By Jason Sweeney
Profit sharing plans. 401(k) plans. IRAs. ESOPS. SARSEPS. The myriad of retirement options can be confusing when planning for your golden years. Don’t forget the IRS has different regulations for different plans, which can take a bite out of your nest egg. And now, with Social Security reform a contentious topic of national debate, saving for retirement has become as bewildering as ever.
Sam Harding, the president of Retirement Administration Inc., spoke to the Los Altos Kiwanis Club May 3 to clarify the options.
“All a retirement plan is is a way to save,” he said. The more money you put into your savings pipeline, the more you’ll have available down the road.
In the past, retirement was thought of as a “tripod.” The three legs of the retirement tripod were a company retirement plan, personal savings and Social Security. Harding called the tripod the “old world theory of retirement.”
In today’s world, a different approach is required. Social Security cannot be counted on to provide for a comfortable retirement. Workers no longer spend their entire careers at one job, and company pensions are not as common as in the past.
Harding uses a matrix to simplify and personalize a retirement strategy for his clients. His matrix breaks down the various plans to help clients choose the path that best suits their retirement goals. Harding said the matrix gives the future retiree an understanding of the plans, shows how they work and explains their advantages and disadvantages.
With Social Security reform a hot topic, Harding explained that young people are more positive about reforms because they are familiar with 401(k) plans and with having autonomy with their money. But if reforms allow for more autonomy, money would have to come out of the Social Security pipeline. Two ways to cover shortfalls caused by proposed reforms would be to increase the percentage withheld from employees’ paychecks or increase the basis of the tax from the current salary ceiling of $90,000.
Some people have nontraditional plans for providing for a comfortable retirement. Some Californians plan to sell their homes and move to states where property values are lower. One person Harding met was on the “buy lots of lottery tickets” plan. Another was on the “sue the socks off your employer” plan.
Harding has been in the retirement business for the last 30 years in Los Altos. He opened his first office on Main Street above The Bullfighter-a restaurant located where the Mandarin Classic is today. Harding’s present office is on El Camino Real.
The secret to planning retirement is not as complicated as it might seem, Harding said. “Start early and often,” he advised. “If you are making enough money where you have money left over - that’s the secret.”
Retirement Administration Inc. is located at 4966 El Camino Real, Suite 213. For more information, log on to www.retirementadmin.com.
