Talking Retirement

You’re Not Dead, But the Government Thinks You Are?

Pay the Mortgage vs. Pay Your 401k.

Why You Might Already Be Saving Enough for Retirement.

According to [the contrarian economists from universities, research institutions and the government ], the financial industry, with its ostensibly objective online calculators, overstates how much money someone will need in retirement. Some, in fact, contend that financial firms have a pointed interest in persuading people to save much more than they need because the companies earn fees on managing that money.

The more realistic amount could be as little as half the typical recommendation made by Fidelity, Vanguard or any number of other financial institutions.

You might find this article very interesting. I did. Click here to read the whole thing.

No Two Retirements Are The Same

Who Says Retirement is All About Relaxation? is basically a bullet pointed list on how retirement is different for everyone. It’s a good read, but I really enjoyed the quote near the end of the article.

Retirement is personal. George Burns never wanted to retire:

“Retirement at 65 is ridiculous. When I was 65 I still had pimples,” he once said. “… I’m going to stay in show business until I’m the only one left.”

Funny! The story is a good read with a positive point of view. Read the story here.

Bad News for GenXers When Retirement Comes

Center for Retirement Research at Boston College released a report that that age increase for people born after 1960 might have some negative implications. “The delay in Social Security means that 60 percent of Generation Xers in the bottom third of income are at risk for being unable to maintain their standard of living in retirement.” Ouch, being a Generation Xer myself, that hurts. Read the article.

Updegrave Makes the Case for Stocks

In Goal: 12 years, $2.5 million, an article by the always-informative Walter Updegrave, there’s an intelligent argument made for keeping your portfolio mix higher on the side of stocks when planning for the long term when asked for advice.

Many people think they’ve got to ratchet their stock holdings way, way back once they hit retirement. But I’d advise against going too far, especially in your case. You and your wife have a good chance of spending 30 to 40 years in retirement. That means you’re going to need some asset growth to maintain your purchasing power in the face of inflation. It’s harder to get that asset growth if you’re invested too heavily in bonds, particularly early in retirement.

Automatically Enrolled in a 401k? Don’t Stick With the Defaults.

...A significant number of companies make principal preservation the goal for default investments. If your money has been invested only in a money market fund, for example, you’re missing out on the potential for long-term growth. Stocks (or mutual funds composed of stocks) should be a portion of every worker’s retirement cache. They may be riskier than other savings options, but over time they’ve provided the best returns to investors with years to go before retirement. Look for a low-cost equity index fund if you’re not sure where to start.

There’s more advice, like making sure to take full advantage of your company’s matching funds. Read the entire article though for the full story.

Also, check out the follow up article, Retirement and Irrational Man, Part 2, especially if you’re a little intimidated by the choices in your 401k.

Diet Planning Gets More Time Than Retirement Planning

For example the study showed more than half of Ontario Baby Boomers, compared to 47% nationally, spent more time planning their diet than their retirement. Just under 50%, compared to 46% nationally, spent more time planning home renovations and across the country almost half of Baby Boomers surveyed said they spent more time planning an exercise routine. 

Read the article for the full story.

Advice On How To Spend Your Retirement Money

The Chicago Tribune has a interesting article that address the other retirement money concern, spending your retirement savings once you retire. Here’s are a couple key paragraphs from Spending retirement savings will require strategy.

Rather than locking themselves into a fixed withdrawal of an initial 4 percent plus annual inflation, retirees should consider their nest egg as a job that pays variable income, and maximize tax strategies accordingly, Horan argued in a recent paper for the Journal of Financial Planning.

For example, Horan said, retirees who are required to take minimum distributions from their individual retirement accounts might withdraw funds up to the 15 percent tax bracket from their traditional IRA, then take the required remainder from a Roth IRA, in which withdrawals are tax-free.

Cheaper Long Term Care Insurance.

Got a few minutes today? It won’t take long to read Three Major Retirement Hazards to Avoid from Senior Journal. One “min-tip” is at the end of the first tip. We’ve all probably noticed that healthcare is getting more and more expensive. It’s easy to assume it will be a significant part of our expenses during retirement. But did you know this? “Buying long-term care insurance early on can help lower its costs immensely.” Good advice. Read the article for the rest of the tips.