The Times They are a Changin’

I wonder if Bob Dylan had retirement planning and health care costs in mind when he wrote those lyrics. I happen to be a pretty big Dylan fan, and although his new stuff is great, his message and priorities certainly have changed over the years.

What are your priorities to and through retirement?

As we all get closer to retirement, there is no doubt that our priorities change: Perhaps it starts with substituting a soda for a glass of Cabernet, wearing shoes for actual comfort and of course taking a little less risk with the money we’ve saved. No longer are we or should we be willing to take the chance of significant losses. A National Retirement Risk Index has shown that even if people annuitize all their financial assets including executing a reverse mortgage, 44% will be at risk of being unable to maintain their standard of living in retirement…. And that does not include rapidly rising health care costs. When these costs are included, the percentage of households at risk rises from 44% to 61%! Therefore, making important decisions about our finances as we approach and live in retirement is critical to maintaining our way of life.

Retirement reality
Unfortunately, as the reality sets in that our working years are limited, our concerns begin to change. It’s no longer just about asset allocation and what stocks or funds ought to be a part of that allocation. Outliving assets, health care costs, long-term care, inflation, longevity risk, income and mortgage protection….those are the things that that top our minds. Of course asset allocation and portfolio management are the foundation to successful retirement planning and need careful attention. However, people are living longer than ever due to recent medical innovations which only add to the dilemma. People over age 65 spend four times as much on healthcare as their younger peers, according to AARP research, and that end-of-life care can easily eat up 50% or more of an individual’s lifetime funds. Failing to prepare for retirement’s major expenses can be the biggest challenge to living comfortably in our golden years.

For the most part, the major health care expenses faced by retired households are premiums for Medicare Part B (which covers physician and outpatient hospital services) and Part D which covers drug related expenses: the co-payments related to Medicare covered services and or services not covered at all. Keeping track of all the many concerns is overwhelming to say the least. It is no wonder that in a recent PBS program, people in the street were asked what was their greatest fear about aging. The most frequent answer was ending up in a nursing home.

Below I have illustrated the 7 key steps for a successful retirement. I have called these:

The 7 great wonders of successful retirement planning:

1. Stop losing money: A proper Asset Allocation and Risk tolerance of assets is essential. Most retirees are simply taking too much risk than they should and they are not getting paid enough in return. Review your allocation and rebalance constantly.

2. See the doctor: Treat any health ailments as soon as possible. Many insurance companies are changing policies to not include many seemingly minor health issues such as bunions and hemorrhoids.

3. Pay yourself first: It’s the distribution that counts…not just accumulation. Position your assets and manage them appropriately so they will be able to distribute guaranteed income for life. Say goodbye to those risky investments of yesteryear, and stop holding that old portfolio out of emotional or sentimental reasons. This money has to last you the rest of your life and you can’t make it back. Many people fail to realize that they may spend more time in retirement than they did working.

4. Don’t give Murphy’s Law a chance: Stay covered by insurance all the way up to 65 when Medicaid kicks in, and don’t risk it. You would be amazed at the number of healthy people suddenly get sick the day after their warranty ends. COBRA usually covers you for 18 months so liberation day may be at 63

The challenges in Retirement Planning

Retirement planning is never a very simple job. It requires a lot of thinking and proper execution of the plans. Right from when to where, everything needs to be taken care of well when planning for your retirement years. And, only when the best laid out plans are executed the way they should be, can you enjoy a carefree life after retirement. But in this current economic climate which is a tough one, one major concern that would be bugging the newly retired individuals is choosing a destination to spend their lazy days. Finding a cheap place in the given time can be a challenge but then nothing so challenging that you will have to give up.

Find a cheap place

To find a cheap place for spending your retirement years, you will need to take into consideration several important things. These include the following:

• Cost of an average house

• State taxes for a fixed income range

• Comfort factors like population of fellow retirees, climate of the place, etc.

Places to choose

One of the most popular destinations amongst the retirees is the south western part of U.S, especially the places like South California and New Mexico. These are the most preferred locations for spending the post job days of your life in complete peace. But with popularity also comes a heavy price tag. So, if these places prove too expensive for your pocket, there are cheaper options too in the sunny southwest. Look for houses in Tucson and Arizona if you want things to be on the reasonable side. The commonest choice however, is Florida. An all time favorite destination for retirees, there are homes available for different budgets. The perfect weather conditions coupled with the beach side living makes this destination one of the best choices for every budget.

Retirement is a new chapter of adulthood as it transforms a person to a time of passion and purpose. Retirement is not the end of everything. It is just the beginning of a new and relaxed life which could turn out to be interesting and more productive if you plan well. So design your next phase well to lead a meaningful second adulthood.

Many people are uncertain about their pre-retirement planning. Are you confused about the right plan or selecting a career path after retirement? You should be, and more so if you are nearing your fifties as you have plenty of years to plan ahead and this question is the one that should lead you to the right path. Some people find pre-retirement planning very tedious and boring and they feel that they would need more money than they calculate. Many executives prefer leading stressful lives, as they don’t know how to start planning for their retirement. Some find themselves locked in a decent pay pack and they cannot think of anything else or any change over.

You should plan well for your retirement. Seek the help of a counselor who can create a plan for your retirement and help you set your goals or define your career path so as that you can lead a satisfying retired life. Retirement counseling is generally based on your needs and either the counselor guides you to a specialist or provides a referral. Retirement counselors are well versed to handle all your issues relating to relationship, financial management, life balance issues, stress and well as anxiety that accompanies when you near the retirement stage.

Retirement is very critical for some people and other than financial issues some also face restlessness. Experts are not satisfied with the currently available pre-retirement programs as they find them shallow. They suggest that a retirement counselor should give a holistic approach towards understanding:

Current financial resources and the future needs. Management of leisure time more meaningfully, either by pursuing hobbies or opting for some volunteer activities, or in reflection and contemplation. Obtainable property, or health and safety. Relationships.

Research shows that pre-retirement people often refuse to seek help from counselors. But slowly this trend is changing and many corporations now offer specific pre-retirement help. Retirement counselors play an important role in providing financial information with meaningful suggestions based on a special sensitivity to the fact that anxiety about retirement is often about aging.

Counseling baby boomers and elderly during the pre-retirement stage is a new and challenging field that promises a more satisfying, meaningful life for America’s older citizens. The little planning and initiative goes a long way.

How should you invest your money? Should you contribute to your company’s 401k, put the money in a Roth IRA, or just buy mutual funds? Can you expect to receive any money from Social Security when you retire? How much of your retirement money will the IRS take in taxes? These are the important questions Rick Rodgers expertly answers in “The New Three-Legged Stool” with clear explanations, followed by practical, concise instructions to make the most with the money you have. This tax-efficient approach to retirement planning is one that readers will refer to again and again.

“The New Three-Legged Stool” refers to the three types of investments you should have, and balance properly to support your retirement. These three investments are Tax-Deferred Savings, After-Tax Savings, and Tax-Free Savings. Rodgers takes the reader through an explanation of why each of these types of savings is important, how to invest in it, and how to withdraw the money to achieve the maximum benefit at the time of retirement. Tax-Deferred Savings include company 401(k) plans and IRAs (including SEP and SIMPLE plans). After-Tax Savings include mutual funds, bank and brokerage accounts, and investment real estate-anything that isn’t technically a retirement account. Tax-Free Savings are Roth IRA’s and Roth 401(k)s that have no immediate tax benefits. Rodgers devotes considerable time to explaining the benefits and disadvantages of these investments, and why a healthy balance must be achieved among all three.

One of greatest strengths in “The New Three-Legged Stool” is the examples it offers in the form of various retirees’ stories. The book opens with “The Un-Funniest Story Ever Told” about a successful businessman with an estate worth over $4.4 million. Because the man never consulted a retirement planner or made an effort to do estate planning, when he passed away, his children ended up paying 85.8% of their father’s retirement account in taxes! Many more examples of retirees’ experiences are illustrated in the book, often comparing two people’s strategies to see which ends up being more beneficial.

Besides telling readers how to manage their money according to the current IRS tax laws, Rodgers provides an explanation of how the IRS functions, why it tries to get as much money as possible, based on the U.S. Government’s failure to handle its money properly, and the origins of Social Security, as well as the approaching crisis that by 2017 more money will be withdrawn than is annually contributed to Social Security.

Rodgers closes with advice on finding a good retirement advisor and how to do estate planning, including writing a will or setting up a trust to protect your hard-earned money so you will have enough for the remainder of your life and money left over for your heirs. Several useful charts accompany the discussions, illustrating how much money a person will need to live on, depending on current income, age of retirement, expected longevity, and when a person chooses or is required to draw income from various retirement accounts, including Social Security.

Rick Rodgers has produced a much-needed, well-organized, friendly to read, and refreshingly short book (202 pages) that will give readers much to think about and plan for, and which they will return to time and time again. I hope Rodgers will update the book as time goes by so it is current and future readers can equally benefit from it as tax laws change.

Rick Rodgers is well qualified to provide advice on tax-efficient retirement planning. He is an industry veteran of twenty-five years, has published numerous articles on investing in such publications as Wealth Manager, been a guest on TV and radio shows, and been quoted in “Investment News” and “Smart Money” magazine. In 1996, he founded Rodgers & Associates “to help families create and conserve their wealth in preparation for worry-free and dignified retirements.” For more information about Rick Rodgers and “The New Three-Legged Stool,” or to contact him for personal investment assistance, visit http://www.TheNewThreeLeggedStool.com

You don’t have to do a lot investigating to find some good retirement planning advice these days. You shouldn’t wait to long on following up on that advice. There will come a day that starting to save up for those golden years is to late. Then you will have to keep working just to keep your head above water. Many people somehow seem to believe that you have to wait until a certain age before you can start saving up for your retirement. That is not true, you can even start saving up for your children if you want to. That may be a strange idea, saving up for your children’s retirement but if you can spare the money why not?

Planning a retirement advice

First thing you need to find out by yourself is what you already know about retirement planning and start from there. Find out how much money you think you will need once you retire. And don’t think about what you need just to get by but imagine how much money you would need to do all the things you want to do when you don’t have to work anymore. Remember you have all the time of the world at that stage so you should do some fun things and those cost money. So think of a larger amount then what you would need when you are still working. Also let’s not forget that pesky thing called inflation take that in to account as well.

Then the next step would be to take that number to a specialist, find yourself a retirement advisor or consultant and show him or her the number you have in mind that you want at the end of you working career. The specialist will tell you if that number is reasonable and how you can accomplish that amount. They can offer you retirement planning advice with things like retirement income stream, savings strategies etc. etc.

Some extra tips

The above is of course very basic advice and without knowing your personal situation it is probably the most anybody can give you. You can never start to soon with saving up for your retirement planning. Always review your benefit statements because these individual statements show the total plan and the invested amount.

Do you know the retirement plan of your spouse? It wouldn’t be the first time that a retirement plan provides a benefit for the spouse and sometime they are not aware of this fact and are thus missing out on a savings opportunity. Take a look at your social security statement, which is another great tip, the administration of the social security will send a statement each year some three months before a person’s birthday.

Preparing for and planning your retirement is an important task, maybe be something you don’t want to think about at this moment but it should not be put off until later. When you pushing it forward the chances are you need to save larger amounts of money just to reach your projected end target. Maybe you need some professional help, and most people do, then don’t be afraid to make an appointment at a financial institution of browse the internet and look for companies specialised in the subject of retirement planning advice.