Category Archives: Retirement Planning

Ideas to help preserve and grow your money

5 Smart 401(k) Moves to Make Now

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financial freedomMy Comments: You say you don’t have a 401(k)? Maybe you have a 403(b), or an IRA with exposure to the market. If you are in or close to retirement and your investment portfolio goes to hell, you simply don’t have enough time to hope it recovers and gets back on track. Be defensive for a while and sleep better at night.

by Carolyn Bigda | September 26, 2016

Storm clouds are forming, so take your nest egg off autopilot and steer to clearer skies.

Blissfully, making your 401(k) grow hasn’t been that hard in recent years. Since March 2009, the S&P 500 index of U.S. stocks has more than tripled in value. And thanks to the Pension Protection Act—now celebrating its 10th anniversary—many workers are automatically enrolled in 401(k)s. “Inertia has led to some pretty powerful results,” says Katie Taylor, director of thought leadership at Fidelity.

But inertia works only as long as the winds are blowing in the right direction. Today there are signs that momentum could be shifting. U.S. equities, for one, are as frothy now as they were leading up to the 2007–09 bear market and the Great Depression in 1929. The S&P 500 trades at a price/earnings ratio of 27.3 based on 10 years of averaged profits, a 63% premium to historical averages.

Meanwhile, corporate profits have been declining for five consecutive quarters, the worst such streak since the financial panic. And worried fund managers have amassed large piles of cash, according to a recent Bank of America Merrill Lynch survey.

None of this means your 401(k) needs a major overhaul. This is, after all, your long-term portfolio, meant to endure choppy air from time to time. But a few tweaks now can help ensure that inertia doesn’t work against you—and that you’re still on track no matter what happens in the market.

Get over your fear of bonds

If you haven’t rebalanced your 401(k) in a while, it probably looks different from what you remember. Without rebalancing, a moderate 60% U.S. stock/40% U.S. bond portfolio at the end of the last recession is now closer to an aggressive 80% equities/20% bond mix, according to Morningstar.

The rule of thumb: If your weightings are off-kilter by five percentage points or more from your desired mix, it’s time to take action.

Some investors, though, may be wary of rebalancing into bonds now, notes Maria Bruno, a senior investment analyst in Vanguard’s investment strategy group. That’s in part because fixed-income prices fall when interest rates rise, and the Federal Reserve could lift rates before the year is out.

But “rebalancing helps protect you from short-term volatility,” Bruno notes. Even if fixed-income prices fall, bonds can still serve as a cushion. The worst calendar-year loss for intermediate-term government bonds was 5.1%, in 1994. By contrast, the worst loss for blue-chip U.S. stocks was 43.3%, in 1931.

You can further reduce risk by choosing bond funds with an average “duration” of about five years or less, which are less sensitive to interest-rate moves, says Peter Mallouk, president of Creative Planning in Leawood, Kans. (A duration of five implies that if rates rise one percentage point, the fund could lose 5% in value.) You can look up this figure for your plan’s fixed-income offerings at Morningstar.com. If your 401(k) doesn’t offer a good low-duration option, go with a core fund such as Dodge & Cox Income DODIX 0% , with a duration of just four years, in your IRA. The fund, which has beaten more than 80% of its peers over the past five, 10, and 15 years, is in our MONEY 50 recommended list.
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Need More Money?

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Piggy Bank 1My Comments: We live in a society where having more money is considered better than having less money. Would you agree?

That being said, many of us who are now retired or retired and are now working again, are trying to figure out how much we need. There is no definitive answer for any of us, but in many respects, how much we need is a function of how we phrase the questions.

Apr 9, 2016 By Shlomo Benartzi

It’s conventional wisdom among financial advisers: People planning to retire should aim to maintain 70% of their current income in retirement.

It sounds sensible enough. But in reality it can encourage people to underestimate the amount of money that will keep them content in retirement.

The 70% rule leads us astray because it fails to address the emotional cost of losing 30% of our income. Most people focus on the 70% they will keep, not the spending they will give up. They aren’t prepared for the changes that will be required in their lifestyles. When they eventually are confronted by the specifics they have to cut, they are unhappy. In short, the 70% rule makes the future seem secure and comfortable, even when it’s not.

Behavioral economists refer to this as a framing effect. Similar examples abound in everyday life, as people find choices far more appealing when they are framed in terms of gains rather than losses. For instance, people are more likely to buy ground beef when it’s described as 75% lean rather than 25% fat. They think a condom with a 95% success rate is safe, but are scared of one with a 5% failure rate.

Framing effects can even shape our estimates of longevity. Research by a group led by John Payne, a professor at Duke University’s Fuqua School of Business, finds that when people are asked to estimate their lifespan using different frames, they come up with strikingly different answers. In particular, asking subjects if they will “live to” a certain age leads to estimates that are roughly six to nine years longer than asking if they will “die by” a given age.

Why? One explanation is the “live to” frame focuses our thoughts on the reasons we might stay alive. When people are given the death frame, by contrast, their minds are naturally drawn to the reasons they might die. Instead of thinking about their healthy exercise habits, they focus on their love of hamburgers.

Framing effects matter because they shape our perceptions of the world and the content of our thoughts. The question hasn’t changed, but the frame can determine how we judge alternatives and what we end up choosing.

So how can we ensure that framing effects don’t ruin our retirement? Here’s my proposal: Before workers settle on a retirement-savings goal, or decide it’s time to retire, they should undergo a behavioral stress test. In short, they should be asked to identify three expense categories they will cut in retirement, with instructions to be as specific as possible as to what exactly they will cut. These cuts should be significant enough to add up to approximately 30% of their current spending.

In my experience, while most people find the 70% rule palatable, they find the 30% frame unacceptable. When asked to think specifically about where they would be willing to sacrifice—perhaps dining out, travel, or spoiling the grandchildren—that is when they become more aware of how much they are being asked to give up.

And that’s the point of a behavioral stress test.

The key insight is that people need to be exposed to both gain and loss frames to be able to make realistic decisions about the income they will need in retirement. Behaviorally, neither frame by itself is sufficient. While the gain frame can lead people to underestimate the amount of sacrifice that will be necessary, the loss frame might cause them to think too negatively about the consequences of those sacrifices. Indeed, economic research has shown that big differences in income typically result in minor differences in happiness.

The behavioral stress test probably will encourage most people to increase their retirement-savings goals, and thus have more income in their later years, allowing them to avoid giving up certain pleasures and activities.

It is the same for banks when they undergo stress tests in an effort to determine their ability to withstand a financial crisis. The tests help them identify hidden risks and correct mistaken models before it’s too late.

By considering both gain and loss frames, we can start to figure out what we really want—and what we definitely don’t want to live without.

Shlomo Benartzi is a professor and co-head of the behavioral decision-making group at UCLA Anderson School of Management, and author of “The Smarter Screen” about online behavior. He can be reached at reports@wsj.com.

10 Retirement Decisions You Will Regret Forever

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My Comments: This list comes from Kiplinger, and is relevant to many of the people I talk with daily. I’ve only include two of the ten here. To to find the rest you’ll need to click on any of the images which will take you to the Kiplinger site. If for any reason, they block you out, let me know and I’ll figure out a work around for you.

By Bob Niedt

As more and more baby boomers start eyeing the coastline of retirement, thoughts turn from the daily worry over the Monday-through-Friday commute to concerns about how to fund the golden years.

How prepared are you? Do you know the ins and outs of your pension (if you’re lucky enough to have one)? How about your 401(k), IRA and other retirement accounts that make up your nest egg? Do you have a good handle on when to claim Social Security benefits? These are some of the questions you will have to contemplate as the work days wind down. But long before you punch out, make sure you are making the right choices.
To help you out, we’ve compiled a list of retirement decisions some of you may regret forever. Take a look to see if any sound familiar.

Planning to work indefinitely
Many baby boomers like me have every intention of staying on the job until 70, either because we want to, we have to, or we desire to maximize our Social Security checks. But that plan could backfire. You could be forced to retire early for any number of reasons.

Consider this: One in four U.S. workers expects to work beyond age 70 to make ends meet, according to a recent Willis Towers Watson survey. Yet, you can’t count on being able to bring in a paycheck if you need it. While 51% of workers expect to continue working some in retirement, found a separate 2015 survey from the Transamerica Center for Retirement Studies, only 6% of actual retirees report working in retirement as a source of income.

Whether you work is not always up to you. Three out of five retirees left the workforce earlier than planned, according to Transamerica. Of those, 66% did so because of employment-related issues, including organizational changes at their companies, losing their jobs and taking buyouts. Health-related issues—either their own ill health or that of a loved one—was cited by 37%.

The actionable advice: Assume the worst, and save early and often.

Putting off saving for retirement

The single biggest financial regret of Americans surveyed by Bankrate was waiting too long to start saving for retirement. Not surprisingly, respondents 50 and older expressed this regret at a much higher rate than younger respondents.

“Many people do not start to aggressively save for retirement until they reach their 40s or 50s,’’ says Ajay Kaisth, a certified financial planner with KAI Advisors in Princeton Junction, N.J. “The good news for these investors is that they may still have enough time to change their savings behavior and achieve their goals, but they will need to take action quickly and be extremely disciplined about their savings.”

Morningstar calculated how much you need to sock away monthly to reach the magic number of $1 million saved by age 65. Assuming a 7% annual rate of return, you’d need to save $381 a month if you start at age 25; $820 monthly, starting at 35; $1,920, starting at 45; and $5,778, starting at 55.

Uncle Sam offers incentives to procrastinators. Once you turn 50, you can start making catch-up contributions to your retirement accounts. In 2016, that means older savers can contribute an extra $6,000 to a 401(k) on top of the standard $18,000. The catch-up amount for IRAs is $1,000 on top of the standard $5,500.

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How Much Will Your Health Expenses Be In Retirement?

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Cost-of-careMy Comments: Having access to medical care is a big deal. Having access to medical care that you can afford is a big deal. And it becomes a bigger deal when you are no longer employed and attempting to live the rest of your life with some degree of financial freedom.

By Glenn Ruffenach July 15, 2016

Question: My wife and I are trying to set up a budget for retirement, and we’re wrestling, in particular, with health-care expenses. How can we estimate what our medical bills will look like in the future?

An important — and vexing — question. For instance, a healthy person will have fewer and/or smaller medical bills in later life, right? Well…maybe not. As a recent study, “An Apple a Day: The Impact of Health Conditions on the Required Savings” noted, “Excellent health, ironically, can actually raise an individual’s lifetime health spending needs because of the likelihood that healthy 65-year-olds will live much longer.”

A good starting point (and a study worth reading in full) is the “2015 Retirement Health Care Costs Data Report” from HealthView Services Inc., a provider of health-care planning tools in Danvers, Mass. According to HealthView, a healthy 65-year-old couple can expect to pay, on average, $266,589 for insurance premiums and $128,365 for related expenses (dental, vision, copays and out-of-pocket bills) over their lifetime.

Another good resource—one with an emphasis on prescription-drug costs—is “Amount of Savings Needed for Health Expenses for People Eligible for Medicare” from the Employee Benefit Research Institute in Washington. The study estimates that a couple, where both spouses have median drug expenses, would need $259,000 to have a 90% chance of having enough money to cover health-care bills in retirement.

Note: Neither report accounts for possible long-term-care expenses. For that piece of the puzzle, check out Genworth Financial’s GNW, +2.72% 2016 “Cost of Care Survey.”

I am due to begin required withdrawals from my retirement savings. What are the advantages and disadvantages of an annual lump-sum withdrawal as opposed to a monthly payout?

In most cases, a required minimum distribution, or RMD, in the form of a single annual payout causes fewer problems — if you have a good amount of self-discipline.

Yes, monthly withdrawals act like a regular paycheck. But, to take a worst-case scenario, if you die midyear, your family must withdraw the remaining RMD, says Carolyn McClanahan, founder of Life Planning Partners Inc. in Jacksonville, Fla. Figuring out how much has already been withdrawn and how much remains to be withdrawn can (at times) be a hassle.

With a single lump sum, you can deposit the funds in a savings account and then arrange for monthly transfers to your checking account, creating (in effect) a regular paycheck. And if you wait until November or December to take an RMD — when you have a clear picture of all your income for that year — you can calculate your tax withholding on the withdrawal more accurately.

The one cautionary note about a single annual withdrawal: willpower, or the lack thereof. “Some people spend it all at once if they take it as a lump sum,” McClanahan says.

I have a question about paying my grandchildren’s tuition. I understand that if I pay the institution directly there is no tax consequence for my grandchild or me. Does this apply only to tuition or does it include room and board?

The answer: just tuition. But you have some flexibility here.

To start, the “tax consequence,” in this case, is the federal gift tax. You can give as much as $14,000 in cash or other assets to as many people as you wish each year, and those gifts won’t count against your (the giver’s) lifetime exemption. (In all, you can give away $5.45 million before gift taxes kick in.) If you exceed the $14,000 ceiling in a given year, you have to file a gift-tax return. That said, there are exceptions to these rules.

Under section 2503(e)(2) of the Tax Code, “any amount paid on behalf of an individual as tuition to an educational organization” is exempt from gift taxes. Note the wording: “tuition.” Period. There’s no mention of associated costs, like books, room and board, etc.

This shouldn’t stop you, however, from paying the grandchild’s tuition — and then either gifting him $14,000 to pay room and board, or paying room and board up to $14,000 directly, says Barry Kaplan, chief investment officer at Cambridge Wealth Counsel in Atlanta. And if both grandparents are alive, each can gift $14,000, for a total of $28,000.

My husband started taking Social Security at his full retirement age, but continued to work. He is now 75 and still working full time. Over the past 10 years, his benefit has gradually increased because of cost-of-living adjustments and his continuing contributions (via his paychecks) to Social Security. I am nearing full retirement age and am trying to figure out how much I would receive as a spousal benefit. I know that — at my full retirement age — I can qualify for half of my husband’s benefit. But do I get half of what he started receiving 10 years ago, or half of what he is receiving now, including the adjustments to his benefit?

Your spousal benefit would be based on your husband’s current payout, including the cost-of-living adjustments and any increases tied to his continued wages. To get a better idea of how much the spousal benefit will be, says Darren Lutz, a public affairs specialist with the Social Security Administration, your husband can create a “my Social Security” account at socialsecurity.gov/myaccount to see what his full benefit is, before deductions for Medicare premiums, etc. Then you can visit the agency’s retirement planner for spouses to learn more about potential benefits.

Glenn Ruffenach is a former reporter and editor for The Wall Street Journal, and co-author of “The Wall Street Journal Complete Retirement Guidebook.” Email your questions and comments to askencore@wsj.com.

11 Medicare Mistakes to Avoid

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healthcare reformMy Comments: If you are 65 and older, Medicare is fantastic. Okay, it has its limitations, but coupled with what is known as a MediGap or MedSup plan, it’s fantastic.

You can argue all you want about how this country is slowly sinking into a socialist morass, but when you reach my age, health issues surface almost weekly, not annually. Being able to seek advice from medical professionals without first thinking how it might break the bank, is a huge component of financial freedom. HUGE, I say.

July 18, 2016 By Ginger Szala

First, let’s generally define the Parts of Medicare. Part A, referred to as original Medicare, focuses on hospital coverage. Part B is medical coverage. Part C (also called Medicare Advantage) is a different way of putting Parts A and B into one plan, offered by private companies. Part D is prescription drug coverage.

The rules of Medicare are complicated and laden with deadlines that are costly to miss. Via Kiplinger, here are 11 common Medicare mistakes to avoid:

1. Not reviewing your Part D Plan annually
Medicare Part D is a headache for many to keep on top of. But remember these key points:
• Open enrollment runs from Oct. 15 to Dec. 7 every year.
• During open enrollment it’s essential to review options because there might be changes to your current plan, meaning your cost and coverage would vary. Be leery of plans that increase premiums, increase your percentage of cost for drugs, or other requirements, like having to use a specific pharmacy, to be covered.
• Make sure you check if any drugs you’re on have gone generic, as you might get a nice price reduction.
• Medicare also helps you to compare plans. Check out the various links on Medicare.gov or AARP.org for more information, guidance and price comparison tools.

2. Picking the same Part D plan as your spouse
Not all Part D plans are alike, and just because a plan works for you it might not be the same for your spouse, who may be taking different prescriptions. Use the Medicare Plan Finder to determine your out-of-pocket costs on each plan. Also keep in mind that some plans require the use of specific pharmacies.

3. Going out of network on private Medicare Advantage plans
If using private Medicare Advantage plans, similar to PPOs or HMOs, you’ll need to utilize the network of doctors and hospitals within the plan to get the lowest co-payments. Be wary that if you go out of network, there may be no coverage at all.

4. Not knowing how to switch Medicare Advantage plans anytime if needed
Even outside the annual open enrollment period, it’s possible to switch plans for life-changing events, like moving to a place that isn’t in your current plan’s geographical coverage. And if you’re in the five-star plan, you can make a switch any time during the year. Also, from Jan. 1 to Feb. 15, you may be able to switch from Medicare Advantage to traditional Medicare plus Part D prescription-drug plan.

5. Not considering Medigap within 6 months
Once enrolling in Medicare Part B, you have six months to buy any Medicare supplement plan in your area even if you have pre-existing conditions (and at age 65, who doesn’t?). But after six months, insurers can reject you or charge more depending on your health. It depends on your state rules and insurer’s policies. Check at Medicare.gov for your options.

6. Not opting for Medicare when you turn 65 (most of the time)
Forever young, so who needs Medicare? Well, you’re smart to take advantage of what the government is giving you, often for free. If you are getting Social Security already when you turn 65, you’ll automatically be enrolled in Medicare Part A and Part B. But if you aren’t receiving Social Security benefits, you’ll have to act on your own to sign up. There are reasons to delay: for example, you or your spouse have a full-time job and already get health care coverage as a part of that. Be aware that if you aren’t collecting Social Security benefits, there’s a seven-month period to sign up for Medicare, which runs from three months before the month you turn 65 to three months after.

7. Not signing up for Part B if you have retiree or COBRA coverage
Again, there are many tricky steps in the Medicare signup game. Unless you or your spouse are receiving insurance through a current employer (who has 20 or more employees), Medicare is considered your main health insurance coverage. Retiree coverage, COBRA or severance benefits are NOT primary, and if you don’t sign up for Medicare, you might have gaps in coverage and be late on your Part B premium. So pay attention.

8. Missing the Part B enrollment deadline after leaving your job
It’s an alphabet jungle out there, but this one is easy: if you still have insurance through a job when you turn 65, that’s fine. You don’t need to worry about Part B premiums. But within eight months of leaving your job, you need to sign up or you might have to wait for the next enrollment period, meaning a gap in coverage. Then there is also the possibility of a 10% lifetime late-enrollment penalty.

9. Ignoring income thresholds
Most people pay the minimum of $140.90 a month for Part B premiums and $12.30 per month for Part D. This goes higher depending on your adjusted gross income. So if you are bringing in more than $85,000, that Part B premium could more than double per month, where as Part D could jump fivefold. Be mindful when you are withdrawing from tax-deferred accounts that you don’t go over the income threshold if possible.

10. Not fighting surcharge changes for the year you retire
The Social Security Administration uses your tax returns from the most recent two years to determine if you are subject to an income surcharge, that is you are making more than $85,000 a year. But you can protest it if you prove life-changing events, such as divorce, death of a spouse or retirement.

11. Not minding your HSA contributions
You can’t contribute to HSAs if you are getting Medicare, but if you or your spouse have health insurance through a job (with 20 or more employees) and haven’t applied for Medicare or Social Security benefits, you still can continue to add to your HSA. That said, be careful about contributions in the year you leave your job and sign up for Medicare, as your HSA must be prorated by number of months on Medicare.

Will You Regret Taking Social Security ASAP?

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SSA-image-3 My Comments: Too many people choose to take early benefits. If you need the money, hate your job, don’t have a job, plan to die soon, or simply don’t have confidence in your life, then maybe it’s OK. But it usually turns out to be a mistake. There is a do over, but you have to take it within 12 months. Most don’t and then when they discover they are 75, there’s not enough money.

By Casey Dowd Published June 30, 2016 The Boomer FOXBusiness

Attention Baby Boomers who will soon be turning age 62 and are planning on taking Social Security benefits early, be sure to do your homework before you sign the paperwork.

A Nationwide Retirement Institute survey of 909 U.S. adults aged 50 or older found that many of those who claimed their Social Security benefits early wish they could change their decision – and the top reason is to maximize their benefit. Meanwhile, of those who wouldn’t change their decision, many say they had no choice – saying they needed the money.

“Social Security is undoubtedly one of the most complex retirement topics facing American workers,” says Dave Giertz, President of Sales and Distribution at Nationwide. “Even those who can identify the factors that will impact their benefit are likely unable to grasp the thousands of rules that apply to Social Security. The complexity makes it extremely difficult for retirees to maximize their benefit on their own.”

Giertz discussed with FOXBusiness.com what you need to know.

Boomer: What impact has claiming Social Security early had on American workers?

Giertz: American workers are potentially missing out on hundreds of thousands of dollars in retirement income by claiming Social Security early. Instead of leaving money on the table, retirees need to consider all of their filing options to help understand how Social Security can fit into their overall retirement income plan.

Maximizing your Social Security benefit is more important than ever because, for most, it is the only source of retirement income. Only 36 percent of future retirees we surveyed have pensions, compared to 54 percent of recent retirees and 60 percent of the oldest retirees. Preparing for retirement holistically by working with online tools and advisors can help retirees face challenges posed by lack of retirement income, health care costs and other obstacles.

Boomer: What surprises typically come up in retirement?

Giertz: Seven out of 10 retirees who have health problems say the problems came sooner than they expected, increasing the impact on their retirement and their wallets. Additionally, almost two in five retirees (37 percent) say health problems keep them from living the retirement they expected.

For many current retirees, health care expenses are eating up a majority of their Social Security benefit. The average American claiming their Social Security at 62 will spend about 61 percent of their Social Security benefits on health care costs, according to a case study comparing data from Nationwide Retirement Institute’s Social Security 360 Analyzer and Health Care Costs Assessment tools. That’s before factoring in long-term care costs.

Meanwhile, according to the same case study, if an average American waits until age 70 to claim Social Security, they have more money left over and end up spending just 47 percent of their benefit on health care costs.

Boomer: How can Baby Boomers project what their benefit will be, so as not to be surprised when they retire?

Giertz: As a start, don’t guess. About a quarter of Americans who haven’t claimed Social Security say they are either guessing or don’t know the amount they will receive in their monthly benefit check. As a result, many Baby Boomers are overstating the amount they might receive. Those approaching retirement say they expect to get $1,610 in monthly Social Security benefits, while in reality recent retirees report their actual monthly benefit is about $1,378, and those who have been retired longer report receiving just an average of $1,185 per month.

Only 11 percent of current retirees used an online calculator to estimate their benefit; however, among Baby Boomers approaching retirement, the use of these tools is becoming much more prevalent. More than four in 10 future retirees (42 percent) have used a Social Security calculator to estimate their benefit.

While the development of Social Security calculators is helping close the Social Security knowledge gap, Americans should work with a financial advisor to create a holistic retirement income plan that includes Social Security. Retirees who work with an advisor are much less likely than those who don’t to say health care costs keep them from living the retirement they expected (11 percent vs. 29 percent).

Boomer: With the increase in the cost of living and inflation in retirement what should future retirees be doing now to support the increase?

Giertz: Nearly two in five Americans nearing retirement (38 percent) expect their living expenses will go down in retirement.

However, changes in the cost of living and inflation are the top reasons expenses increase in retirement, according to the retirees we surveyed. Of those retired 10+ years say the cost of living (79 percent) and inflation (62 percent) are the leading factors impacting their living expenses retirement.

In addition to saving more, maximizing your Social Security benefit is key to coping with cost of living increases and inflation.

Boomer: How can Boomers maximize their Social Security benefit?

Giertz: Eighty-six percent of future retirees cannot correctly identify the three basic factors that the Social Security Administration uses to determine their benefit amount, and, as a result, many retirees do not know how to maximize their Social Security. Understanding how your age, benefit start date and marital status work together to determine the amount in your benefit check every month is a great start.

However, the combinations of different ages, benefit start dates and marital statuses make every individual or family’s ideal filing strategy different – and many Baby Boomers may want to consider a variety of strategies with different benefit start dates.

While life events force many Americans to take Social Security early, those who are willing or able to wait get rewarded for their patience. According to the Social Security Administration, American workers receive and extra 8 percent per year for every year they postpone collecting benefits beyond their full retirement age amount – up to age 70.

Can You Afford to Live Longer?

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retirement-exit-2My Comments: Many of you know that I’ve recently started a series of workshops that focuses on how the Social Security system works. It’s an attempt to help those who will soon become eligible, or are already eligible, better understand a very complex and not user friendly institution in American life.

One assumption that is new to me, but but critical to the planning process, is to assume everyone will live to be 100. Obviously that’s not going to happen, but it’s a conservative approach to making the necessary decisions about your future life style and how you are going to pay for it.

This article from Casey Dowd might be helpful if any of you think this applies to you.

By Casey Dowd, Published June 16, 2016

According to the National Institute on Aging, in 1950 a man retiring at age 65 could expect to live another 13 years and a 65-year-old woman another 15 years. Today, according to data from the Society of Actuaries, there is a 43 percent chance that retirees could live to at least age 95.

Allianz Life conducted a study with the Stanford Center on Longevity to explore the topic of longevity, what it means for retirement planning and how advances are leading people to consider alternative life-path possibilities.

“As Americans come to terms with the fact that they’ll likely live an extra 30 years, they have the opportunity to look back and evaluate their past decisions and consider the newfound possibilities for the future afforded by time,” said Katie Libbe, Allianz Life Vice President of Consumer Insights.
While it’s good news that you can expect to live longer in retirement, can you financially afford it? Libbe discussed with FOXBusiness.com what you need to know.

Boomer: How can Baby Boomers plan for living 30 more years in retirement, both socially and financially?

Libbe: We found that people are incredibly optimistic about longevity and also that they have interest in alternative life paths that differ from the traditional and linear “school-work/marriage/kids-retirement” track that has been the de facto life template for generations. When asked to design their ideal longer life, nearly half of Americans said they would prefer a nontraditional model that is unique to their interests – where they might work, take career breaks, go back to school, volunteer and try different things in no set order.

Although boomers may not have as great an opportunity to make widespread changes to their life path as younger generations, they can still use the conversation about longevity to consider new possibilities for their retirement years, including encore careers or continuing education. As they explore these new possibilities, they should also think about their financial plan and what it may take to build a strategy that supports an alternative to a traditional retirement.

Boomer: What regrets are boomers finding about chances not taken and dreams not realized?

Libbe: Although the topic of longevity was met with extreme optimism by the majority of boomers – 94% were positive on the prospect of living 30 extra years – the process of thinking about longer life caused many boomers to look back and identify some regrets about choices made and opportunities missed.

Nearly 20% of boomers noted they would “take more risks in life,” a common theme among the one-third of Americans who said they regretted many of their major life decisions. Included among those top regrets for boomers are not following their dreams, not taking risks with their career and not taking risks with their lives in general (new jobs, going back to school, etc.). Nearly a third also said they wish they’d been more gutsy in their choices and done things they really wanted to do.

Boomer: How does this change traditional retirement planning?

Libbe: For many Americans, including boomers, having more time opens the door to new opportunities. Boomer respondents confirmed a desire to explore different life paths: pursuing a dream like starting a new business, having a second career doing something they truly enjoy, volunteering/supporting the environment, or retiring later by working fewer hours but for more years overall. Nearly half of all respondents feel a longer life can enable a totally different view of how and when major life choices are made.

While many Americans expressed interest in embracing the possibilities of a longer life, they also understand the need for better planning in order to fund those different goals/life paths. More than nine in 10 boomer respondents agreed that people will need to be more thoughtful about how they plan for longer lives, and nearly the same percentage agreed that major changes would be needed in how people think about funding longer lives. In addition, a full 94% of boomers agreed that, with 30 extra years, it’s not enough to just put aside money for retirement – people would need a much broader, more goal-specific plan – a longevity plan, that falls outside the confines of traditional financial planning.

Boomer: Is our parents’ “traditional” retirement gone forever?

Libbe: Traditional retirement is not gone forever, but new conversations about longevity are forcing people to consider whether a traditional retirement is truly right for them. Of course, if you prefer spending time on a beach or at the golf course, there is nothing wrong with developing a plan to help you achieve those more traditional retirement goals. But it’s important to understand that there are many other possibilities that come with longer life – from extending your working years doing something you love, to taking a sabbatical now in order to pursue a passion project while you still have the time and energy to make it a reality.

It certainly takes careful planning to achieve these objectives, and most Americans seem to understand that a new paradigm is needed to think about, plan for and fund a longer life. A good first step is to meet with a financial professional and discuss how you may be able to achieve different short- and mid-term goals while saving for retirement, opening up the freedom to try different things, pursue passions and explore alternative life plans.