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Financing Your Retirement Years

Since people with bleeding disorders are living longer, healthier lives, more time will be spent in retirement than was the case with previous generations, and you should plan accordingly.

Know Your Retirement Accounts

There are two primary types of retirement plans offered by employers:

  • Pension plans (called defined benefit plans). These plans provide recipients with a specific amount of money every month for the length of their retirement. These are the gold standard.
  • Defined contribution plans. These are 401(k)s and 403(b)s that are funded by contributions from the recipient (and sometimes matched by the employer) and grow through investment in mutual funds.

In addition to employee-based retirement plans, there are other ways to help you plan on retirement.

  • Personal retirement accounts. These are Individual Retirement Accounts (IRA) and Roth IRAs that are available to individuals and often grow through stock market investments. These can be used to augment an employer-sponsored retirement account.
  • Social Security. This is the government program that most Americans pay into with every pay check (people in defined benefits plans do not pay into Social Security). At retirement, Social Security pays you a monthly benefit based on the number of years you worked and the amount you contributed to Social Security during those working years.
For an idea of how much money you’ll need in retirement, go to Retirement Calculator—CNN Money.

Most people today are eligible for defined contribution plans.

Here are some considerations when looking for such a plan:

  • Employer Match. Some employers will match your contributions to your 401(k) up to a certain amount. If possible, take the maximum the company provides.
  • Allocation of Your Funds. Stocks tend to be higher-risk and higher-yield investment vehicles. Bonds, by comparison, tend to be lower risk, but they also yield smaller dividends. Depending on how many more years you think you’ll be able to work, you’ll want to customize your investments according to risk. The closer you are to retirement, the less risky your investments should be. Many companies allow you to do a mix.
  • Dividend Reinvestment. You can usually choose to take the dividends earned by your investments in cash or reinvest them into the account. It’s often best to reinvest. The more you invest the more the fund grows.

After considering all your options, it’s a good idea to talk to a professional at your bank or at the Financial Planning Association to make sure your plan will meet your future needs and support you in retirement.

For more information on financing your retirement, go to Financial Planning Association.