average cost of a nursing home is over $50,000 per year and climbing. What little savings they did have could be depleted or turned into debt.

5. The Boomers Love Debt & Don’t Know how to Invest

The generation that raised the boomers (our grandparents) believed in a thrifty lifestyle that was not financed by debt. Education was cheap,  housing was cheap, and pensions were aplenty. They could live off their pensions while holding on to any additional savings for emergencies and then to give as an inheritance.

All the boomers did were spend, spend, spend. They rebelled against their parent’s frugality. They are the generation that fell in love with mortgages, credit cards, and two fancy cars in every driveway.

Now that the retirement burden has been shifted to individuals, as 401K’s vs. pensions are now the norm, the boomers have shown little savvy in growing their savings through investments. There just won’t be any inheritance to bestow.

What Inheritance?

Instead of the “how much?” taboo subject around inheritance, perhaps the new taboo subject will be  “who is supposed to pay off all your debt for medical/nursing care?”. That WILL become the new inheritance standard.

As uncomfortable as it may be, it’s one that is best discussed sooner than later.

Inheritance? Forget it. 5 Reasons why Gen X & Y won’t Get Inheritances is copyrighted by 20somethingfinance.com without consent to republish.

As I highlighted last week before polling readers on their own savings rate, the average U.S. personal savings rate has been around 5% for the last few years.

That seemed pretty darn low. And it seemed even lower after I found out that percentage includes not only take-home savings and IRA contributions, but employee AND employer retirement contributions.

Yikes.

Naturally, I wondered how the citizens of our fine country stacked up against other industrialized nations.

I found an interesting chart from the Organisation for Economic Co-operation and Development (OECD), that highlights past and forecasts future personal savings rates by country for 24 of the largest GDP countries that publish this statistic.

In 2010, the savings rate from the most notable countries were:

• Australia: 9.3%
• Canada: 4.3%
• Germany: 10.9%
• Ireland: 19.3%
• Japan: 6.5%
• France: 16%
• Spain: 13.1%
• UK: 4.6%
• US: 5.8%

What can we take away from this data?

1. At Least Americans are not Dead Last

As bad as the U.S. personal saving rate looks, it’s not the worst. We came in 16th out of the 24 countries in 2010. We’re predicted to vault past the mighty Poland into 15th in 2011.

2. Canucks Like to Spend

Canadians have had a worse personal savings rate than Americans for the past 3 years. This is in line with the data I found around U.S. vs. Canada consumer spending. Quite simply, Canadians love to spend their money on crap that they would be wise not to.

3. The Economic Impact on Personal Savings is Substantial

The Irish had a whopping 19.3% savings rate last year – all the way up from 3.8% in 2008 (when the Irish banking crisis hit). Similarly, yet less dramatically, the U.S. personal savings rate jumped from 2.1% in 2007 (before the housing crisis) to 5.9% in 2009. I find it really interesting that when economic turmoil hits a country, personal savings rates in that country go up significantly. One has to wonder how much economies further suffer as a result of people hunkering down and reducing their spending.

4. The French Really Know how to Save

The French, who hit a 16% personal saving rate in 2010, have averaged over 15% per year since at least 2005. This makes them the most consistent savers of any industrialized country. That’s a bit surprising when you consider how high France income tax rates are (3rd highest).

5. The Danish do Not

The Danish have had a negative personal savings rate since at least 2005 and were the only country, on average, to achieve this feat in 2010. What’s the deal? Maybe their spending all of their earnings on Hasselhoff memorabilia. Oh wait, that’s Germany. No excuse, Danes.

Discussion on Personal Savings Rate by Country

• Do some of these findings surprise you?
• Do you feel better or worse about the U.S. personal savings rate after seeing this.
• What do you think the average personal savings rate should be in the U.S.?

Related Posts:

• The U.S. is the Most Overworked Nation in the World
• Parental Leave Benefits by Country

A Personal Savings Rate by Country Comparison is copyrighted by 20somethingfinance.com without consent to republish.

There are a lot of incorrect sources on the web that claim retirement savings in 401K’s and IRA’s are not included in the government personal savings rate calculation. They claim that personal savings is basically calculated by taking non-retirement savings and dividing by take home income. Although much easier to calculate, and in some ways more relevant if you’re looking for a barometer on early retirement, this calculation is not what the government uses.

The BEA DOES factor in employee and employer retirement contributions to 401K’s and IRA’s into their personal savings rate calculation.

And suddenly, that 5% number looks pretty paltry, doesn’t it?

Want to calculate your own personal savings rate? Why wouldn’t you? Here’s how to do it…

How to Calculate your Personal Savings Rate:

In order to calculate your personal savings rate:

• Step 1: Add up net savings (or losses). This includes non-retirement savings and your retirement savings for the year (all personal retirement contributions + all employer retirement contributions). Capital gains or losses should not be factored in – just the contributions. This number could end up being negative as well, if you had net debt for the time period, instead of savings.
• Step 2: Calculate total income. Add your total take home income (after tax income) to your employer retirement savings.
• Step 3: Divide. Personal Savings Rate = Step 1 (all savings or debt) /Step 2 (all income)

Here is an example in action:

Let’s hypothetically assume that I save $5,000 in my 401K and $2,000 in an IRA. My employer matches $1,000 in my 401K. I have an additional $2,000 saved outside of retirement accounts. My after tax (take-home)  income is $40,000.

• Step 1: $5,000 + $2,000 + $1,000 + $2,000 = $10,000 (net savings)
• Step 2: $6,000 (401K contributions) + $40,000 (take-home income). Note that the IRA contributions and non-retirement savings are not added because they come out of take home income (no need to count twice).
• Step 3: Personal savings rate = $10,000/$46,000 = 0.21 = 21%

It may help to pull out your most recent paycheck to complete the calculation.

Once you have the numbers, it’s much easier than it looks.

I’m really curious to see what the average 20somethingfinance reader is saving – and will use the poll results in future articles on this topic.

What is your Personal Savings Rate?

• What is your personal savings rate? (take the poll below and share your calculation in comments)
• Do you feel good about this number?
• Why are you saving this amount?

Related Posts:

• The Shockingly Low Amount of Retirement Savings per American
• 2012 Maximum 401K Contribution
• What is Modified Adjusted Gross Income?

What is your Personal Savings Rate? (reader poll) is copyrighted by 20somethingfinance.com without consent to republish.

Indeed, it is a metric that you should have a vague knowledge of. But probably not for the reasons you are thinking.

It can be a bit misguiding.

Before I get into why that is, let’s first go over how to calculate your net worth, in the traditional sense.

How to Calculate your Net Worth

Calculating your net worth is a bit like calculating your personal budget.

On one side of the equation, you have the good stuff. With budgets, it’s income. With your net worth, it’s your assets.

On the other side of the equation, you have the bad stuff. With budgets, it’s expenses. With your net worth, it’s your liabilities.

What goes into each column?

Assets

• Your assets typically consist of:
• Home Value: How much your home is worth on the market
• Cash: Checking account, savings account, cash
• Retirement Accounts: Total value of your 401K’s, IRA’s
• Non-Retirement Investment Accounts: personal investment accounts
• Depreciating Assets: Market value of your vehicles and other personal property (excluding home)

Liabilities

Your liabilities consist of:

• Mortgage/Home equity loan debt
• Student loan debt
• Auto loan debt
• Credit card debt
• Any other outstanding debt

What is Net Worth?

The definition of net worth is the total value of what you are worth on paper with the categories listed above as guidance. After you’ve done that:

Net worth = total assets – total liabilities

Mint.com will email you your net worth on a weekly basis, if you’d like to make it really easy.

But is it something you should even worry about?

Why it can be Misguiding

Many people think that net worth is synonymous with their ability to retire. To do that opens up potential for disaster.

Why?

You need somewhere to live. Unless you plan on drastically downgrading your home when you retire or move to a much cheaper part of the country or world, your home equity is completely irrelevant to your ability to retire.

Also irrelevant is the value of your vehicles, jewelry, and other personal property – unless you plan to sell them all.

And yet a third irrelevant category, if you plan to retire early, is your actual retirement accounts! If you plan on withdrawing before the age of 59 and 1/2, you’ll be heavily penalized and taxed in many cases. When you turn 59 and 1/2, absolutely, these should be considered assets. But until then? I wouldn’t do it.

Do not equate net worth with retirement unless you plan on making drastic changes when you retire.

What is Net Worth Good for then?

Not much, to be honest. It’s an over-rated financial word.

However, there is a TON of value in mapping out your assets and your liabilities in order to gain actionable financial insights.

For example, if after mapping out your assets and liabilities, you realize that you are up to $20,000 in a savings account and you have $10,000 in credit card debt that you are paying 12% interest on, that can be an incredibly valuable insight to take action on.

Does that insight have anything to do with “net worth”. No.

Calculating your net worth just for the sake of calculating it might have some value if your goal is to make your peers at the local yacht club feel insignificant. Otherwise, the value is in mapping out your assets and liabilities.

What is Net Worth? is copyrighted by 20somethingfinance.com without consent to republish.

But it often creates some tough decisions for people.

When you’re dealing with credit card debt with APR’s above 10%, it usually is an easy answer: pay off the debt. You’re rarely going to consistently be able to make over a 10% on your investments.

When you’re dealing with a very low APR, for example, student loan debt of 2-3%, the answer is also pretty simple. Invest. It’s fairly simple to earn more than 2-3% via conservative investments in the market.

But what about when you’re right around that 5-7% mark? That’s when it gets tricky.

Reader, Lisa B., write in:

“I have about $15,000 worth of student loan debt at 6.25% interest rate. I am 27 years old and getting married this year. My partner is 29 years old. We do not have any retirement savings, but we also do not have any other debt besides my student loans. We will have about $1500 a month in disposable cash starting in the fall. Is it better to put the money towards my student loans or towards a retirement plan?”

It’s a tough question that many of us have or will come across.

On one hand, being 27 and 29 and not having any retirement savings is a bit of troubling red flag. Sure, Lisa and her partner have time to catch up, but if they don’t start a retirement savings discipline now, when will they?

On the other hand, 6.25% is a rather enticing guaranteed investment return in today’s volatile market.

I thought I’d pass it along to the readers to comment to get a variety of opinion.

Should Lisa:

1. Focus on paying off the student debt first, before saving for retirement?
2. Focus on retirement and pay off the minimum monthly payments on the student debt?
3. Do both at the same time?

What’s your take?

Related Posts:

• Retirement is Dead
• At what Age do you Expect to Retire?
• Hidden 401K Fees

Pay Off Student Loan Debt or Save for Retirement? Help a Reader! is copyrighted by 20somethingfinance.com without consent to republish.

Not the pie-in-the-sky estimate. I’m talking about when you REALLY think you’ll be able to retire (for reference, the average retirement age in the U.S. is between 63 and 64).

You know how I feel about retirement. If you don’t, check out my retirement is dead post. In it, I highlight how I think that traditional 65 and done retirement is a thing of the past and we’d all benefit by expecting and preparing for the “new retirement”.

So, three questions for you, and I’ll throw in polls for good quantitative measure:

1. At what age do you expect to partially retire (the “new retirement”)? This is when you become financially independent and scale back from a full-time gig out of necessity to pursuing personal interests.
2. At what age do you expect to completely retire? (No work at all)
3. Where did you come up with those numbers?

I have a pretty ambitious goal of being able to hit “new retirement” by 35 – meaning, being financially able to pursue income in whatever way I’d like due to zero debt & significant savings built up. Where did I come up with that number? I’m close to being debt free right now, however, I have a lot of work to do in the savings department. Whether I do hit my goal of 35 remains to be seen and even if I hit that financial point, it doesn’t mean I’d quit my day job, only that that option would be made available to me if I decided to.

If it does, you’ll be the first to know…. well… maybe the second or third.

As far as fully retiring, I don’t think I would do this until my 70′s, if ever. I really think that in order to fully retire the U.S. would have to move to universal health care, or at least offer it to people above a certain age.

I’d love to hear everyone’s thoughts, and here are the two polls:

Related Posts:

• Pensions vs. 401K’s
• The First Steps to Stop Dreaming & Start Retiring
• The Average Retirement Savings Per American

At What Age do you Plan on Being Partially & Fully Retired? is copyrighted by 20somethingfinance.com without consent to republish.

Definition of Retirement: sit around the home, read the paper, play some golf, drive around town in a Cadillac, catch the early bird special at the local diner, watch some TV, go to bed, and do it all over the next day. Mix in an occasional RV or European vacation to take some photos and all was right in the world.

Retirees had a simple financial formula for achieving that dream:

1. Hit age 65.
2. Stop Working.
3. Collect your pension check, replacing the majority of your annual income before retirement.
4. Collect your Social Security benefits to fill in the rest.
5. Rely on your retiree health benefits from your employer.
6. Collect your medicare benefits to fill in the rest.

Those days are all but over. Why?

1. Pensions are dead – our generation won’t get them, and if you are lucky enough to get one, good luck keeping most of it.
2. Most individual investors fail miserably at investing. With 401K’s, any hopes we have of retiring are dependent on a.) you becoming a good, patient investor, b.) the market performing well (just look at the last decade’s miniscule returns if you aren’t scared yet).
3. Social security benefits will not deliver what they have in the past (Social Security has historically replaced 40% of income). That is, if one of our political parties does not successfully push through the privatization of Social Security first, which would result in an impact similar to shifting pensions to 401K’s – that is, placing more burden on individual investors to get it right.
4. Retiree health benefits are about as rare as pensions will be for our generation – almost non-existent.
5. For better or worse, medicare as it stands is under attack by Republicans. According to the non-partisan Congressional Budget Office, Ryan’s medicare altering proposal would shift more and more burden to individual retirees as it encourages a move to individuals buying health insurance through the private sector and is tied to general inflation vs. medical inflation. Whether Ryan’s plan passes or not, the U.S. has a budget problem that is going to encourage shifting more and more burden to retirees over the years. We can’t escape that.

Traditional Retirement is Dead

Scary stuff. If you don’t start hoarding a significant amount of your income (50%+), average double digit returns, and stay in impeccable health… retirement, in the traditional sense, is all but dead to you.

The system itself was designed when we were primarily a blue collar society and our bodies could not take working much beyond age 65. As we have shifted more and more towards and information based economy, perhaps we simply don’t need the 65 and quit formula. We may not have a choice.

You simply won’t have have the same entitlement programs to fall back on and private sector employers won’t foot your bill either. For better or worse, IT’S ALL ON YOU.

I’m not taking a political stance here. I’m trying to warn you that you will really have to look out for yourself starting yesterday and get a little bit lucky if you want to have a traditional retirement in today’s political and economic climate.

Is that such a bad thing?

The New Retirement

Perhaps my views will change as I age. I just can’t imagine a life centered around doing nothing.

It sounds like preparing for death.

When I’m 65, 70, and beyond, I want to live it up!

I can’t imagine NOT working in some capacity. Sure, at the age of 70, I don’t want to be slaving away in a factory line somewhere or on a computer (I almost said ‘pushing paper’) for 40 hours a week, but I do want to pursue creative interests, do meaningful work, and engage with others.

And if I have to take a part-time job to grab partial health insurance, so be it.

I think this will be the norm for our generation. And it might not be all that bad.

Shifting Our Mindset About Retirement

Retirement is all about situation and mindset.

I view it as a gradual or potentially even sudden move from following monetary pursuits to following personal objectives.

In other words, achieving enough financial freedom to do what you want in life.

There may be some peaks and valleys along the way that force you to seek a meaningless job part-time that offers health insurance or force you to take a full-time job in order to replace lost retirement savings.

Maybe retirement for you is becoming debt free and quitting your corporate 9-to-5 at age 40, working part-time at a Starbucks for health insurance, and gaining the bulk of your income from passion-related multiple income streams.

Does that sound so bad?

The New Retirement Formula

Your mileage may vary, but I think the new retirement will look something like this:

1. Become debt free.
2. Pursue interests that result in income.
3. Supplement health insurance through income or part-time work with health benefits.
4. Enjoy the nice added benefit of Social Security, Medicare, or other entitlements, but certainly don’t count on them.

Notice the lack of retirement age or ‘stop working’ from the equation.

What Steps Can you Take to Prepare for the New Retirement?

Maybe I’m wrong, but I just don’t see our society moving to a heavier benefit entitlement system and our current system isn’t even sufficient for our generation to realize a traditional retirement. As a result, the traditional retirement is dead. In order to be prepared for and embrace that:

1. Stop worrying, it only causes inaction and a victim mentality. Start acting.
2. Attack debt with a vengeance. The sooner you can become debt free, the sooner you will be able to achieve the new retirement.
3. We’ve lived like many of our parents who have a cushy pension and who will get full Social Security payouts. We need to stop that. Keep your living expenses low. Consider downgrading or selling your vehicles and buying a tiny home instead of a larger one.
4. Save like you never have before, particularly outside of your retirement accounts. Still put significant funds into your retirement accounts, but realize that those accounts are designed for the traditional retirement model. If you withdraw early, you will be penalized. The new retirement will require you to have a larger savings base outside of retirement accounts that you can withdraw from when needed.
5. Start figuring out what your marketable hobbies and creative interests are and start pursuing them. Whether you achieve the new retirement or not, you should consider this.
6. Become multi-skilled so that you can be flexible and recession proof.

Whether you believe that traditional retirement is dead or not, these actions will only improve your financial standing and freedom to pursue your interests in life.

Traditional & New Retirement Discussion:

• Which retirement – old or new – sounds more appealing to you?
• Do you believe that the traditional retirement system is dead?
• What is your new retirement vision?
• How are you planning on preparing for the new retirement?

Traditional Retirement is DEAD! Now What? is copyrighted by 20somethingfinance.com without consent to republish.