| Spotlight: Bud Hebeler |
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Do you find using that formula pretty effective? |
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| Savings myths and realities |
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 Oh yes. I find as a consequence of using it, I've done better than I would have by keeping a constant percentage all the time. I balance it precisely every year or every quarter. Having that little bit extra in there at 10 percent makes a huge difference.
If someone is getting a pension from their workplace, why should they bother saving for retirement in a 401(k) or similar retirement plan?
For most people, chances are that a pension won't be enough, because what most people do is hop around from job to job.
Let's say based on the amount of time you've been working for your employer, you're going to get $1,000 a month. Now you quit and you go to work somewhere else. Well that $1,000 amount does not increase. Twenty years from now, you'll still just get that $1,000 when you actually reach retirement age. That amount of money will not be worth anywhere near what it is today.
So problems can arise if you jump around from job to job -- and most do that now.
Also, there are many employers who don't provide pensions and then there are a lot of employers who've been dropping pensions and have been putting people in cash balance pension plans.
So you have to be cautious about using a pension projection that an employer gives you. You have to think very broadly about it and probably discount the value because you may not end up working there for your entire working career.
The decision about when to collect Social Security depends on many factors, but is there a rule of thumb that people should follow?
I think they should do an analysis of it and if they can't do it themselves, then go to a professional who's not selling anything. The professionals used to say take your money at 62 and that was a terrible mistake in my view, but what they wanted to do was get their hands on your money as early as they could so they had income themselves. That's my view of why they recommended that.
“If you do a thorough analysis of your situation, you'll find that there's a great benefit in retiring later.”
If you do a thorough analysis of your situation, you'll find that there's a great benefit in retiring later. If people can't do the numbers themselves, there are enough honest planners out there that could do it for you or you could use a software program to help you with that decision.
For the most part, people will do better by waiting. There are some qualifications to that. First of all, you wouldn't want to wait for a long period of time if you were in really bad health and you knew you were going to die long before the average person. Another reason is you just haven't saved enough money that you can afford to take Social Security later -- there are a lot of people in that situation. I get letters all the time.
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