2nd Quarter 2007

Make Your Savings Last Longer With a Retiree Dream Job

What’s one of the best ways to stretch your retirement savings? Keep working. Even working at your dream job a few hours a week can make a huge difference. Earning any extra money can help you postpone taking withdrawals from your nest egg, letting money that would otherwise be spent continue to grow. As a result, you’ll have more money to finance a shorter full retirement. You might even earn enough to keep building your retirement savings, or you may qualify for valuable health insurance benefits.

Working past retirement can be fun if it’s something you enjoy doing. Years before you retire, start thinking about what you’d like to do. You might become a consultant in your field, for example, or start a totally different line of work. Be creative: Some retirees join the Peace Corps, pick up seasonal work as a guide at a state park or go into real estate. Others start a small landscaping business, become an extra in movies, work on cars or boats, become a local handyman, fix up old houses, work with animals or take a job at a favorite store. Even if it’s a low-paying job you couldn’t afford to take during your prime working years, now you can come out ahead if you’re working after you had originally planned to retire.

You’ll have the best chances for success if you lay the groundwork for your dream job while you’re still working. Take classes in the field or earn professional certifications so you’ll be ready to make the switch. Start networking and attend professional conferences. Get experience by working part-time during weekends or when you’re off-shift. If you like your current job but want more flexibility, ask your employer whether you can work as a consultant down the road.

Update Your Beneficiary Designations to Control Where Your Money Goes

One of the biggest mistakes people make with their retirement plans can be fixed easily: They forget to update their beneficiary designations when they get married, divorced, have children or grandchildren, or if one of their beneficiaries dies. If you don’t make changes when you have major life events, the wrong people could inherit the savings you’ve worked for years to build.

Guided Pathways™ Helps With Retirement Savings

Investing Spotlight

When people make investment changes based on the daily performance of the stock market, they tend to make poor decisions - selling when a stock is down and buying when it’s doing well. That is exactly opposite from the way to make money in investments, which is to buy low and sell high.

How Much Can I Save in a 401(k) and a 457 Plan?

In 2007, you can make a combined contribution of up to $31,000 to a 457 and 401(k) plan ($15,500 each), if both plans are offered by your employer. Additionally, if you are age 50 or older, you are eligible to contribute up to $5,000 more to each plan.

Vantagepoint Funds Rank Among the Top Performers

Vantagepoint Funds ranked 13th in the latest Investment News rankings of performance among U.S. diversified equity fund families, with a gain of 10.03 percent over the 12 months ending March 31, 2007. Vantagepoint Funds ranked ahead of fund families including Vanguard, Fidelity and Putnam.

Tax Rules for Home Sales

Most people no longer owe taxes on the profits when they sell their homes. As long as you’ve owned and lived in your home for at least two of the past five years, you won’t owe taxes on up to $250,000 in home-sale profits if you’re single (including $250,000 for each member of an unmarried couple who owns a house jointly), or $500,000 in profits if you’re married filing jointly. Any profits above the exclusion will be taxed at your long-term capital-gains rate of 15 percent or less.

Market View: Balancing Risk and Reward

All investments involve risk. Typically, asset classes with the highest return potential also carry the most risk. Stocks tend to be more volatile than bonds or cash but also offer the possibility for larger gains.

New Ways to View Your Personal Rate of Return

You can now access more information about the performance of your ICMA-RC accounts. In addition to the quarterly and year-to-date personal rates of return that we provide on our participant Web site, Account Access, we’ve added several new features to help you view and analyze your personal rate of return data.