Filbrandt Reports

Test Your Retirement Readiness Knowledge

Volume 18, Issue 21

Executive Summary

In this report, you will learn:

  • What is meant by “Full Retirement Age”
  • The difference between financial independence and retirement
  • Whether or not professors are at risk of losing their life insurance at retirement
  • If university professionals are required to roll over their retirement accounts to an IRA
  • What percentage of Americans over age 65 typically require long-term care

Retirement is an important part of everyone’s financial future. However, many people don’t fully educate themselves on what awaits them, and as a result, are often surprised by what does or doesn’t happen concerning their finances.

Are you ready to test your retirement knowledge and see how many of these key points you know? Let's get started.


Q. What is Your “Full Retirement Age?”

A. For people born in the year 1960 and later, full retirement age is considered to be 67. This is the age at which they will be fully vested in their Social Security benefits and be able to receive 100 percent of the eligible monthly amount, based on their salary history. People born before 1960 have different “full retirement ages.” Examples:

  • 1955: 66 years, 2 months
  • 1956: 66 years, 4 months
  • 1957: 66 years, 6 months
  • 1958: 66 years, 8 months
  • 1959: 66 years, 10 months

Professors who claim Social Security benefits earlier than full retirement date will receive less than 100 percent of eligible benefits each month through death. People who wait until after full retirement date stand to receive more than 100 percent of their eligible amount.

Q. What is the Difference Between Financial Independence and Retirement?

A. A person is financially independent when he or she no longer needs to work to maintain their desired lifestyle. Instead, their money will do the work to provide the lifestyle they want. One’s retirement date is usually tied to an age or career longevity milestone. Therefore the two don’t always coincide. This is particularly the case in academia, where retirement often occurs later than in most professions.

Q. True or False: Many Professors Are at Risk of Losing Their Life Insurance at Retirement

A. True. Many professors forget about the life insurance benefit they have through the university until after they have retired, when it is too late. Without taking action through the benefits office to extend life insurance or seeing alternative options, that benefit will cease the moment the professor’s employment ends.

Test Your Retirement Readiness Knowledge

Q. True or False: University Professionals Are Required to Roll Over Their Retirement Accounts to a Personal IRA Upon Retirement

A. False. Professors are not required to roll over their retirement accounts, and the university plans offer several advantages over other retirement plan structures:

  • When people in academia roll retirement savings outside of the university, they can lose access to some unique products that can have great benefits.
  • The university has negotiated low fees with the vendors that they have: TIAA, Fidelity, Vanguard and others. Professors want to keep taking advantage of that. Generally speaking, fees will be higher for accounts outside the university environment.
  • The IRS considers a retirement plan as a safe haven from creditors. IRAs, in some cases, are not.

Q. What percentage of American adults over the age of 65 are likely to need some form of long-term care?

A. When the topic of long-term care arises, some people have the attitude that “it won’t happen to me.” According to AARP, about 70 percent of people over the age of 65 will need some type of long-term care assistance during retirement. Therefore, this should be part of your retirement planning. See our recent report for more on some of the options you should consider to prepare for the possible need of long-term care.

How did you do?

If you answered these questions easily, give yourself a pat on the back. If not, you may realize you have more studying to do before you retire. These are all important concepts to understand so that you're as prepared as possible for retirement. Some suggested reading is in our online library of Filbrandt Reports about retirement planning, as well as our channel of retirement-planning blog posts. You can also schedule a 15-minute, no-obligation call with us to discuss any questions you may have.

Volume 18, Issue 21

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