Life Insurance 101 - Videos On How Life Insurance Works and An Overview Of Your Options | Aviva USA

Life Insurance 101 - Videos On How Life Insurance Works and An Overview Of Your Options | Aviva USA:

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LOOK OUT BABY BOOMER"S:The New rules Of Retirement

Lets take a look back to 2006-2007. This was a very hard time for all of us. But for hard working         Americans getting ready to retire within the next five years, this was and absolutely scary time.
    

 here's a little knowledge when it comes to types of pensions. There are two general types of pensions: DC plans and traditional DB plans. In DC plans—which include 401(k) plans—employers, employees, or both employers and employees make tax-deferred contributions to a retirement account in the employee's name. The contribution amount can be set either as a particular share of salary or a given dollar amount. At retirement, workers receive the funds that have accumulated in their accounts, generally as lump-sum distributions (Johnson, Burman, and Kobes 2004), although they can also use the proceeds to purchase annuities in the marketplace.

Traditional DB plans provide workers with guaranteed lifetime annuities that begin at retirement and promise benefits that are typically expressed as a multiple of years of service and earnings received near the end of one's career (for example, 1 percent of average salary received during the final 3 years on the job, multiplied by the number of years of service). Plan participants cannot collect benefits until reaching the plan's retirement age, which varies among employers. Some plans allow workers to collect reduced benefits at specified early retirement ages.

The value of future retirement benefits from DC plans increases each year by the value of employee and employer contributions to the plan plus any investment returns earned on the account balance. As long as market returns are relatively stable and participants and their employers contribute consistently over time, account balances will increase steadily each year until retirement. Because equity returns are volatile in the long run as well as the short run (Stambaugh 2009), the expected income from DC retirement accounts of those reaching retirement age can vary greatly over different time periods (Burtless 2009). But the plans themselves are not designed to produce age-varying growth rates.¹

In contrast, the growth pattern of future benefits by design varies by age in DB plans. Pension wealth—the present discounted value of the stream of future expected benefits—grows slowly in typical DB plans for young workers, increases rapidly once workers approach the plan's retirement age, but then levels off or can even decline at older ages. Pension wealth is minimal at younger ages because junior employees typically earn low wages and have completed only a few years of service. In addition, if a worker terminates employment with the firm, benefits at retirement are based only on earnings to date, and their present value is low because the worker receives them many years in the future. The present value of DB benefits rises rapidly as workers increase tenure with their current employer, as their earnings increase through real wage growth and inflation and as they approach the time when they can collect benefits. Workers in traditional DB plans often lose pension wealth, however, if they stay on the job beyond a certain age or seniority level. Growth in promised annual retirement benefits typically slows at older ages as wage growth declines. Some plans also cap the number of years of service that workers can credit toward their pensions, and others cap the share of preretirement earnings that the plan will replace in retirement. In addition, pension wealth can decline for workers who remain on the job past the plan's retirement age if the increase in annual benefits from an additional year of work is insufficient to offset the loss caused by a reduction in the number of pension installments. As a result, traditional DB plans often create a strong disincentive to continue working for the same employer at older ages.

                                    Now Is the time to really think, "will my company have MY back when it's time to retire?" That is a very scary thing to think about.

                  I could go on and on about all the possible scenario's on what could happen to your hard earned money. But YOU have a way to take control of your money. If you feel in any way your money could be in jeopardy, TAKE ACTION! Don't wait for someone else to make the decisions what happens to your money.

                Next time I will go over some great alternatives to roll your money into a safe investment with government guarantees you won't loose a dime of your money. In fact, as the economy is slowly getting stronger your money will grow with a guarantee never to loose a penny of your money. INTERESTED?

•  guarantee tax breaks
• never loose another penny
• you are in control of YOUR

Stick with me and I will explain how easy it is to set your self up for success!

MONEY MAKEOVER:

Well I am working on some great content to bring to all of you. Please check back soon, I promise not to disappoint. Until then...