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Retirement Savings: Pay Yourself First

Are you currently working on growing your retirement nest egg? Are you adding to it only as you have extra cash on hand? The truth is that very few of us ever have what we would consider "extra" cash. The turbulent economy and the lure of discretionary purchases can challenge even the most disciplined savings plan. To ensure that your savings game plan is successful, you should make contributions to a retirement account on a regular basis. "Paying yourself first" by making these contributions to your retirement account before you address other financial activities will set the right tone for a successful retirement savings plan. Learning to live and invest within your means is a goal that many people struggle to attain, but learning to do so will make your overall financial game plan run more smoothly. Once your expenses are paid and you have contributed to your retirement savings plan you can consider discretionary purchases.

The American Senior Benefits Association (ASBA) offers its members a wonderful benefit that can assist you as you map out your retirement savings game plan. The ASBA Supplemental Retirement Plan allows members to voluntarily establish a Traditional IRA, Roth IRA and/or a Non-Qualified Tax-Deferred Annuity (interest accumulates tax-deferred until withdrawn).

In addition to its interest rate offering, the ASBA Supplemental Retirement Plan offers plan features that are unparalleled under the fixed portion of the plan. There are no minimum contribution amounts and no administrative fees. Participants may withdraw up to 50% of their accumulated interest earnings once per year without a surrender charge. Each lump sum contribution of $20,000 or more per participant will be credited with an additional .10% in interest for 2010. Plan participants will not be assessed the graded surrender charge if the Participant is 59 1/2 and retired or disabled or deceased (whichever comes first), or has been in the plan for ten years or more. Automatic distributions may be established on a quarterly, semi-annual and annual basis. As with any tax deferred program, the IRS penalizes premature withdrawals under defined circumstances. Even in an environment of rising short-term interest rates, this plan remains a strong option offering a second quarter interest rate of 2.50% on all contributions received through June 24, 2010 guaranteed to December 31, 2010. For contributions credited in 2010, the plan has a minimum interest rate guarantee of 2.00% through December 31, 2011. Many new and existing participants are drawn to the product because of an interest rate that exceeds rates offered on Certificates of Deposits. The fixed interest rate portion of the ASBA Supplemental Retirement Plan is underwritten by Lincoln National Life Insurance Company, a leader in the industry with over $146 billion in assets under management, and with 100+ years of experience, offering both expertise and unquestioned reliability. Lincoln National Life generally invests in fixed income securities with maturities of five to seven years.

In addition to the Lincoln National Life product, ASBA members also have the opportunity to utilize the MainStay Funds for the Traditional IRA and Roth IRA portion of the plan. The plan uses Class I shares, typically only available to institutional investors. A participant utilizing the available Mainstay Funds will have an administrative asset fee equal to $1.50 per $1,000 of balance per calendar quarter. Please contact IPC (contact information can be found at the end of this article) in order to receive additional information including a Prospectus.

Once you join the ASBA Supplemental Retirement Plan, you will have the opportunity to earn Tuition Reward points, similar to other popular rewards programs, which can be redeemed as tuition discounts at hundreds of participating private four-year colleges and universities. Once you enroll in the Tuition Rewards program, you will earn Tuition Reward points equaling 1.25% of the combined asset balances in your IRA and/or Non-Qualified Tax-Deferred Annuity accounts on a quarterly basis. You will also have the opportunity to earn bonus points for enrolling in the program and for each student whom they add. Every Tuition Reward point can be redeemed for $1.00 in tuition reduction at participating colleges. These guaranteed minimum scholarships are capped at one full year of tuition, spread evenly over four years. Room and board is not included; a college's normal admissions standards apply.

As with any other undertaking, a sound financial plan requires research and a willingness to make changes in the plan based on life changes. Most employers now offer some form of a retirement plan, but very few offer plans that can provide the necessary income for an employee and their family through their retirement years. The responsibility falls on the individual to estimate their financial needs and to set up a plan to meet those needs. For further information on the ASBA Supplemental Retirement Plan, please contact IPC, the plan administrator at or you may call us at 1-800-368-3515. Remember, when you get a tax break you either use it or lose it!