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Is Our Retirement Planning On Schedule?

Reviewing: American Funds 401 K Plan  |  Rating:
alice By alice on
Badge: Advisor | Level: 25 | Finances Expertise:

Who wants to plan for retirement? Not me, but a time came when my husband said he wanted to retire at 55 from his job as a sheriff's deputy and paramedic. At first I thought he was joking, but soon realized he was quite serious. He was then 50, and would have 32 years towards retirement benefits when he reached 55.

First we talked to the county retirement dept. where he worked and they encouraged him to purchase his 3 years of military time so that he would have 35 years of service, instead of 32, to obtain his maximum pension benefits. He started immediate withdrawals from his paycheck to do that.

We attended one of the periodic seminars on retirement offered by his employer. I called the local representative for American Funds which oversees my 401k plan at work and asked for advice. We talked to our tax accountant and then decided on this plan.

PAY OFF ALL CREDIT CARDS. This was probably the hardest thing we had to do. It took us a little over 5 years. I never realized how much plastic we carried around until we sat down together and cut up all our cards, that was an eye opener. I can't tell you we weren't tempted and it was really hard at times but it was a great feeling as we made the final payment on each card.

401K PLAN. I have a 401K where I work and my employer matches 50 cents for every dollar that I contribute. I upped my weekly deduction to the maximum amount my employer would match. I can go online at any time and move my funds around and I get advise from American Funds which manages the plan to do that.

PENSION BENEFITS. My husband did retire from his job with a full pension at age 55 like he wanted. There were several pension choices to make, he could take his maximum payment each month which would last until his death, or he could take a smaller amount each month and if he were to die before me I would be entitled to the exact amount he was getting until my death. It wasn't a hard choice as the difference in payouts was not all that much. He knows I will be taken care of if anything should happen to him.

SOCIAL SECURITY. My husband plans to file for his benefits at age 62. I'm still unsure but have a few years to decide. As I'm still working full time it will be a decision I will make when the time comes.

I would encourage anyone to think about what you want out of retirement. It will be knocking at your door before you know it!