Category Archives: Retirement Planning

Ideas to help preserve and grow your money

6 Retirement Lessons

My Comments: My professional efforts these days are focused on helping people make good decisions about their retirement. My grey hair lends itself to this demographic.

So my posts tend to favor ideas and thoughts that are relevant to many people either starting to navigate these transitional waters to retirement, or are already there.

Nov 4, 2016 | Andrea Coombs

Are you a retirement “do-it-yourselfer,” convinced you can plan for your own retirement without paying for a financial adviser? That’s all well and good, but given that money managers work with people in a variety of financial situations, their experiences with the problems that prevent people from retiring can offer insights into how to overcome those challenges.

I spoke to a few experts to find out how they handle that difficult situation: a client who wants to retire but whose financial picture suggests she shouldn’t yet do so.

Ideally, of course, advisers want people to seek financial advice early on, years before they plan to retire. “Then we have the ability to help you work towards your goals over a period of time and make adjustments as things change,” said Nancy Skeans, managing director of personal financial services at Schneider Downs Wealth Management Advisors in Pittsburgh, Penn.

But sometimes people don’t show up at the adviser’s office until they’re eager to leave the workforce for good. In those cases, she said, advisers sometimes are forced to deliver bad news.

“We just had that situation with an individual and his wife,” Skeans said. “He’s thinking about retiring in two to three years. It was very obvious to me when I looked at his balance sheet, coupled with what I backed out as to their spending, that if they retired immediately they would put themselves into a precarious situation.”

One red flag was that this couple hadn’t accounted for their retirement tax bill. “All of their assets were in tax-deferred accounts,” Skeans said. “Every dollar they spend is going to be a dollar plus the taxes. That means, if you’re trying to support a standard of living after tax, you’re going to have to gross that money up.”

So, one lesson is to remember that the government is going to take a bite out of your retirement account. Here are more lessons financial advisers say they’ve been forced to teach new clients:

1. Be disciplined about a budget

In 2008, Skeans said, a client who was about 64 years old was laid off. “He decided he wasn’t going to look for other work,” she said. “We ran the projection. Obviously, at that point in time the portfolios were down because of the market and I was deeply concerned.

“Fortunately the guy was a finance guy, a controller for a small company. He heard us loud and clear that the biggest thing he and his wife needed to do was stay within a budget,” she said.

At the time, Skeans talked with the couple about how to stabilize their finances through reduced spending. “He was very adamant he did not want to go back to work,” she said. “We were able to help him and his wife structure a budget and they have stuck to it and continue to do so.”

And now? “Eight years later, their portfolio is just slightly below where it was eight years ago,” Skeans said.

2. Take a practice run

People sometimes underestimate what they’ll spend in retirement, especially in the early years when they suddenly find themselves with plenty of free time and energy, said Tripp Yates, a wealth strategist at Waddell & Associates in Memphis, Tenn.

“I’ve seen it where people do a budget for retirement and they tell me, ‘OK, we’ve done all the numbers and we can live off $50,000 a year,’” Yates said. Too often, that’s a bare-bones budget that doesn’t take into account travel and other activities. “The first five to 10 years of retirement, people are probably going to spend more rather than less, because they’re in fairly good health and want to enjoy that time,” he said.

One way to get a good handle on your spending is to test-run your retirement budget, he said. In one recent conversation with a couple, he told them: “Maybe one spouse who really wants to retire can. The other spouse continues working and maybe we take six months to a year and try to live on that budget, practice, see if it’s actually doable before both husband and wife call it retirement,” Yates said.

3. Don’t focus on the market

Given the media’s attention on the market’s every move, it’s no surprise that people seeking help from an adviser often fret about what happen next. That’s the wrong focus, said Robert Klein, president of the Retirement Income Center in Newport Beach, Calif. (Klein is also a writer for MarketWatch’s RetireMentor section.)

“People read so much in the media about performance and that’s naturally their focus until you show them on paper it’s all about your goals and planning for those and controlling what you can control,” he said. While investors must make sure their investments are diversified, there’s no way of knowing when the market might take another steep plunge.

“You have to control what you can control and develop prudent strategies that are going to work no matter what the market does,” Klein said.

4. Be clear about your goals

Retirement planning is about more than “just having X dollars in income,” Klein said. Figure out what you want retirement to look like, and then work from that. “It’s about a lifestyle in retirement. What are they going to be doing day-to-day in retirement?” he said. “Then you can focus on the finances: ‘What is it going to take so I can do that?’”

For some people, a hard look at a retirement lifestyle leads them to choose to work longer, Klein said. “A lot of people are better off working longer even if they can afford to retire. They just don’t have the hobbies. It’s a whole different routine when you retire,” he said. “Phased retirement is really good for a lot of those people, so they can take baby steps into retirement,” he added.

5. Use software that provides a picture

If you’re planning your own retirement, are you using financial software that will create projections as a chart? “Most people don’t communicate with numbers, they communicate pictorially,” said Kimberly Foss, founder of Empyrion Wealth Management Inc. in Roseville, Calif.

Foss said she shows clients a simple chart depicting how long their money is likely to last if they retire now. In some cases, she might produce a second chart that shows how spending less might make their outlook improve, and then talk with the client about options, such as downsizing the house or refinancing, working longer or delaying the purchase of a new car.

For one couple, seeing those pictures and having that discussion made all the difference, Foss said. They wanted to spend the same amount of money in retirement that they’d been spending while they worked, but the size of their savings account didn’t support that goal. So, they switched from the country club to a lower-cost health club, refinanced into a cheaper mortgage and started cooking at home more rather than eating out.

Reducing those costs and others preserved their portfolio for the long haul. Said Foss: “It created the income so that they could retire.”

6. Get real with your adult children

In some cases, people retire but unforeseen expenses put their financial security at risk. Skeans said one client unexpectedly found herself supporting her adult daughter and grandson, who live in her home, even as she herself recently entered a care facility.

“She’s taken out enormous amounts of money to help her daughter and grandson,” Skeans said. “She’s supporting their household and she’s paying the cost of assisted living. I said, ‘If you continue at this pace, this portfolio is going to be gone in five years.’”

Skeans said if the client sells her home—that is, asks her daughter to find her own place—that money would bolster her finances. “She should be able to make it and still leave something to this daughter in the end,” Skeans said. “She said, I’m going to talk to my daughter about that.”

How Timing Impacts Your Retirement Portfolio Longevity

My Comments: Many a client has asked “How long will my money last?” and the only rational, unsatisfactory answer is “It depends”.

Unfortunately, luck plays a major role in our lives. If you’re alive and well today, chances are you’ve had at least some good luck. In answering the above question, much depends on timing, which is typically something over which we have NO control. Little more than deciding the date of your birth.

Follow these thoughts by Kevin Michels to get some additional insights.

Kevin Michels, CFP® February 20, 2017

How long will your retirement nest egg last? This is an intricate question to answer and many factors come into play such as rate of return, the value of your savings, annual withdrawals, inflation, etc.

However, one factor that is very important and is largely not spoken of is the timing of when you retire. In fact, the timing of when you retire is so important it can make the difference between running out of money in retirement or leaving a multi-million dollar inheritance to your children and grandchildren.

A Retirement Example

Let me explain by example. Let’s take 10 imaginary couples and pretend they have each saved $1 million for retirement. Each couple invests the full $1 million in the S&P 500 for the duration of their retirement, which we’ll assume lasts for a period of 30 years. Each couple also plans on withdrawing $100,000 per year from their portfolio and will increase that amount by 3% per year to account for inflation. The only difference between each couple is the timing of their retirement. The first couple retires in 1977, the second couple in 1978, the third couple in 1979, and so on and so forth.

All else being equal, aside from the timing of each couple’s retirement, how will they each fare over a 30-year period? The disparity between the longevity and value of each couple’s retirement portfolio is staggering.

Three out of the 10 couples actually ran out of money before the 30-year period ends, simply because they chose to retire one year too early or one year too late, while the other seven couples end the 30-year period with balances ranging from $500,000 to $3.2 million.

The three couples that ended up running out of money (1977, 1981, 1986) all had something in common. The first five to 10 years of their investment returns were subpar. The perfect storm for a short-lived retirement portfolio is created when you pair investment losses with withdrawals in the first five to 10 years of retirement. You get so far behind, that it becomes impossible to catch up. This is known as “sequence of returns risk.”

To put this into perspective, take a look at the table below regarding the most successful couple, who retired in 1979 and ended with $3.2 million, compared to the least successful couple who retired in 1977 and ran out of money in 20 years.

Couple

Longevity of Retirement Nest Egg

Average Annual Return of S&P 500 for 30-Year Period

Average Annual Return of S&P 500 for First 5 Years of Retirement

1977 – 2006

$0 after 20 years

12.48%

8.13%

1979 – 2008

$3.2 million after 30 years

11.00%

17.36%

Although over the long term the S&P returned 1.48% more per year in 1977 to 2006 than 1979 to 2008, the couple that retired in 1979 will leave a multi-million dollar estate largely because in the first five years of retirement they have superior investment returns than the couple who retired in 1977.

Safeguards to Protect Retirement Investments

Fortunately, we can put safeguards into action to mitigate the sequence of returns risk.

1. Don’t invest your entire portfolio in the S&P 500 or any other one asset class.

For the most part, it is good for retirees to be invested in stocks. This protects against inflation risk and low yields in the bond market as we’re seeing now. But volatility comes with stocks so it’s also important to include some bonds or bond funds in your portfolio as well, to smooth out returns.

2. Always keep at least the next two years of expected withdrawals in cash or short-term bonds.

In our example, each couple planned on withdrawing $100,000 per year and increasing that amount by 3% a year for inflation. So in their first two years of retirement, they could have liquidated $203,000 ($100,000 for year one and $103,000 for year two) and kept it in cash to safeguard against short-term volatility. This would have saved the couples who retired in 1977 and 1981. Both of those couples started their retirement with negative returns.

3. Rebalance your portfolio annually.

Rebalancing is simply the practice of selling high and buying low. If your portfolio is invested in 70% stocks and 30% bonds and the stock market underperforms the bond market for a year or so, naturally the stock portion of your portfolio will decrease while the bond portion will increase. If at the end of the year your portfolio is now made up of 65% stocks and 35% bonds, you can sell the 5% of bonds to reinvest in low-priced stocks or to keep in cash for future withdrawals.

4. Aim for a lower withdrawal rate in the first five years of retirement.

Your withdrawal rate is calculated by dividing your total withdrawals for the year by your total portfolio value at the beginning of the year. In our example, the withdrawal rate for our retirees starts at 10% ($100,000/$1 million), which is high for the first five years of retirement. As previously stated, the longevity of your retirement portfolio is greatly affected by your returns and withdrawals in the first five years of retirement. If each one of these couples would have started with a lower withdrawal rate, even 9%, they all would have had money left over at the end of the 30-year period. Try to start with a lower withdrawal rate and then increase it as your portfolio grows.

In the end, the decision of when to retire isn’t as important as the plan you have in place to ensure your retirement capital lasts the duration of your life. Before you begin living the golden years, make sure you work with your spouse and potentially a financial planner to have a plan in place that will provide peace of mind during those years of market turmoil.

A Retirement Checklist

My Comments: There’s a fundamental difference between strategies and tactics. If you don’t now know the difference, and you realistically plan to retire at some point, then I encourage you to learn and understand the difference.

Too many people get caught up in tactical steps, responding to what they might see on TV or in response to a salesman or saleswoman wondering why their commission is still in your pocket.

In the context of retirement, your first effort is to develop a comfort level with the strategic implications of moving away from the work force and into what we favorably think of as retirement. Only when you (and your significant other) come to terms with how you want the rest of your life to play out should you then explore the various tactical steps that will allow you, hopefully, achieve your strategic goals.

The following checklist is about the best outline I’ve found to help you get where you want to go.

Kelly Henning, CFP  \  July 8, 2016

Clients often ask financial planners, “Will I be OK in retirement?” Before looking at a client’s assets and expenses to answer that question, we ask follow ups such as, “What do you want your retirement to look like?” Each individual’s perspectives on retirement are unique. Some people want to remain in their current house and community. Others wish to downsize and stay in the area close to family and friends. There is yet another group that wants to leave expensive Northeast states and move south or west.

Thus, it’s key to expand on a client’s retirement goals earlier rather than later.

The checklist below illustrates different items to think about as retirement approaches, from ten years before to right after retirement begins. The earlier one starts planning for retirement, the more prepared one should be not only financially, but also emotionally.

5 to 10 Years Before Targeted Retirement
• Brainstorm retirement goals and dreams of what your retirement will look like.
• Think about where you want to live and whether you want to downsize.
• Revisit goals and timeframe annually.
• Obtain annual credit report.
• Pay down mortgages and other debts to strive to become debt-free by retirement age.
• Revisit progress toward achievement of retirement goals, and adjust retirement contributions and/or spending as appropriate.
• Review estate planning needs and update documents, titling and beneficiaries as needed.
• Consider the need for Long Term Care insurance.

1 to 5 Years Before Targeted Retirement
• Attend pre-retirement workshops and/or consider a personal life coach to help prepare for the transition.
• Get comprehensive medical, dental and vision exams while still covered by employer health insurance plans.
• Consider Social Security claiming strategies.
• Request estimates of pension or retiree medical benefits.
• Get educated about Medicare options.
• Revisit estimated budget for income and expenses anticipated in retirement.

6 to 12 Months Before Targeted Retirement

For income tax planning:
• Speak with your accountant about your expected new income bracket and how to plan for it.
• Discuss possible Roth IRA conversion or other tax planning strategies.
• Know if you are eligible for any outside retirement plan contributions.

401(k) or 403(b) plan:
• Plan to max out contributions for the current year.
• Confirm all funds in 401(k) accounts are vested.
• Confirm whether funds are pre-tax only or pre-tax and after-tax.
• Coordinate with wealth manager to keep 401(k) or 403(b) funds in the plan or roll to an outside IRA.
• If rolling to an outside IRA, open new account and obtain account number and custodian address/wire instructions for future deposit.
• If retiring between ages 55 and 59.5, you may want to wait to roll over due to options to take penalty-free withdrawals from your 401(k) in year of retirement or take 72t distributions for at least five years.

Pension benefits:
• Obtain all pension benefits available through current employer.
• Determine whether or not a lump-sum pension option is available and whether it is preferable for you.
• Other qualified and non-qualified retirement benefits.
• Obtain information on all additional plans offered by the company and information on vesting, tax, and transfer of these accounts.

Social Security Benefits:
• Login to http://www.ssa.gov, create an account and obtain a current benefits statement.
• Be sure to complete this step for spouse.
• If divorced, contact Social Security directly at (800) 772-1213 and obtain information on taking benefits as an ex-spouse.
• Coordinate Social Security Analyzer tool with benefits statements to determine your claiming strategy.

2 to 3 Months Before Retirement
• Paid time off: If you have any accumulated sick days, vacation time or other PTO days, determine if/how you will be paid for these days.
• Advise your supervisor and HR representative in writing of desired retirement date.
• Hopefully you’ll agree on a specific date (e.g. first week in January depending on payroll and other items).
• Consider a date which you will be eligible for year-end bonus or other benefits, including 401(k) matches, profit sharing, or stock options.
• Request retirement package of paperwork from HR.
• Depending on the size of your company, HR will generally provide its own packet of paperwork and forms that need to be completed.
• Determine date for exit interview with HR/supervisor.
• Make final decision on all insurance, including medical, dental, vision and life insurance (timing will depend on company policies).

One Month Before Retirement
• Obtain via online or phone all the paperwork to roll your 401(k), 403(b) or other retirement accounts, out of the plan into an outside account, if that’s the choice you’ve made.
• Complete paperwork and contact HR to see if plan administrator signature is required.
• Paperwork will be sent in following retirement date.

One Week Before Retirement
• Confirm that HR retirement package has been completed and all relevant documents are signed.
• Clean-up desk/emails, etc.
• Remove any personal/private information from work email and computer.

Post Retirement
• Complete the 401(k) rollover paperwork, which you should submit following retirement date

There are many decisions to consider as one prepares for retirement, from healthcare options to account logistics. Understanding what should be done and when well in advance of your retirement date can be key to reducing stress in the months and weeks before you stop working. Employers will have deadlines on paperwork submission, some of which are your last day of work or thirty days after. Knowing these deadlines and seeking information in advance is essential. Use all available resources, such as your company’s human resources department and your professional advisors, to help make the transition as smooth as possible.

Attention, Seniors: A New Social Security COLA Bill Was Just Introduced in Congress

My Comments: This might be good news if it wasn’t so unlikely to happen.

Sean Williams | Mar 18, 2017

According to the January snapshot provided by the Social Security Administration, nearly 41.4 million retired workers are receiving a monthly benefits check from Social Security totaling an average of $1,363. While that may not sound like a lot, Social Security benefits comprise more than half of all monthly income for 61% of retired workers, based on SSA data. Without Social Security, it’s very likely that the poverty rate for seniors would soar, and many would struggle to make ends meet.

But as many of you also probably know, Social Security is beginning to run into some roadblocks. Two major demographic shifts — the ongoing retirement of baby boomers which is lowering the worker-to-beneficiary ratio, and the lengthening of life expectancies over the past five decades — are weighing on this vital program. According to the 2016 report from the Social Security Board of Trustees, the program will have exhausted its more than $2.8 trillion in spare cash by the year 2034, at which point a benefits cut of up to 21% may be needed on an across-the-board basis.

Congress can’t forget about current retirees

It’s pretty clear from this data that Congress needs to act with some degree of expediency to ensure that Social Security offers a financial foundation during retirement for the many generations of workers to come. However, Congress also has to be careful not to forget about the tens of millions of seniors already receiving Social Security.

One of the more contentious battles in Washington is in regards to what should be done (if anything) about Social Security’s cost-of-living adjustments, or COLA.

Right now, Social Security’s COLA is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). As with any of the CPI variants, it takes into account the price movements of a pre-determined basket of goods and services and compares that year-over-year data.

For Social Security, the average CPI-W reading from the third quarter of the previous year serves as the baseline figure, while the average reading from the third quarter of the current year serves as the comparison. Any decrease in year-over-year prices means a 0% COLA for the following year. Thankfully, Social Security benefits cannot be decreased due to deflation, albeit beneficiaries have had three years of no COLA, and a minuscule 0.3% COLA over the past eight years. Any increase in the year-over-year CPI-W is passed along and rounded to the nearest 0.1% in the following year.

A new Social Security COLA bill was just introduced

The debate in Washington involves whether or not the CPI-W is the best measure to tie Social Security’s COLA to. According to one Congressman, it’s not.

Earlier this month, Rep. John Garamendi (D-Ca.) introduced the CPI-E Act of 2017 into Congress. The sole purpose of the Act introduced by Garamendi would replace the CPI-W with the Consumer Price Index for the Elderly, or CPI-E, in calculating Social Security’s COLA. The CPI-E strictly measures the spending habits of households with people aged 62 and up. Since roughly two-thirds of all Social Security beneficiaries are seniors, switching to the CPI-E would (presumably) be more accurate in representing their spending habits.

For instance, according to data found in Garamendi’s press release that accompanied his bill, which already has 24 co-sponsors, the CPI-E rose at an average rate of 3.1% between 1982 and 2011 compared to just 2.9% for the CPI-W over the same time span. In other words, seniors could receive a larger COLA most years with the CPI-E.

Why, you wonder? The CPI-E places a considerably larger emphasis on medical care expenditures and housing costs, which for seniors are often much higher than that of working-age Americans as measured by the CPI-W. Likewise, the CPI-W tends to overemphasize the impact of educational, apparel, transportation, and food expenditures, which just aren’t as important for seniors when compared to working Americans.

In recent years, weaker fuel prices at the pump and stagnant food prices have been the main cause of seniors’ weak COLAs. Plus, medical care inflation has outpaced Social Security’s CPI-W-based COLA in 33 of the past 35 years. According to estimates from The Senior Citizens League, had the CPI-E been used in place of the CPI-W over the past 25 years, the average retired worker would have netted an extra $29,600 in payments.

Switching to the CPI-E probably isn’t in the cards

However, before you get too excited, realize that the chances of this bill succeeding in a Republican-led Congress are slim-to-none.

For starters, the CPI-E has its shortcomings, too. For example, the CPI-W factors in more households than the CPI-E, meaning that it’s providing more data points and presumably a more accurate picture of what Americans are spending their money on.

Also, the CPI-E fails to take into account the rising costs associated with Medicare Part A. Medicare Part A covers in-patient hospital stays, surgical procedures, and long-term skilled nursing care. Even if the CPI-E Act of 2017 were to pass and be signed into law, seniors would likely still fail to keep pace with the true medical care inflation they’re facing.

There’s also that not-so-tiny problem about Social Security running out of spare cash between now and 2034. Switching to the CPI-E without any additional revenue generation would mean depleting the Trust’s spare cash at an even faster rate.

And, of course, the CPI-E is the complete opposite of what Congressional Republicans are angling for. Rep. Sam Johnson’s (R-Tx.) Social Security Reform Act of 2016, introduced in December, called for a switch to the Chained CPI, which Republicans seem to prefer over the CPI-W. The Chained CPI factors in a consumer behavior known as “substitution,” which the CPI-W does not. The Chained CPI assumes that consumers will trade down to lower-priced goods and services if the goods and services they currently buy become too pricey. Thus, the Chained CPI grows at a slower pace than the CPI-W, which could place seniors in a bigger hole to medical care inflation.

Clearly, this isn’t the last we’re going to hear about the COLA debate on Capitol Hill. But, don’t expect COLA reform to happen anytime soon.

5 Ways to Protect Your Money in Retirement

My Comments: OK, #5 may be a bit of a stretch for me. I’ve had a black thumb all my life; anything I plant dies immediately.

There are now millions of us in retirement, or what for some of us is semi-retirement. And whether you believe it or not, the rules underlying economics and finance have not suddenly become invalid.

No, the world is not about to end, though some would have you believe it might. But it will be different and there are always unintended consequences. The level of uncertainty right now is troubling to me, so these steps you might take are informative.

Martin A. Smith, CRPC®, AIFA®, RPS® February 27, 2017

Retirement is a celebrated event for obvious reasons. You have worked 30 to 40 years hopefully doing what you love and made a positive impact on society, within your church, and for the legacy and name of your family. Despite these noteworthy accomplishments, if you are not careful your “golden years” might not be quite as golden as you have hoped.

There’s almost nothing worse than finally arriving at your desired destination in life only to have the rug snatched from under you because of some mistakes that could have been avoided. That is what I am here to help you accomplish today…before you retire. Or, if you are already retired, then I urge you to consider the first of five ways retirees should protect their money during retirement. Truth is, you really do have a lot to lose, so let’s not risk it!

Here are five ways retirees should protect their money during retirement:

1. Invest in a Good Cybersecurity System

Cyber fraud is on the rise and retirees and the elderly are among the most vulnerable targets for cyber criminals. In many cases, being a victim of this type of crime can be avoided. Learn how to take measures to secure your personal data, such as sending secure emails with files that are encrypted when communicating with your financial advisor.

2. Understand What Your Retirement Money Is Invested in and Why

Financial literacy is a challenge for many. While many retirees are familiar with investment vehicles such as mutual funds, stocks and conceptually speaking, bonds, there are fewer who are able to explain how their portfolio is invested, what type of asset classes their portfolio is comprised of and how the economy will impact their portfolios.

In addition, I have found that a number of investors simply have the wrong notion in their minds about the pros and cons of investing in the stock market during a recession. Investment portfolios will fluctuate throughout the economic cycle (peak, recession, trough recovery expansion and peak).

3. Buy Long Term Care Insurance (LTC)

If you are like most people you expect to live a long time. Innovations in medical science and biotechnology mean that people are living longer. In fact, according to the National Institute on Aging’s “Global Health and Aging” report, “The dramatic increase in average life expectancy during the 20th century ranks as one of society’s greatest achievements. Although most babies born in 1900 did not live past age 50, life expectancy at birth now exceeds 83 years in Japan—the current leader—and is at least 81 years in several other countries.”

What does this mean for someone who is retired? While it is mostly good news, the bad news is that living longer comes with a price tag and an expensive one at that. That price tag is what we refer to as needing nursing care (i.e. long-term care), whether it’s in-home care or a nursing home facility.

The average daily cost of Long Term Care in most states exceeds $200 per day, in today’s dollars. Just image what the future inflation-adjusted cost will be. Long-term care is definitely a conversation that you want to have with your financial advisor.

Unless you have enough money saved to self-insure, a person who is retired can watch the value of their estate diminish considerably if they are uninsured and forced to spend their retirement savings to provide for their own nursing care needs, or the needs of an uninsured elderly parent.

4. Steer Clear Of Items That Depreciate

Many things will depreciate in value faster than you can say, “I love my retirement!”

I cannot say enough about “impulse buying,” especially for those who may suffer from an impulsive spending disorder. If you truly love your retirement, then don’t jeopardize your quality of life in retirement with wasteful spending. One example that comes to mind is casinos. According to http://www.casinowatch.org, there are 1,511 casinos in the United States that rake in $71.1 billion in annual revenues.

5. Plant a Vegetable Garden. Yes, I Am Serious!

You can’t enjoy your retirement fully if you are not in the best physical shape, right?

According to the Centers for Disease Control and Prevention (CDC), moderate-intensity level activity for 2.5 hours each week can reduce the risk for obesity, high blood pressure, type 2 diabetes, osteoporosis, heart disease, stroke, depression, colon cancer and premature death. The CDC considers gardening a moderate-intensity level activity, and can help you to achieve that 2.5 hour goal each week.

So, perhaps now would be a good time for you to engage in an activity that requires you to kneel, squat, use your arms, shoulders, back and leg muscles more vigorously.
Gardening is one of the best ways for retirees to gain exercise without having to spend money on a gym membership. In addition to the benefit of just being able to enjoy the outdoors and gain peace of mind as you feel the wind blowing, you can also save money by growing your own food.

Furthermore, how comfortable are you with the idea of pesticides, certain chemicals and “orgenetically engineered foods” that have been genetically engineered in some laboratory? I’ll pass! You should enjoy your retirement, therefore I hope you consider these suggestions.

6 Reasons to Work Past Retirement Age

retirement_roadMy Comments: You may not need a reason to keep working. But more and more of us are choosing to remain employed. Modern medicine has conspired to keep us healthy, and boredom is an ugly threat. If you have great ways to spend your time and enough money to avoid running out if you live too long, good for you, go ahead and retire.

By Jane Bennett Clark | Kiplinger | Updated January 2017

Employee Benefits

The perks you get on top of your paycheck can be worth hundreds or even thousands of dollars. Among them: employer-paid life insurance and the employer contributions to your 401(k). Another biggie is health insurance, which can be cheaper than Medicare and provide more comprehensive coverage. Employer coverage is especially valuable if your spouse is younger than 65 and covered by your plan.

Whether you should maintain your employer health coverage over parts of Medicare depends on the size of your company. Here’s how it works: At 65, you qualify for Medicare Part A, which covers inpatient hospital services. Because Part A is free, you have few reasons not to enroll. At that point, you can also enroll in Medicare Part B (for doctor visits), Medicare supplemental coverage and Part D (for prescription drugs). If your company has fewer than 20 employees, you must sign up for Medicare as your primary insurance, even if your employer offers its own coverage. (If you don’t sign up for Medicare, you may not be covered at all. Discuss your options with your employer.)

If your company has 20 or more employees, however, employer-based coverage pays first, and you can stay on it if you choose. When you do retire, you can sign up for Part B and the other coverage without penalty or having to wait for open enrollment.

A Bigger Pension

If you’re lucky enough to have a pension (and it hasn’t been frozen), you may get a bigger payout by working a few more years. Pensions are calculated based on pay and years of service. Some plans base the benefit on your average earnings over the last three or five years of employment, others on your average earnings over all the years in which you’ve participated in the plan. Assuming your income is still going up, your pension benefit could be richer for every year you work.

You Like Working

Working isn’t all about paychecks and benefits. “The relationships, the recognition and the sense of fulfillment that work provides give people purpose and structure,” says Dee Cascio, a psychotherapist and retirement coach in Sterling, Va. That can be especially true for men, she says, who often rely on work for their social network. If you haven’t a clue how you’ll spend your time — and with whom — after you leave the workforce, stay on the job until you do.

A Fatter Nest Egg

Retirement planners generally recommend having enough in retirement savings to last 25 years. For instance, if the difference between your projected spending and income (including Social Security and pensions) in retirement is $25,000 a year, you’ll need 25 times $25,000, or $625,000. Fall short of the mark and working longer is the best solution. Not only will you have fewer years in which you’ll be drawing down savings, but, while you’re working, you can keep feeding your retirement accounts. Even if you don’t add a penny, the money in the accounts will continue to benefit from tax-deferred growth.

A Higher Social Security Benefit

The full retirement age for Social Security, once 65, is now 66 for people born in 1943 to 1954, and it will gradually rise to 67 for people born in 1960 or later. But for every year you delay taking the benefit past full retirement age, you get a bump of 8% in your benefit, until age 70. If you’re healthy and anticipate having at least an average life expectancy (82.9 for men who reach 65, 85.5 for women), it makes sense to wait until 70 to collect the bigger benefit, particularly if you have a spouse who will prosper from a boosted survivor benefit. But that means coming up with another way to cover your expenses during the interim. A paycheck keeps the money flowing.

Coordinating With Your Spouse

Most husbands and wives hope to retire within a year or two of each other, says Richard Johnson, director of the program on retirement policy at the Urban Institute. How so? “When you retire, you have more leisure. Most people want to spend that leisure with their partner,” Johnson says.

If your spouse is much younger or simply not ready to retire, working several more years yourself is a simple solution to the home-alone syndrome.

Opinion: This, not Donald Trump, is the true revolution upending stock-market investing

InvestMy Thoughts on This:

Hysteria on Wall Street! The Crash is Coming! No, It’s NOT!

It’s refreshing to see behind the news and find an insight that serves to explain what’s probably going on. These comments by Howard Gold are probably close to the truth. NOT FAKE NEWS!

Published: Feb 1, 2017 by Howard Gold

Stocks have made big gains since Election Day on the hope President Donald Trump and the Republican Congress would cut regulations and taxes and boost growth. They sold off Monday and Tuesday after the president imposed a temporary ban on visitors from seven Muslim-majority countries.

The ebbs and flows of Trump-related fear and euphoria fascinate Wall Street and the media—myself included—but they don’t matter much in the long run. Far more important, but getting almost no coverage, is a true revolution that’s upending investing—I think, for the better.

This sea change, which has developed over the last decade, consists of three big trends:
1. Investors have abandoned individual stocks for funds and exchange-traded funds (ETFs).
2. They have dumped actively managed mutual funds for index funds.
3. They have flocked to target-date funds as vehicle of choice for retirement saving and investing.

How revolutionary is this?

A generation ago, investors bought baskets of individual stocks, often on the advice of a stockbroker or relative, with little regard for how they worked together. This culminated in the internet bubble of the 1990s when people thought they were diversified by owning tech highfliers Dell, Sun Microsystems, Altera, and Novellus Systems, all of which suffered huge losses in the dot-com crash.

That and the emergence of ETFs in the 2000s prompted investors to dump individual stocks en masse. According to the Investment Company Institute, U.S. households’ net investment in individual stocks fell by an amazing $3.35 trillion from 2006 to 2015. During that same period their investment in mutual funds, annuities, closed-end funds, and ETFs rose by $3.62 trillion.

It’s unlikely all the money that came out of individual stocks went directly into equivalent funds, but the trend is clear: “…Investors are moving from directly owning individual stocks to owning stocks through mutual funds,” including ETFs, Sarah Holden, ICI’s senior director, retirement and investor research, told me in an interview. That’s why I think stock pickers are a dying breed.

It makes sense: When elite hedge funds run by the world’s supposedly smartest money managers trailed the S&P 500 index SPX, +0.30% for the eighth consecutive year in 2016, how can amateur stock pickers hope to beat the market consistently?

But active mutual-fund managers also have an abysmal track record. There’s overwhelming evidence very few of them beat index funds over the long haul: A 2016 study by S&P Dow Jones Indices found that over a 10-year period, more than 80% of actively managed funds trailed their benchmarks.

Cost is the main reason, Vanguard founder Jack Bogle has long argued. Actively managed funds’ average expense ratio was 0.84% last year, according to ICI, while index funds averaged 0.11%. Some of Vanguard’s broadest U.S. stock index funds charge as little as 0.05%—a full percentage point less than many active stock funds. That difference really compounds over the years.

So, index funds now comprise 40% of total U.S. equity fund assets, double their share a decade ago. From 2006 to 2016, $1.1 trillion flowed out of actively managed U.S. equity funds and about the same amount went into similar index funds, in what Morningstar called a “remarkable exodus.” Last year, the flow became a torrent as passive funds took in a record $504.8 billion.

That dovetails with our third big trend. According to ICI, three-quarters of all 401(k) plans offer target-date retirement funds (funds of funds that rebalance as shareholders get closer to their specified retirement date), and the number of those funds has increased 3½ times over the past decade. From 2006 to 2015, assets rose more than tenfold, to $762.5 billion.

The Pension Protection Act of 2006, which eased automatic enrollment in 401(k) plans, and a subsequent Labor Department ruling that allowed target-date funds (TDFs) to be “default” investments in those plans spurred their explosive growth. TDFs’ ease of use makes them especially attractive to millennials, who are gobbling them up.

“I make one decision,” explained Holden at ICI. “I go into the TDF appropriate for my date, and…there’s a whole lot of work done for me in terms of keeping me diversified and then also rebalancing as we move toward retirement.”

A lazy solution? Maybe, but it also shows investors know their limitations, which is very wise.

So, it looks like we’re at an inflection point where most investors will jump into broad market indexes using set-it-and-forget-it TDFs as their principal method for retirement investing.

That’s bad for fund managers, stock pickers, newsletter writers, and media outlets that specialize in stock selection. But it’s good for millions of Americans who just want to save and invest for a decent retirement. It’s a drive towards diversification, automatic investing and rebalancing and simplicity—and who can argue with that?

This, quite simply, is the future of investing. The revolution is happening right now.