San Francisco Retirement Planning
San Francisco retirement planning should start in your 20s, if possible, but in your 30s it's even more important to start saving. A lot of thirty-somethings carry a fair amount of debt, perhaps due to buying a home. It important to be very smart and invest well during these years, since careful planning at this stage will allow you to create the foundation of your retirement savings.
If your San Francisco, CA employer offers a pension plan, don't think you're totally set for your later years. Instead, you'll want to think carefully about your pension plan, and consider whether or not it's really secure when you're planning your CA retirement. There are a number of possible hazards that you may run into with a pension, such as a pension freeze or a benefit formula change.
Retirement Planning In Your 30s
In your 30s, you may purchase a home and you may have young children. Both of these changes can really bust your budget, and put a wrench in your San Francisco retirement planning. Not surprisingly, statistics show that more people have debt during this stage of their life than any other.
If you are among the high percentage of people in their 30s who have credit card debt, now is the time to pay it off. Carrying credit card debt means you're paying unnecessary interest, and you may fall victim to credit card schemes. Also, if you're still working on student loan's in your 30s, it probably means a late you had a lot to pay off in the first place.
So, that's the bad news. However, the good news is that if you're in your 30s, you're more likely to have a stable San Francisco job, where you can get a California 401(k). Furthermore, there are a number of simple techniques you can use to get started on your San Francisco retirement planning.
First off, keep your expenses as low as possible during this stage of your life. It may be tempting to spend more and more as your San Francisco income increases, but do your best to resist the race to keep up with the Joneses. Instead, consider your San Francisco retirement planning goals, and stay thrifty.
If you don't already have an emergency fund, you make sure you create a cushion for yourself. That way, with if you lose your job in San Francisco, or you have to pay unexpected medical expenses, you won't go into debt. Again, if there is a mantra for income planning in your 30s, it's "don't go into debt".
Pension Plan Problems
At a glance, pension plans look like they could easily solve all your San Francisco retirement planning problems. After all, they basically appear to offer guaranteed income for retirement, so you can quit planning your expenses and kick back. However, pension plans aren't really guarantees; instead, they are promises. Unfortunately, you can't depend exclusively on a pension plan to provide significant income.
Your San Francisco employer can change your pension plan. For example, your San Francisco, California company, can decide to freeze your pension at any time. Basically, a freeze stops the clock at the amount of time you've been working, and doesn't include future years. It may be a "hard freeze", which stops future benefits, or "soft" freeze which stops tenure growth.
As you may know, if you have 20 years of service when your pension freezes, you lose out big time. If you have 30 years of service, you're in much better shape (though a freeze is never great). Unfortunately, you can't really anticipate a freeze, and if you're depending on your pension as part of your San Francisco retirement planning income, you may be in trouble.
Also, your pension plan may be converted to a cash balance plan. In other words, the year payout at retirement would be based on what's in your account, rather than a multiple of the compensation of the final years. If this happens after you've been with your California employer for a long time, it can be a big setback for your San Francisco retirement planning goals.
Your California employer may also change the benefit formula. The percentage benefit multiplier may be cut, or the compensation part of the equation may be changed. In other words, the amount of money you can count on from your pension when you're considering your San Francisco retirement planning isn't set in stone.
Planning on relying solely on your pension for your retirement income isn't necessarily the best idea; you should have other savings as well. As is always the case with investments, it's smart to diversify. If you want, a San Francisco retirement planning specialist can help you consider your pension's security and additional savings accounts that will help you secure your future.
Retirement Planners In San Francisco
Financial Engines Advisors, LLC4040 Civic Center Drive
San Rafael, CA 94903
David Bobrowsky, CFP
David Bobrowsky-Gateway Financial Advisors, Inc.1701 N. California Blvd.
Walnut Creek, CA 94596
Mallory Dinis - Senior Vice President - Investments
Financial Engines Advisors, LLC4301 Hacienda Drive, Suite 100
Pleasanton, CA 94588