With many Americans' retirement accounts at the mercy of a punishing stock market, now is a good time to consider going back to basics -- learning the rules of various tax-deferred retirement plans, how to measure investment risk, and how to calculate the income you'll need to live comfortably in retirement.
The Internet, of course, has no shortage of information, but instead of going to a brokerage site -- whose ultimate goal is to sell you something -- you might want to avail yourself of some new tools on the Web. Surprising resources are available that offer both objectivity and a wealth of information. It may take some time to elicit the maximum benefit, but committing yourself to understanding as much as you can about retirement should help quell some of the panic you're understandably feeling now.
NOT JUST FOR FARMERS.
The U.S. Agriculture Dept.'s extension service historically has helped educate rural families about financial issues. But as Barbara O'Neill, a family and consumer-sciences educator at the Agricultural Experiment Station at Rutgers University in New Jersey explains, "We're basically the consumer education piece.... We provide outreach to people all across the country, regardless of whether they live on a farm."
The extension service has posted two online home-study courses -- one on investing and one on retirement planning -- prepared by financial planners such as O'Neill and other experts at major universities. The 11-unit "Investing for Your Future" resembles an online textbook, offering a good reprise of the pros and cons and how-to of various types of investments, including equities, mutual funds, and fixed-income vehicles. It also contains sections on how to find professional help, and how to identify and avoid investment frauds.
The second course, "Planning for a Secure Retirement," contains 10 units that put you through basic retirement-planning paces: how to figure out if you're ready to retire, how to calculate the income you'll need, steps you can take to increase retirement income, and how to make the most of pension plans, Social Security, and Medicare.
Through numerous Internet links, the course makes good use of many of the best retirement-planning tools on the Web, such as calculators of your longevity, your risk tolerance, and how to decide whether to put your money into a traditional IRA or a Roth. O'Neill estimates that it takes about an hour to completely work through each unit and the links.
Folks who like more cyberglitz and want to devote less time to their studies can try the "Investing for Success" course. Sponsored by several nonprofit groups, including the National Urban League, the Coalition of Black Investors-Investment Education Fund, and the Investment Company Institute Education Foundation, it's designed to close the investing "knowledge gap" between African Americans and others with similar incomes. Anyone, of course, can make use of the plentiful online materials.
Each section, including those on risk-tolerance and on planning for retirement, makes clever use of pop-up windows for colorful charts, graphs, and calculators, and you'll find lots of links to additional information.
NOT READY YET.
A new government Web site, www.govbenefits.gov, purports to identify federal benefits for all Americans, including retirees. But it has several major drawbacks. One is that the site doesn't yet contain references to all the benefit programs. Another is that it's not focused on retirement benefits, so you must slog through such questions as whether you're pregnant, a coal miner (or a widow of one), whether you own property that might qualify as a wetland, or whether you fit into other highly specialized federal benefit niches.
Until it's improved, you'll do much better sticking with another site, Benefits CheckUp. This site is most useful for retirees, near-retirees, or someone with retired parents. Sponsored by the nonprofit advocacy group the National Council on Aging, Benefits CheckUp helps you locate federal, state, and local benefits that the retired or the elderly might qualify for. I tested it by posing as a 68-year-old widow living near Fort Lauderdale, Fla., residing in her paid-off home and receiving $300 per month from her late husband's pension, $600 from Social Security, and $300 in dividends and interest.
After I took about 15 minutes to answer questions on issues such as marital and health status, the site compiled a report on 19 different types of programs this fictitious lady might qualify for -- including nutritional meals, free or discounted transportation to medical appointments or grocery shopping, and property-tax relief. In each case, the report listed an address and phone number for information about the program, and documents needed to prove eligibility.
If nothing else, Benefits CheckUp should provide some comfort for those who fear that they'll be forced to eat cat food it the market keeps taking its toll on their retirement savings.
In the boom years of the '90s, it was all too easy to assume that retirement savings would just grow as the market continued its climb to dizzying heights. The new sobering reality emphasizes how important it is to take control of one's future. Making use of accessible, practical tools and information from reputable Internet sources is one good way to start.
By Ellen Hoffman
BW Online Your Retirement columnist Hoffman is author of The Retirement Catch-Up Guide and Bankroll Your Future Retirement with Help from Uncle Sam