 |
|
 |
| Connection Failure |
|
|
|
 |
|
 |
| Never Too Late to Prepare for Retirement Debra Anscombe Wood, RN |
|
|
A secure retirement requires foresight and financial planning. Yet wrapped up in busy lives full of everyday expenses, more than half of America’s middle-age nurses have not started planning for retirement, which may force them to work longer than they hoped. However, it’s never too late to re-group and start saving for the future. “Nurses have a tendency to take care of everybody else and not themselves,” says June A. Schroeder, RN, a certified financial planner with Liberty Financial Group in Elm Grove, Wis. “Nurses are more driven by taking care of others and fulfilling altruistic issues than people in other businesses.” Nursing is still a predominately female profession, and many women admit to lacking the knowledge to invest wisely. Expecting to rely on a husband’s assets is not a smart plan, because no one can predict the future. A 2003 Center for American Nurses survey of RNs age 40 to 73 years found 60% of respondents had not started setting aside money for their retirement. “A lot of people fail to think about their finances,” says Bill Russo, certified financial planner and owner of Concord Financial Planners in Solon, Ohio. “Some people put up a mental roadblock that it’s too difficult or time-consuming.” Yet learning about money and watching it grow can be fun and empowering. “Financial planning is very much like care planning,” explains Schroeder, who calls herself a public wealth nurse. “It’s finding your strengths and weaknesses, just as you would do in a care plan for a patient — assessing the situation, coming up with alternatives, implementing, and making changes along the way.” Steps to financial success
“There’s a big difference between wants and needs,” Russo says. “Food, clothing, and shelter are needs. After that, everything is a want.” Priority No.1, pay off credit card and other debts. Hold off buying a new car or stopping for a daily latte. Pay your savings account first, and resist giving gifts and money to family members. Downsizing is another way to reduce expenses. With appreciation, equity from a house purchased years ago can form the basis for a retirement investment plan. Or if the house is paid off, you can investigate a reverse mortgage, which is a loan against your home that you do not have to pay back for as long as you live there. With a reverse mortgage, you can turn the value of a home into cash without having to move or re-pay the loan each month. If cutting expenses seems too bleak, consider working a second job. Allocate all of that money earned to pay down debts or invest in a retirement account. Nurses also must determine what they will need to live on after leaving the workforce. Many online tools exist for estimating how much people must save. The amount depends on the number of years before retirement, post-work plans and lifestyle, life expectancy, and retirement health care coverage. “Because women live longer, they need more income. They need to plan better,” says Cindy Hounsell, president of the nonprofit Women’s Institute for a Secure Retirement (WISER) in Washington, D.C. Hounsell does not anticipate people will live that much differently after they retire and suggests planning accordingly. Russo, however, says most of the nurses he advises expect they can survive on 60% to 65% of their current income. Many nurses who have not begun saving will need to work longer. Delaying retirement can result in more money from Social Security. Hounsell explains that if someone retires at 62, he or she takes as much as a 30% cut in his or her monthly Social Security check. If an employee keeps working past his or her full retirement date, he or she will receive 8% more than he or she would have if he or she retired at the prescribed date, which varies depending on when he or she was born. Max out employer plans Place your savings in accounts that give tax breaks. Employer-based defined-contribution retirement plans, commonly referred to as 401(k), 403(b), and 457 plans, offer optimal vehicles for retirement savings. The employer deducts money from gross earnings, before taxes, and deposits it into the person’s account. The money grows without incurring taxable income. Some companies will match contributions up to a certain amount. This becomes found money. Try to put in at least as much money as the employer matches. Place bonuses and at least half of raises into the retirement account. But to rack up retirement funds more quickly, put in the maximum. This year, the Internal Revenue Service allows people to contribute $15,000 annually to a defined-contribution account. Anyone age 50 or older can deposit extra over $5,000 to “catch up.” Employees typically direct where the money goes. This requires reading up on the types of funds and their risks. Look for funds with low fees. And avoid keeping more than 10% in employer stock. “Ultimately, have an investment strategy appropriate for your comfort level and the time the money is invested,” Russo says. For those investing in stocks, he advises sticking with ones that pay dividends because they tend to not be as aggressive as others. By reinvesting the dividends, the amount of stock or mutual fund owned increases. Hounsell uses an investing rule of 100 minus your age to determine what percentage of your savings to put into stocks. The rest should be placed in bonds or guaranteed funds. In addition to defined-contribution plans, nurses should consider investing in a Roth or a traditional IRA, Schroeder says. Place tax refunds into the retirement account, rather than spending them. Meet with a financial planner Trying to come up with a plan alone may seem daunting. Books, magazines, and online tools can help. So can taking classes at a local college or adult school. Time spent learning will pay off in the future. Even with all the readily available educational materials, many people find it helps to meet with a financial planner. “You may need someone else to help you plan, just as patients have to see doctors or nurses to help them figure out what they need to do to stay healthy,” Schroeder says. Planners can help identify and set goals, develop and monitor a realistic plan, and make adjustments as circumstances change. The best way to find a planner is to ask friends in a similar situation whether they have a recommendation. Then call and interview the planner and ask about fees. Remember, you are seeking a planner’s advice. Hounsell warns to never turn over your money to a planner to manage. “Nobody cares about your money as much as you do,” she says. Planners make their living through commissions on stocks, insurance, or other investment vehicles they recommend, on fees collected from clients, or on a mixture of both. Make sure the person seems to have your best financial interests in mind and is not just trying to sell something. Trust your instincts. Look for certification by the Certified Financial Planner Board of Standards Inc. Certified financial planners, such as Russo and Schroeder, have met minimum qualifications and agree to maintain high ethical standards. “I’ve found that people who have gotten a plan and have the information to make well-informed decisions seem to be happier and focus on getting it done,” Russo says. “Women are much better at sticking to a plan and following an investment strategy.” With a good understanding of their current situations and goals, along with plans to follow, nurses can achieve a more solid footing in the years ahead. “Sometimes if people can see a light at the end of the tunnel and understand what they need to get there, they’ll do it,” Schroeder says. “Nurses normally are very organized and good if someone gives them the down-and-dirty.”
Debra Anscombe Wood, RN, is a freelance writer. To comment, e-mail pmeredith@nursingspectrum.com. |
While it’s difficult to make up for lost time, there are steps nurses can take. First, develop a spending plan. Determine where every cent earned goes, measure how much is left over at the end of the pay period or month, and figure your net worth — the difference between what you own and what you owe. Many people, and nurses are no exception, end up spending as much or more than they make. If that’s the case, the time has come to evaluate options and make some tough choices. 
