I’m spending today watching the Super Bowl rather than blogging but I do want to give a quick thanks to the following blogs for including my posts in their Carnivals.

Yakezie Carnival at The Amateur Financier
Canadian Finance Carnival at Canadian Finance Blog
Carnival of Financial Planning at The Amateur Finacier

Retirement. Spending time with your family. Travel. Doing what you want to do, when you want to do it.

It’s a wonderful pipe dream that practically anyone over 50 indulges in now and then. (Or even younger.) But in addition to all the uncertainty about Social Security, there’s more to consider, including rising Medicare costs, housing, assisted living and so on. Eventually the question rises:

How much do I really need to save, in order to retire?

And the flip side to that: What if I haven’t managed to do it?

One of the most negatively inspiring books on the subject is Lee Eisenberg’s The Number. (Subtitle: “We’re All Screwed.”) According to Eisenberg, people who invested watched their money swirl down the 2006-2008 stock market crash toilet; those who spent it, instead, just went broke that much faster. To make things worse, people who “downshifted” didn’t always consider that they would not only be living longer, they’d be doing it with uncertain medical plans, and more needs for regular care.

Through the gloom, though, a few lessons emerge:

*You don’t always need a bazillion dollars to retire, no matter what the formulas say. (You might lose it, anyways, the way today’s economy is going.)

*Saving regularly may not protect you — but it does help during emergencies. And the needed money will be there if you run into a sudden, can’t-be-missed opportunity.

*Interest may not be high right now — but neither is inflation. (Or so Eisenberg says. Seeing the jump in food prices over the past year or so, I’d disagree.)

*Plan on working longer. A part-time or consulting job will fill in gaps nicely. (Just don’t rely on it to be there forever — your health or other circumstances may not allow it.)

*Live frugally. It will help your money stretch that much further.

*Keep yourself open to opportunities. (As Katie Couric points out, “Sometimes hard work and good timing intersect. Sometimes they don’t. But they likely will at some point, and when they do…you’ll be ready.” (The Best Advice I Ever Got.)

So is there any formula for knowing how much money you’ll need in retirement? According to Eisenberg, it’s 4% yearly of the principal amount in your investments– based on a 1994 calculation by Bill Bengen, a financial planner who spent hundreds of hours analyzing a hypothetical “sample portfolio’s real return based on historical performance.” (This figure does not include Social Security, pensions, part-time jobs or other income sources.)

Even just before the stock market debacle, financial advisors used to recommend 7, 8, even 9 or 10 percent…which many retirees “spent accordingly. But — oops! — the financial advisers and magazine had overlooked the you-would-think-it-was-obvious fact that stock market returns through that era were unusually robust.”

The final lesson is clear: the Number is just that…a number. “Either way,” Eisenberg says, “getting incensed over who has what strikes me as a waste of psychic energy and a waste of time. Better to invest this valuable energy, and use that time, to come to terms with who you are, or, if it better pleases you, to make more money.” Better get started right away.

This post is by Staff Writer Cindy Brick. You can read more of her writing at CindyBrick.com or her personal blog.

The Internal Revenue Service announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for Tax Year 2012. In general, many of the pension plan limitations will change for 2012 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged. Highlights include:

The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $16,500 to $17,000.
The catch-up contribution limit for those aged 50 and over remains unchanged at $5,500.
The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $58,000 and $68,000, up from $56,000 and $66,000 in 2011. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $92,000 to $112,000, up from $90,000 to $110,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $173,000 and $183,000, up from $169,000 and $179,000.
The AGI phase-out range for taxpayers making contributions to a Roth IRA is $173,000 to $183,000 for married couples filing jointly, up from $169,000 to $179,000 in 2011. For singles and heads of household, the income phase-out range is $110,000 to $125,000, up from $107,000 to $122,000. For a married individual filing a separate return who is covered by a retirement plan at work, the phase-out range remains $0 to $10,000.
The AGI limit for the saver’s credit (also known as the retirement savings contributions credit) for low-and moderate-income workers is $57,500 for married couples filing jointly, up from $56,500 in 2011; $43,125 for heads of household, up from $42,375; and $28,750 for married individuals filing separately and for singles, up from $28,250.

My Retirement Blog was featured in the following carnivals during the past week.

Yakezie Carnival at Little House in the Valley
Carnival of Financial Camaraderie at Financial Success for Young Adults
Totally Money at Passive Income to Retire
Festival of Frugality at Squirrelers
Carnival of Financial Planning at Credit Cards Canada
Carnival of Retirement at 20′s Finances

2012 Combined Traditional and Roth IRA Contribution Limits

If you are under 50 years of age at the end of 2012: The maximum contribution that you can make to a traditional or Roth IRA is the smaller of $5,000 or the amount of your taxable compensation for 2012. This limit can be split between a traditional and a Roth IRA but the combined limit is $5,000. The maximum contribution to a Roth IRA and the maximum deductible contribution to a traditional IRA may be reduced depending upon your modified adjusted gross income (modified AGI).

If you are 50 years of age or older before the end of 2012: The maximum contribution that can be made to a traditional or Roth IRA is the smaller of $6,000 or the amount of your taxable compensation for 2012. This limit can be split between a traditional and a Roth IRA but the combined limit is $6,000. The maximum contribution to a Roth IRA and the maximum deductible contribution to a traditional IRA may be reduced depending upon your modified AGI. This information is from IRS.gov which has lots of good information about retirement accounts.

I had articles in the following carnivals in the past week.

Yakezie Carnival at Prairie Eco Thrifter
Carnival of Financial Camaraderie at My University Money
Totally Money at Family Money Values
Festival of Frugality at The Frugal Toad
Carnival of Financial Planning at Skilled Investor Blog
Carnival of Retirement at Retire By 40

The following is a guest post.

When you are young, retirement seems to be a lifetime away. Being told that you should save for that day is difficult to comprehend. But the fact of the matter is that even if we are young and healthy and fit, we have parents and grandparents who are older and we should take our cue from them.

Their standard of living should be an eye-opener for you. Do they battle to make ends meet or do they live comfortably with money left for traveling and dining out?

How Much To Save

It is generally accepted that you should save at least 10% of your annual income. If you can push that up to 15%, it will be so much better. There are those who advise that 20-30% should be the aim, but think about your living expenses up until your retirement.

You should first eat and then save. Sources such as the moneysupermarket.com website are useful for viewing the wide variety of savings products available to choose from.

The idea is that you should steadfastly continue to put away the 10%, but in addition to that, set aside another 10% in an income-generating product.

The Alternative Income

To stop your day job and put all your efforts into a get-rich-quick scheme means you may falter on both counts. But sticking to your 9-5 job and starting something else on the side can work wonders.

If you can find something that you enjoy, let’s say it’s a hobby and you work one hour on that for every ten hours you work at your regular work, you have started on your alternative income.

A passive income would be ideal but is it possible? Even if you don’t like a specific idea, if you can work the idea and turn it into an additional income over time, it is going to come to your aid when you want to stop the regular job.
If the alternative income does turn into a full-time business over time, that’s good, but if it does not, it really doesn’t matter. What matters is that you find an idea or two that can keep your attention and that can start generating an income for you.

Your ability to earn an income is your biggest asset and that does not only mean working 9-5. It means generating an income from a small business or a hobby. You can earn more working for yourself than working for a boss.

You can also use 10% of your working time and invest that into developing your sideline. In other words, instead of saving the 10%, you can “save” 10% of your time to generate that extra income. If you continue to work at this and the income grows, there might come a time when you can bid your boss farewell.

Any additional cash that you are not using for daily and monthly expenses can be saved on top of your 10% saving. A visit to money saving websites will bring ideas for additional savings. So, if you can keep up the day job and start a side job, the combination of the two will work nicely when you want to retire.

This means you will retire with the retirement money from your work and the 10% you set aside yourself and you will have the income from the side job on top of that. By doing this, you should be able to get to your retirement rather sooner than later.

You probably already know that you should be saving for your retirement. If you are not already saving for your retirement you may be unsure which retirement plan is best for you. There are numerous retirement plans to choose from but we will just look at some of the most common ones.

IRAs

There are two different types of Individual Retirement Accounts, Traditional IRAs and Roth IRAs. You can open either of these without having to go through your employer. These retirement accounts are often used to roll company retirement accounts into, so the transfer is not taxed.

Traditional IRAs allow the taxpayer to contribute up to $5,000 per IRA year or $6,000 per year if you are age 50 and above. These contributions are tax deferred until the individual withdraws the money at retirement.

Roth IRAs were started in 1998 as a result of the Taxpayer Relief Act of 1997. The main difference between a Roth IRA and a Traditional IRA is when the money is taxed. Where Traditional IRAs are taxed when the money is pulled out of the account, a Roth IRA is taxed before the money is put in the account. This allows for the taxpayer to withdraw funds at retirement without being taxed on those withdrawals.

Defined Benefit Plans

Defined Benefit plans, (DB) are employer-sponsored retirement plans that hold monthly benefits for the taxpayer at retirement and can only be contributed to by the employer. These benefits can be set at a specific dollar amount each month or can be calculated with a formula based on years of service and retirement salary. Since ERISA in 1974, many employers have moved from Defined Benefit plans to Defined Contribution plans. Traditional pensions of this type are becoming increasingly rare and comparatively few employers now offer them.

Defined Contribution Plans

Unlike Defined Benefits plans, Defined Contribution plans (DC) allow the employer, employee, or both, to contribute to the employee’s account. These investments often come in the form of mutual funds or stock in the company and as a result, your retirement account is usually directly linked to the performance of the mutual funds or how well your company stock does.

There are numerous types of Defined Contribution plans that your employer can contribute to on your behalf, including a 401(k), profit sharing, Saving Incentive Match Plan for Employees (SIMPLE), ESOP plans, and SEPs. These plans all have different stipulations on what an employer can add and how often it can be changed, but they all must be employer sponsored.

Your choice of retirement plan will be somewhat dependent on what retirement plans your employer offers. If you are self-employed you have other retirement options that will be covered in another post. No matter what route you decide to go to plan for your retirement, whether it is an individual retirement plan or an employer sponsored retirement plan, the biggest thing is that you are planning. There is a different plan or set of plans for every person in every situation, so work with your local retirement planner to figure out what will be best for you in the end.

My wife and I watched the series finale of “Extreme Makeover” on the big screen at a local movie theater. The show was a big deal around here because it featured Joplin and lots of local people were affected by the tornado and/or were involved in the Extreme Makeover home build.

The following carnivals were kind enough to include one of my posts this week.

Yakezie Carnival at Broke Professionals
Carnival of Financial Camaraderie at Boomer and Echo
Carnival of Financial Planning at Skilled Investor Blog
Carnival of Retirement at Passive Income to Retire

If you are starting to think about your own retirement, you are on the right path. You have taken the first step towards achieving that dream retirement. You may need to spend some time writing down your goals and/or expectations for retirement, but asking the questions is where everyone begins.

Yet, just thinking about retirement will not let you retire any time soon. In fact, the majority of Americans are retiring without any significant savings because they have failed to take action. Retirement planning is not just about dreaming. More importantly, it is about taking the necessary steps to make your dreams come true. Like I said, it takes action! There’s nothing passive about it.

My Retirement Plans

While I don’t have the same goals of sitting on a beach with a fancy drink in hand that many people have, I have begun to write down my goals for retirement (even at age 24). I know that by writing them down, they will be that much more achievable. I actually plan to retire early (by the age of 27), with the only catch being that I don’t see retirement as most see it. In fact, I see retirement as not having to work a 9-to-5 job and as having the financial security without income from my day job.

Some people are able to retire early with a large lump sum. I know this isn’t possible for me (as I don’t have that kind of money and it would take decades to get it), so I have devised a different plan. I hope to build up enough income from blogging and real estate that I can quit my day job. The only job that I would have is to work part-time to maintain this income. Focusing on cash flow allows me to achieve financial security much sooner.

How I am Working to Achieve These Plans

My plans wouldn’t be great retirement plans if I were not working towards achieving my goals. Because my goals are very specific, it makes it even easier to work towards achieving them. I plan to quit my day job and retire within the next 3 years. Since I am focused on building up my cash flow, I am working on building up multiple blogs that will generate income. With the income that I earn from my blogs, I am putting that in a savings account that will go towards my down payment for my first rental property. With more assets, my cash flow will only increase and I will be able to hire out more of what is required to sustain that income. This will allow me to limit my working hours (while in retirement).

If you have specific plans for your retirement, you should be working towards achieving those goals. Whether that is generating income or saving X amount per month, you need to be doing something. If you aren’t working towards your retirement now or don’t have any plans to start soon, think how hard it will be to start later. Do yourself a favor and start making your goals a reality today.

What are you doing to achieve your retirement plans?

This was a guest post written by Corey from Passive Income to Retire and 20′s Finances. He blogs about his financial goals in order to help his readers achieve financial security.

I haven’t been posting much lately but with the new year I am making a commitment to start posting here on a more regular basis. There will be at least one new post a week. In the meantime here are some other retirement articles for you to enjoy.

Social Security Benefits for Divorced Spouses at Oblivious Investor.

How to Retire During a Recession at WiseBread.

Retirement Plan B: A Light Hearted Look at Boomer and Echo.

You can also check out my investing articles at InvestorzBlog.com.

Yakezie Carnival was hosted at The Ultimate Juggle.

The Festival of Frugality was hosted at Funny About Money.

The Totally Money Carnival was hosted at Help Me to Save.

According to an AARP study recently released, health care issues are the number one biggest fear retirees have.

Is retirement affordable?

The biggest challenge for most potential retirees is the cost of care and the ability to stay healthy through retirement. Experts claim one will need an extra $200-$300,000 to pay just for health care. That is not only a scary thought, but those amounts could delay or prevent many people from retiring.

You have options

What if there was another option?
It would be wonderful to go to the corner clinic and get what you need at affordable prices. Or to visit a medical facility and actually have a a full hour of appointment time with the doctor to yourself. Or even to be able to have the financial means to pay for a hip replacement, a full physical with X-rays and blood work, or a colonoscopy, eye glasses and dental care straight out-of-pocket.
What if you could do that today?
You can.

You are not alone

Tens of thousands of Americans and Canadians are already looking to Medical Tourism as an alternative to the high costs or excessive wait times in their native countries and are looking to places such as Thailand, India, Singapore, Costa Rica, Mexico or even Eastern Europe for solutions. Boomers more than any other age group are seeking medical care overseas to address health needs such as orthopedic procedures, cancer care and alternative treatments for chronic conditions like arthritis, diabetes and age related conditions.
Currently there are seven million Americans and Canadians living abroad already taking advantage of foreign health care services and that number of expats is expected to double in the next 10 years.

Safety?

What if there were affiliates to Johns Hopkins Hospitals overseas? Would that make you feel more comfortable? What if there were high standards of accreditation for hospitals and clinics? It might surprise to know that this is the case right now.
If this is the first time you have ever heard of Medical Tourism or if you have doubts that it might be an answer for you, take a look at our Medical Tourism Page and familiarize yourself with all the choices available.
Having an alternative to taking care of your health care needs could facilitate your retirement. And it could help you sleep better at night.

About the Authors
Billy and Akaisha Kaderli are recognized retirement experts and internationally published authors on topics of finance and world travel. With the wealth of information they share on their popular website RetireEarlyLifestyle.com, they have been helping people achieve their own retirement dreams since 1991.