Social Security Retirement Benefits

You should find out if you will be eligible for Social Security retirement benefits.

If you are eligible for Social Security, you should determine what the amount of benefits would be at early retirement and at your full retirement age. If you have a spouse, you should find out the same information for your spouse. This link will take you to the Social Security Administration website. http://www.ssa.gov/

 

This link will show you the age at which you can collect full retirement benefits if you are eligible. http://www.ssa.gov/retirechartred.htm

 

This link will take you to three calculators at the Social Security web site. The Quick calculator is the easiest one to use. All you need to know is your birth date and earnings for the current year. http://www.ssa.gov/planners/calculators.htm

 

Pension from Off-farm Employment (such as a 401(k) Plan)

If you are working off the farm, are you eligible to participate in a pension plan?

If Yes, are you contributing to the plan?  If Yes, are you contributing enough to receive the employer match?  If you have investment choices, do your choices match your goals and risk tolerance? Do you understand all of the details of your plan?

 

Individual Retirement Accounts

If you have earned income, an Individual Retirement Account (IRA) might be a good way to save for retirement. There are two types of IRA’s: traditional IRAs and Roth IRAs. With a traditional IRA, you can deduct your annual contribution from your income if your income is below a certain level. If you have a Roth IRA, your contribution is made from taxable income. You can establish an IRA by mail, on the Internet, through your bank or with an investment advisor.

 

This link provides an explanation of Individual Retirement Accounts (IRAs).

http://www.montana.edu/wwwpb/pubs/mt9807.html

 

This link will help you determine your eligibility for either a traditional IRA or a Roth IRA and compare the investment outcomes of a traditional IRA and a Roth IRA. http://screen.morningstar.com/ira/iracalculator.html

 

Other Plans for the Self-employed

If you are self-employed and want to establish a retirement plan for yourself and/or your employees, here are some suggestions. http://www.dol.gov/ebsa/publications/easy_retirement_solutions.html

 

This is a link that provides more information about pension plans for the self-employed or small businesses. http://www.smartmoney.com/tax/workbusiness/index.cfm?story=smallbiz

 

Investments

Here are some of the ways to save: a savings account, mutual funds, stocks, or property. You should choose the type of investment that fits your goals, your financial situation, and your risk tolerance. To reduce your risk, you should invest in more than 1 or 2 choices (such as mutual funds). Here is a site that will help you analyze your tolerance for risk. http://moneycentral.msn.com/investor/calcs/n_riskq/main.asp

 

More information about saving and investing is available at the Financial Security in Later Life web site at http://www.csrees.usda.gov/nea/economics/fsll/fsll.html

 

Your Property

You should determine the value of your property. You need to know the fair market value (FMV) and the potential market value (PMV) of the land that you own.  You should determine the fair market value and potential market value each year and keep a record of your information.

 

Annuities

An annuity is an investment that results in receiving a fixed sum of money on a regular basis later in life. In most instances, the payments will continue as long as you live.

When you buy an annuity, you can pay the entire cost at once or you can pay for it on an installment basis.

 

Some of the disadvantages of an annuity are that the company who sold the annuity earns a management fee, there are withdrawal charges if you take the cash out early, there is no inflation protection on the monthly payments that you will receive in the future, and distributions from annuities are taxed as current income. Be sure that you are considering a reputable company when you are thinking about the purchase of an annuity.

 

Checklist about how you should plan for retirement.

ü      You should learn about Social Security benefits.

ü      If you work off the farm, are you eligible for an employer plan?

ü      Do you save for retirement with an Individual Retirement Account (IRA)?

ü      If you have other investments, are they diversified?

ü      If you own property, have you determined the value of your property?

ü      Do you keep good records for yourself and your farm or business?