Washington DC Retirement Planning

No matter what stage you are in your working life or if you live in one of the fifty states or Washington D.C., retirement planning is extremely important. No matter your age, now is the time to start thinking about retirement options.

Retirement Planning Basics: Saving Tips & Strategies

It is common knowledge that planning for retirement is a necessity. Pension plans are more or less a thing of the past, 401Ks, though an important part of your retirement planning, are generally inadequate to see you through your full retirement, and Social Security may not exist when you are ready to retire.

1. Save a little now. No matter how tight money is, you should be saving for your retirement. If you are more than twenty years away from retirement, then only a few dollars per paycheck will, over time, make a significant difference when you are ready for retirement.

2. Employer retirement and savings plans. Take advantage of any retirement or savings programs that your employer offers. Usually, employers offer a match for your savings/retirement plan. If you should change jobs, be sure to take your savings/retirement plans with you. They are much too valuable to leave behind.

3. Do not dip into your retirement savings, ever, no matter what happens! Of course you can pay the taxes and the penalties on taking that money early, but, it is a huge mistake. No matter what kind of an emergency you have, it isn’t important enough to break into your retirement fund. You should have an emergency savings fund to cover whatever has happened. If you don’t have an emergency fund, today is a good day to open a savings account for just that purpose.

4. When is a good time to start saving for retirement? How about today, right now open a saving account and start saving for retirement. It doesn’t matter if you are two years old you’ve already missed two years that you could have been saving for your old age. Most experts agree that given the fact that people are living longer than ever before you should really and truly have at least $1.5 million saved for your retirement. If Congress raises the retirement age to seventy, and the average person can expect to live well into their nineties or into their 100’s it is not an unreasonable expectation that it will take that much money to see you through your golden years.

Why Do People Retire In Washington D.C.?

As with any major metropolitan area, there are pros and cons to living and retiring in Washington D.C. It is the seat of the United States government. Most people who live and work in D.C. work for the government and have a higher per capita income than the majority of the country. Washington D.C. is a planned community and covers approximately one hundred square miles.

The Pros to Retiring in D.C.:

1. Lots of things to do. There are lots of cultural activities, theaters, shopping, museums, festivals, recreational activities galore and a large number of these activities are free. It is a vibrant active city, there is no reason to be bored in D.C.

2. Washington D.C. is centrally located on the east coast. Within a day’s drive you can go to the beach, or the mountains. New York City is nearby as well as Arlington, Virginia, and, Bethesda, Maryland.

3. Diversity of people. People from all over the world live in Washington. It is a great place to meet new people and learn about different cultures.

4. Variety of Neighborhoods throughout D. C. It doesn’t matter if you want to own your own home, or condo, rent an apartment in the city, or, live in a rural setting. You can find what suits you best in D.C.

Some of the Cons of Living in D.C. Include:

1. Heavy traffic! Los Angeles still holds the crown for the worst traffic in the country, but, it is a good guess that D.C. is running a close second. Public transportation is under-used and very limited; it usually is not considered a very good option.

2. Cost of living is considered to be the highest in the country. Salaries tend to be high as well, but, it is advisable to move to the suburbs where home and rent prices are a little more reasonable.

3. High stress level. People in D. C. tend to be highly educated and very motivated to succeed in their professions. They work long hours and sometimes feel that they are sacrificing their personal life with their family, children, and friends to run the “rat race.”

Neighborhoods In The Washington D.C. Area

Capitol Hill is the largest historical residential district in Washington D.C. Most of the row houses were built in the late ninetieth and early twentieth century and are all on the national register of historic places.

Georgetown was a busy port during colonial days and a major center for commerce. The Chesapeake and Ohio Canal begins in Georgetown and runs 184 miles to Cumberland, Maryland. Many historical homes have been restored and are open to the public. It sits on the Potomac River and today is a prime tourist location. There are many upscale shops, and restaurants. Georgetown University sits on the western edge of the neighborhood.

Dupont Circle/Embassy Row is very cosmopolitan district that has some of the stateliest mansions in Washington D.C. Most of the foreign embassies are located here as well as some of the most famous museums, art galleries, and, restaurants. The nightlife here is very popular with the gay community.

Adams Morgan has a very lively nightlife that is very popular with the young professionals. The area has a large number of bars, restaurants, specialty shops, art galleries, and coffee houses.

Penn Quarter/China Town is an area just north of Pennsylvania Avenue has been revitalized since the building of the Verizon Center about ten years ago.

Anacostia/Southwest has been undergoing some massive renovations and is now one of the fastest growing neighborhoods in the Washington D.C. area. It is located on the Anacostia and Potomac Rivers, and the Southwest waterfront. Construction will soon be complete on Nationals Park, the new baseball stadium.

Rockville/Bethesda/Chevy Chase are very close to the capitol and Bethesda has some very important institutions including the National Institute of Health, National Geospatial-Intelligence Agency, Consumer Product Safety Commission, and the National Naval Medical Center, and other important agencies. Rockville is the county seat and Chevy Chase is a primary residential area.

Shaw originated with the freed slave encampments that sprang up around Washington D.C. during and after the Civil War. During the late nineteenth century and early twentieth century the residents developed an intellectual and cultural lifestyle. Howard Theological Seminary received its first matriculates in 1866.

The jazz of the seventh street musicians began attracting attention during the 1920’s and Duke Ellington still holds the title of the most famous musician from the area. Shaw remains primarily an African-American neighborhood and many of the houses and buildings are on the national register of historic places. In recent years, young professionals and Ethiopian-Americans have moved into the area creating some controversy among those who feel the neighborhood should hold onto its historic African-American culture.

Mount Pleasant is in the Northwestern quadrant of Washington D.C. and has a population of approximately twelve thousand people. It is known as a working class neighborhood and most of the people who live here are wage earners, though there are a few professionals, and middle income families.

The Cost of Living in Washington D.C.

The cost of living in Washington D.C. is among the highest in the nation. However, there are many free cultural events, museums, art galleries, festivals, and things to do that don’t cost a cent that can make your social life very inexpensive by comparison to other cities in the United States.

Cost of housing within the metro area is extremely high and most people opt to move to the suburbs and commute into the city itself. Housing costs are well above the national average as well as food, tobacco, alcohol, gasoline and other staples.

Washington D.C. is a great place to retire if you have an above average retirement income.

The Year Round Weather

Washington D.C. is in the humid sub-tropical climate in the Mid-Atlantic area and removed from major bodies of water. It has four distinct seasons. Winter temperatures average 38° (F) and the average snowfall is about 14.7 inches. Blizzards affect Washington D.C. about every three to four years and the most violent storms are called nor’easters. They contain high winds, heavy rains or snow, depending on the time of the year.

Spring is usually warm with occasional heavy rains and cool evenings. Summer is hot and humid. The average temperature in July is 79° (F) (26° C) with a relative humidity of sixty-six percent. The combination of the heat and humidity often spark violent thunderstorms through the summer months.

Hurricanes that track through the Atlantic have usually weakened, partly because of the city’s inland location. The Potomac has flooded on rare occasions, mostly in the Georgetown area. For the most part, Washington D.C. seems to be protected from natural disasters.

The highest recorded temperature in Washington D.C. was 106° (F) (41°C) on both August 6, 1918, and July 20, 1930. The coldest temperature was -15°(F) (-26° C) on February 11, 1899, during the Great Blizzard of 1899.

Healthcare in Washington D.C.

The District of Columbia has one of the premium health care systems in the country. Its fourteen hospitals, many of which are affiliated with major medical schools and research centers, include hospitals at Georgetown, Howard, and George Washington universities.

The city offers state-of-the-art specialty hospitals for women, children, and veterans. There are world-renowned centers for neuro-scientific research. And the study of fertility, pregnancy, and development is ongoing work being done in the Washington D.C. hospital system. There are also nationally recognized services for trauma, cancer, heart disease, and organ transplants.

One of the most renowned medical care and research facilities in the world is nearby is the Johns Hopkins Hospital and Health Systems which is supported by the university’s School of Medicine. In 2003, the institution was named the nation’s best hospital, and second best medical college. As a result it was the largest recipient of National Institutes of Health funding in America.

Qualified Well Known Retirement Plans

A qualified retirement plan is an employer sponsored plan that meets the requirements established by the Internal Revenue Service (IRS) and the US Congress.

Pensions, profit-sharing plans, money purchase plans, cash balance plans, SEP-IRAs, SIMPLEs, and 401(k)s are all examples of qualified plans, though each type works a little differently.

Employers may take a tax deduction for contributions to qualified plans, and in some plans employees may make tax-deferred contributions.

Among the other requirements, a qualified plan must provide for all eligible employees equivalently. That means the plan can’t treat highly paid employees more generously than it does less-well paid employees, though one group of employees, such as those within five years of the official retirement age, may receive different treatment than another group.

In contrast, a non-qualified plan may be available to some employees and not others. In some plans, non-qualified contributions are made with after-tax dollars, either by the employer or the employee, although any earnings in the plan are tax deferred.

In other plans, future benefits are promised but contributions are not actually deposited in an account established for the employee.

Mandatory federal withdrawal rules that apply to qualified plans do not apply in the same way to non-qualified plans, though non-qualified plans are subject to stringent regulation as well.

A plan that meets the requirements of the Internal Revenue Code is eligible to receive certain tax benefits. These plans must be for the exclusive benefit of retirees or employees or their beneficiaries.

Non-qualified deferred compensation plans are designed for companies with highly compensated employees whose ability to maximize plan contributions are limited by a qualified plan. It is an option for key executives and helps these employees maximize their retirement needs.

Qualified Well Known Retirement Planners for Washington D.C.

Managing retirement benefits and wealth accumulation programs for employees in today’s complex organizations, is one of the most challenging jobs in business. It’s a balancing act of multi-dimensional proportions. Employees at all levels look to their employer for programs and advice to help them achieve financial security. Management wants competitive benefits with an economical cost structure. Accelerated economic, social and regulatory changes call for adaptability and an above average competence of fiduciary oversight, openly honest in fee structures, and bottom-line results.

Merrill Lynch
555 12th St. NW
Washington D. C. 20004
800-Merrill

Retirement Choices LLC
5405 Hesperus Dr
Columbia, MD 21044
410-730-8787

District of Columbia Retirement Board
900 7th Street, NW, Second Floor
Washington, DC 20001
(202) 343-3200

Calculating / Estimating Retirement Savings Needs

Most people who first meet with retirement planners are shocked at how much money they should be saving for their golden years. But, if taken in the context that you will be saving throughout your adult life, perhaps twenty to thirty years, it suddenly becomes an easier figure to grasp.

When you retire your living expenses will decrease as well. By then you will have your mortgage paid off, your children will be grown and on their own, and you won’t have the work related expenses any more. You won’t have to buy as much gasoline as you did when you were commuting to work

As a general rule you will be able to live comfortably on seventy-five percent of your current income. When calculating how much money you will need to save for retirement it is a good idea to figure three percent per year for inflation. In some years inflation is less and other years it is more than three percent, but, over all that is the general trend.

You can only estimate how many years you will be retired, but, let’s assume you work until you reach full retirement age which is currently sixty-seven. If you live to be ninety-seven then you will need enough resources to carry you through a full thirty years of retirement. In your declining years, your medical expenses will increase, so you will need to carry health insurance.

Avoid Withdrawing if You Can

Don’t raid your retirement accounts to pay for your children’s college tuition. First of all there are plenty of programs to help with college tuition costs, from grants, scholarships, and other paid programs that it should not be necessary for you to sacrifice your future for theirs.

If they have to get low-interest college loans, then it is better for them to start their adult working life in debt, then for you to end your working life, in debt without any retirement savings.

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