 Even
with pension, you need retirement planning
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 Dear
Dr. Don,
Does someone really need a huge amount in a retirement account if
they will receive a defined benefit from the state beginning at
age 55?
-- Cully Cache
 Dear
Cully,
A defined-benefit pension from the state beginning
at age 55 will reduce the amount you need in your retirement nest
egg but doesn't eliminate the need for retirement savings. You didn't
mention whether the state pension plan is in lieu of Social Security
benefits or in addition to them, but having Social Security benefits
kick in at age 62 or older will also reduce the amount of money
you need to accumulate in a retirement account. A Bankrate feature,
"The
right time to start drawing Social Security benefits,"
has more information about when to start collecting Social Security
benefits in retirement.
The other side of the equation is, if you're planning
to retire at age 55, you'll want a fairly sizable financial cushion
available to you for both unexpected expenses and financial flexibility.
Plans to start a second career or work part time will reduce the
amount you need in the account.
How you plan to pay for health-care coverage between
the time you retire and when you become eligible for Medicare is
also an important consideration in setting a target for your retirement
account. Health-care benefits paid to retirees by employers can
change over time, and you may need a reserve to guard against any
changes in your benefits.
Use Bankrate
interactive work sheet to help you calculate a target for that
retirement nest egg. Also take a look at the retirement
planning calculator on the CCH Web site to input the particulars
of your situation and see if your retirement savings plan is on
track.
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