If lack of familiarity with financial plans or fear of becoming involved are among the reasons you avoid retirement planning, this article will give you some encouragement to help your employees and yourself plan for the future.
http://www.youtube.com/watch?v=yY73unMoXn4
In our experience, almost all of private school employees will need savings over and above the benefits their school’s retirement plan provides, in order to maintain their standard of living during their retirement years.
You may be wondering, “How much will I need to retire?” While the answer will vary for each person, of course, here are a couple simple calculations to give you some idea.
Some planners suggest you calculate what you think you will be making the year before you retire and then multiply that number by six. This means, that if you are making $50,000 per year at the time of your retirement, you should have at least 50 times 6, or $300,000 in retirement savings.
Another way of looking at this is to calculate how much of your savings will be available for your use every year in retirement. Try this calculation. For every $100,000 invested that averages 7% growth and assuming an inflation rate of 3%, you could count on having $3,000 of annual income without disturbing your original $100,000. Therefore, if you have $300,000 in retirement savings, you can anticipate being able to use 3000 times 3 or $9,000 per year from your retirement savings. Of course, this amount would be added to your Social Security and any other income options you may have at the time of retirement.
Please understand that this is an oversimplification for purposes of example. What you really need is a written retirement plan. The earlier you start the better off you will be.
Additional ISM resources of interest
ISM Monthly Update for Human Resources Vol. 7 No. 8 Baby Boomers Are Reinventing Retirement
Additional ISM articles of interest for Consortium Gold Members
I&P Vol. 24 No. 12 Retirement Plans: Maximizing Your Teachers’ Options
