Mentally Alert

As you grow older, it will be important to stay mentally fit as well as physically fit! Putting together your plan will take some work including researching and learning some new financial terms and concepts, gathering data and information to put together the various plan worksheets, and doing some financial calculations - all of which will affect not only your overall plan, but the specific operational goals and objectives you set as well. You need to be mentally alert when you do these things.

Therefore, when you first logon to this website, or if have been on the website working on your plan for awhile and start losing concentration, click on the Mentally Alert button and do a few finacial brain teasers to check your mental alertness.

MENTAL EXERCISE NUMBER 1: If you put 10.0% of your compensation each year into your 401(k) plan at work (or a similar type of plan), how much money will you have in your retirement account when you retire, how much in monthly income will it provide you with after you retire, and how long will that income last?

A. it depends on when you retire
B. it depends on how often your contributions are put into the plan 
C. it depends on whether or not the employer matches some portion of your contribution
D. it depends on how often your employer puts in their matching contribution, if any
E. it depends on how much the plan expenses are, and who is paying them
F. it depends on how much you earn on your account balance
G. it depends on whether you take a loan against your account balance
H. it depends on whether or not you take a hardship distribution from the plan
I. it depends on whether or not you roll your account balance over to an IRA if you terminate employment
J. it depends on what the interest rates are when you retire
K. it depends on what insurance company annuity rates are when you retire
L. it depends on how much compensation you earn through the years
M. it depends on how long you stay at the companies you work for through the years
N. it depends on whether the current tax laws are changed
O. it depends on how long you live
P. it depends on your investment strategy
Q. it depends when you start taking the monthly income and the other distributions you take 
R. it depends on how well the US economy does
S. it depends on healthcare related expenses
T. it depends on inflation in the future
U. all of the above

Answer: The answer is all of the above - and yoU. If you think about it - you have at least partial control over more than half of these things (the bolded ones). However, it is important for you to understand all of them if you want to have a chance at a good retirement in the 21st century. And you will have to make assumptions and projections regarding many of these things. You need to take control of the things you can, and you can do this by creating a personal retirement plan. Many of today's retirees are participants in pension plans and the social security system, that provide a guaranteed monthly income for life at retirement. Most Americans retiring in the 21st century will never enjoy this type of retirement. They will be individually responsible for accumulating retirement funds, and for making those funds last through their lifetimes. Successful future retirees will have to be smarter about finances, planning for retirement, and saving for retirement than today's retirees whose retirement planning was to a great degree designed and funded by their employers. You may not have access to a 401(k) plan at work, so you may think the example above does not apply to you. Most of the things still do. Chances are good that there is a similar kind of plan available to you! The good news is that financial services companies can help you control some of the items listed above that you can't control through the products they offer. You do not have to try to find all the solutions by yourself! But you owe it to yourself - and your plan - to know what solutions are available.