Nurses Over 50

Last week, we introduced Nurse Shawna.  She and her husband have been neglecting their retirement plans, while getting their kids educated, and maybe letting their lifestyle creep ahead of their income.  A common story for many.  Baaaaad Nurse!!

Help is on the way!  Because even our Congress, with its 11% approval rating, saw the sagging retirement efforts of many, passed a bill several years ago allowing “catch-up” contributions.    This will greatly help Shawna, but before we go into those details,  let’s discuss a little background info.

Washington Spending and the Graying of Nursing

Are you a little frightened right now by what is going on in Washington?  The amount of spending in Washington is scary.

Nobody knows the implications it will have for our  country’s future.  Even the most sanguine of economist’s admit, this is uncertain territory.

In past times,  this type massive government spending-such as after the Great-Depression, the average age of our county was much younger.

How much younger?  Less than 7% of the population  was over 65 in 1930.  Now 43 % of households are over 50 yrs of age.

The percent of the public debt vs Gross domestic product is at a level not seen since 1950, and according to the Congressional Budget Office,  the percent of public debt/GDP is expected to continue to rise over the next 10 years.

Aging Population

What does the aging of our population mean.  To me it means it will be ever more difficult for the country to grow itself out of this deficit.  And, I am an eternal optimist, glass half-full kind ‘uv a guy!

“What does this have to do with nurses over 50?” you might ask.  “Why- saving for retirement of course!!!”  The feds will be out of money, unless they print too much.   Then with inflation, the money we have will be worth much less!  The implications for Social Security are obvious to all! You can’t depend on it!

Nurses are aging too!

photo by kalacaw

Aging well, of course, but aging nonetheless.

Nurses are aging along with the population-with the 2008 National Survey on Nurses by the feds showing over 45% of nurses over 50!

Because of all of these demographic factors, the federal government has seen the need to help older workers put more retirement money away!

Catch Up Contribution Provisions

This assistance is known as Catch-Up provisions- no, not catsup…

Normally the amount of money you can put away in various retirement accounts is capped.  Many of you may not realize it, cause you aren’t even coming close to the limits now.  But these tax advantaged retirement accounts, such as your 403b at work, or IRA’s, while generous, have a limit.

Again, you may not realize it because you have never approached the cap, if you are saving at all.

But we are going to change that-areeeeeent we?????  And if you want your retirement to be more fun than watching Oprah re-runs, then you need to get started increasing your retirement savings.  Maybe start slowly, so it doesn’t hurt as much.  Increasing your pre-tax deposits in your 403b a percent or so more at the time.

Here is a brief list of  the extra income you can deposit in your various retirement accounts:

• 403b, 401k: $5,500 extra per year over your already generous limits. (most don’t hit the limits!)
• IRA (traditional and Roth): $1,000 over your normal limit of $5,000

Now remember, these are per person, so if you are married, and your spouse is over the age of 50 as well, you can potentially put an extra $12,000 per year.

Nurse Shawna’s retirement savings dilemma:

What can Shawna and her husband do, to get back on track to the comfortable retirement they had been dreaming about.  What are her goals, “To buy a second home near their oldest daughter.”  ” To be able to travel, and see the country.”

We aren’t rich, we don’t need the Ritz- we can enjoy a Holiday Inn Express, as long as we have each other and our kids to enjoy!”  ” I just don’t want to be still on the floor, with nurses calling in sick, when I am 75 using my walker to get around!”

Nurse Shawna’s financial to-do list!

To use the “catch up” provisions to increase her 403b deposit to the max.  Her 403b adviser can walk her through the tax minefield regarding income limits.  Now remember she had an extra $1,000/month of cash flow freed up with her last child finishing school.  With the tax advantages of 403b deposits being made “pre-tax” she will actually be able to put ~$1200 extra per month into her retirement savings.  If she hits that 403b limit, then the extra can be placed in an IRA.

This will also max her out on the 3% match from her employer- adding additional monies, that she was missing out on.

She and her husband have looked over their lifestyle creep, and found many ways to save money and try to add to their savings.  This includes selling a bass boat he no longer uses.  They have dropped memberships, magazine subscriptions, and had a big yard sale to get rid of the stuff the kids left behind.

They are beginning to pay attention to the small and large ways they spend money.  They are also considering downsizing their home, so they can build up the savings to buy that second home in the next 10-15 years.

Limits on preferential taxed savings:

Now the limits on how much can be deposited in 403b’s, and the income limits on tax deduct-ability of IRA’s, is complicated.  I will attach an article for your reference.

Buy my CPA consultant, who is also a Certified Financial Planner, has advised me on writing this article, and his advice was:

“This is one of the most complicated areas of tax law.  The amount of money you can set aside in these programs is strictly enforced by the IRS, and there are penalties and interests if you get it wrong.  I highly recommend- if you are trying to hit these upper limits- to obtain the advice of a tax professional!”

Don’t let that precaution,-give you an excuse to slow your savings, however.  Just keep in mind, just as you have professional knowledge and your advice can save your patient’s life, or improve their health; it is equally important to use financial professionals for financial advice!

You over 50′s out there!  What say you?

Have you increased your retirement withdrawals at work, or in your IRA?  If not,  what are you waiting on?  Help from the gov’ment????  I wouldn’t hold my breath….