Questions and Answers to income protection and retirement planning.

Q. I have a government Social Security or Old age pension. Why should I be concerned

     about any other pension.

A. There are a number of concerns in this respect, because of the increasing strain on the

     pension fund.

    People are living longer today than ever before. Pensioners generally start collecting

    at age 60 or 65 and now collect for more than 20 years. Will the pension fund run dry

    by the time you are ready to begin collecting your pension?

   The people reaching the pension collection age are getting close to the number of

   people paying into the program. That's no different than your personal budget, if you

   spend more than you earn, serious financial problems are not far away.

Q. Why wouldn't the government just put more money into the pension fund, when it gets 

     low?

A. Both the Canadian and USA governments are in deep debt, paying huge amounts of

    interest to major lenders. China holds a major portion of the USA's National debt.  The

    governments must some how find money to pay off the debt and interest, or they will

    default on their loan, as many countries already have. To do this they must tighten their

    belts and spend less money.  The pension fund will be one cutbacks.

 

    Talks have already begun discussions on what could be done. The first reduction
    could come by increasing the age at which people can begin to collect, so payments
    will not have to be made for such a long period of time. Secondly, the taxation on

    government pensions could be increased.  The younger you are, the more likely

    reductions will take place in your lifetime.

Q. Will the amount of these government pensions keep pace with the increased cost of

     living?

 

A. If the past is any indication, they will not.  This means it will become harder and harder

    to make ends meet, unless you have another source of income, such as from an asset

    based income protection program.

Q. Why is income protection so important?

A. Few people have adequate financial protection in the event that they become ill,

    are in an accident. Even if you work for a large company their policies may not cover

    you for the rest of your life. In fact not even for a full year. But an income producing 

    asset may be the right answer for you.

A. Additional Questions to ask yourself.

Women are more likely to work in part-time jobs that don't qualify for a retirement plan. And working women are more likely than men to interrupt their careers to take care of family members. Therefore, they work fewer years and contribute less toward their retirement, resulting in lower lifetime savings. Does this apply to you?

Of the 62 million wage and salaried women (age 21 to 64) working in the United States, just 45 percent participated in a retirement plan. Be proactive and start an independent plan today.

On average, a female retiring at age 65 can expect to live another 19 years, 3 years longer than a man retiring at the same age. An independent plan can increase a woman's chances of having enough money to last during her retirement.

Do you work for an employer that offers a retirement plan? All job categories may not be included in your employer's plan (those of part-time or temporary workers, for instance), your job may or may not be one that is.

Have you worked at the job long enough to earn retirement benefits? In many companies, you may have to work for 5 years to become eligible to receive retirement benefits.

Too often employees, especially women, quit work, transfer to another job, or interrupt their work lives just short of the time required to be eligible to collect their pension.

What happens to your retirement benefits if you change jobs? You may lose the retirement benefits you have earned if you leave your job before you are vested.

With some retirement savings plans, there may be tax consequences, and possibly penalties, if you withdraw your savings early. Sometimes the money is required immediately, but will that leave you short for retirement?

Are you entitled to a portion of your spouse's retirement benefit if you and your spouse divorce?

Are you aware of the rules that govern your retirement plan and the retirement plan of your spouse if either of you dies? The rules are different for defined contribution and defined benefit plans. The rules may be different if you or your spouse participate in a defined contribution plan (such as a 401(k) plan). Consult the plan administrator for details about spousal rights.

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