Monthly Archives: January 2011

Top 10 Investing Tips for 2011


I hope this is not too late, considering that one month has already lapsed, and by now a lot of people have already made their mind on what they want to accomplish in the year 2011. This year has definitely got to be the year which will determine a lot of things, ok I’m speaking personally here, but all said and done let this year be a memorable one. The following ten strategies should be on top of your list for the year 2011, according to Don Taylor, PhD, CFA.

With an economy still on the mend and unemployment stubbornly high, it’s important to make the best investing decisions for you and your family. The best strategy blends managing risk, while investing to get the most bang for your buck.

Take these baby steps and follow the rest of’s 100 tips for 2011, and you can improve your financial life in the coming year.

Tip 1: Define or refine your life goals

What do you want out of life?

The trend in financial planning is to work with people to help them determine what they want out of life, and then establish financial objectives that will facilitate the client’s ability to achieve those life goals. Money becomes the catalyst instead of the goal. Don’t get drawn into the vague generalities of a comfortable retirement, an education for your children or travel abroad. When you know what you’re working toward, you’ll be more committed to investing for those goals.

Tip 2: Get the big picture of your financial plan

Financial planning is a lot more than just managing your investments. A comprehensive financial plan looks at the big picture. It includes a review of your insurance, employee benefits, income taxes, investments, retirement and estate planning, as well as personal financial statements, your attitudes toward risk, and your goals.

A good planner is the captain of your financial ship. The Certified Financial Planner Board of Standards Inc. has a wealth of consumer-friendly information, including the publication “How to choose a financial planner.”

Tip 3: Create an investment policy statement

Whether you do it yourself or work with a financial planner, you should have an investment policy statement that serves as a guide on how you want to invest. This guide should include the investor’s philosophy toward investing, investment objectives, the investor’s attitude toward risk, a target asset allocation, guidelines for monitoring portfolio performance and an approach to portfolio rebalancing.

Other items should cover tax considerations, estate planning goals, fees and expenses, and trading costs. It should spell out an approved list of investments, and whether the investor allows trading on margin, short selling and investing in derivative securities. And it should also spell out whether the investor’s account allows discretionary trading by the account manager.

Tip 4: Know your risk tolerance

Know how you feel about risk in investing. The “Investment Risk Tolerance Quiz” offered by Rutgers University’s New Jersey Agricultural Experiment Station, can give you a quick read on your risk tolerance. If you find yourself tossing and turning at night and it’s not your mattress but rather the markets keeping you awake, then it’s time to dial down the risk in your portfolio.

Knowing your risk tolerance will help you decide how to invest your money. Conservative investors may not be comfortable with investing much money in the stock market because of its volatility. Lower volatility means lower potential returns, so a conservative investor will have to save a higher percentage of his income to be on track to meet his financial goals.

Investors have to manage their investments considering twin risks: the risk that their investments lose principal and the risk that their investments lose purchasing power. Conservative investors can protect principal by investing in certificates of deposit insured by the Federal Deposit Insurance Corp., but the FDIC doesn’t protect the purchasing power of those deposits. Keep an eye on your purchasing power, too.

Tip 5: Review and rebalance your portfolio

Calendar rebalancing is one approach to adjusting how you’ve invested. Others include target rebalancing and tactical rebalancing. Calendar rebalancing has you adjust your portfolio on a regular basis. Target rebalancing waits until an asset allocation is above (or below) the maximum (or minimum) target asset allocation. Tactical asset allocation has you reducing or increasing the allocation to an asset class based on your outlook for that asset class.

An active management portfolio strategy that rebalances the percentage of assets held in various categories in order to take advantage of market pricing anomalies or strong market sectors.

Investment allocations in financial securities are typically split between stocks, bonds and cash. The investment allocation that’s right for you will depend on your risk tolerance, investment goals and market outlook. You may decide that an allocation of 50 percent stocks, 30 percent bonds and 20 percent cash is right for you. If this year’s stock performance brought your stock allocation up to 60 percent, then rebalancing the portfolio will get you back to your target allocation.

Tax and other considerations like estate planning can influence your desire, and ability to rebalance your portfolio.

Tip 6: Establish an emergency fund

Establishing an emergency fund is where most consumers should start investing. Starting out, it’s best for the money to be invested in liquid and safe investments like a money market account or a money market mutual fund.

Financial planners typically suggest the fund hold three to six months’ worth in living expenses. The more risk you face in the workplace, the more you should have available. Counting on cash advances from your credit cards or loans from your 401(k) plan are not viable financial backstops because the credit card companies can raise the interest rates to obscene percentages, and a plan loan won’t help you if your financial emergency is getting laid off from your job since a 401(k) loan comes due when you leave an employer.

Tip 7: Review your approved list

Your “approved list” is the stocks and bonds you’re willing to invest in and the cash you plan to hold. Even within those basic categories you can invest in individual securities, mutual funds or exchange-traded funds, or ETFs.

If your portfolio doesn’t have an international component, looking beyond domestic investments can make sense, and not just for stocks. Expanding the list to include commodities, precious metals and real estate can give your portfolio diversification. Learning how to hedge portfolio risk with options and futures contracts is best left to a discussion between you and your investment professional.

Tip 8: Roth IRA conversions and more

The Internal Revenue Service removed the income limitations for Roth IRA conversions, starting in the 2010 tax year. Unfortunately, there are still income limitations on who can contribute to a Roth IRA. That forces taxpayers with incomes above the contribution limits who want to hold retirement assets in a Roth IRA to perform the intermediate step of contributing to a traditional IRA and then making a converting contribution to a Roth IRA.

If investment returns don’t pan out, taxpayers have the ability to recharacterize their Roth IRA contribution as a contribution to a traditional IRA. The taxpayer has this option up until Oct. 15 of the tax year following the conversion year. Converting in January 2011 gives you the flexibility to recharacterize over 21 months. Investors should have a better read on the recovery and tax code changes over that time span. Work with your tax professional to determine if converting your traditional IRAs to Roth IRAs makes sense.

Tip 9: Estimate your retirement nest egg needs

You need a sense of how big your investment portfolio should be at retirement. The Employee Benefit Research Institute’s 2010 Retirement Confidence Survey concluded that only 46 percent of workers or their spouses have attempted to estimate their retirement nest egg needs.

If you construct a household spending plan (or budget), you can use the total annual expenses as a guide to what you might need in retirement. Financial planner recommendations typically range from 75 percent to 100 percent of your annual expenses while working, but exclude money budgeted for retirement savings. You’ll be taking distributions from these accounts, not funding them.

Bankrate’s retirement calculators can help you right-size your nest egg by estimating your income needs in retirement, considering how much you have already put aside and deciding on your pre-retirement savings goals.

Tip 10: Capture the match in your retirement plan

If your company’s 401(k) or 403(b) plan has your employer matching contributions, then you should contribute up to the limits of the company match. A typical 401(k) matching program has the employer contributing 50 cents for every dollar you contribute up to a limit of 3 percent of salary. You contribute 6 percent, the company contributes 3 percent, and you just made a 50 percent return on your money.

Financial Advice That Can Do Serious Damage


Ok, we always hear the same kind of advice when it comes to financial matters. While the advice given is kind of generalized, in the sense that it can apply to all people facing that kind of financial challenge, sometimes it’s not always the best advice when you take into consideration the financial difficulty you are going through. That is why, before you can act on the advice given, it is always prudent to get a second opinion first, because the circumstances may be totally different in both cases. Don’t get me wrong, I’m not saying that you don’t follow or listen to the advice, all I’m advocating is finding out if the financial advice applies to your case as illustrated in the following article by Joe Mont.

Even the most well-intentioned personal finance advice and most standard, accepted bit of conventional wisdom on money matters can be bad in the wrong situation. Of course everyone’s situation is unique and what works for some is unwise for others, and vice versa. But there’s advice so common it’s hard to keep that common-sense truth in mind.

Here are four usually savvy strategies that in the wrong situation can backfire, and cause more damage in the long run:

Put as much as you can into your 401(k) or IRA.

The mantra of many retirement experts falls into two camps: “save” and “save more.” Deferrals of 10% and 15% of pay are often touted as ideal. While planning for the future, it’s naive to not at least consider your current reality. If all you can legitimately kick in is 2%, so be it. At least you are doing something and setting the stage for when times are better.

Another scenario where pumped-up contributions may not make sense for everyone is when it comes to creating an emergency fund. Experts advise that having an emergency fund of at least three to 12 months of salary is important, to help in the case of disasters such as unemployment, an unexpected illness or the always poorly timed car breakdown.

On paper, your money will do better in a 401(k), especially if it can leverage an employer match, or an IRA because there will be — in all likelihood — a far better return on your money than the typical savings account. But if you have little or no emergency savings, that money can be costly to extract when needed — a 10% penalty on top of additional state and federal income taxes. You also lose the future value of compounded returns.

Boost your deferral rate as high as you can.

Even if you have an above-average salary, is a bigger deferral rate necessarily better? Choosing how much to contribute isn’t always so simple.

“If you contribute too little to your 401(k), you may not get the full employer match,” says Robert J. DiQuollo, president of Brinton Eaton, a New Jersey financial planning firm. “On the other hand, if you contribute too much, too fast, you can shortchange yourself.”

DiQuollo uses the example of an executive making $20,000 a month who contributes 20% to a 401(k), with a 5% company match. He or she will reach the IRS’ annual contribution limit of $16,500 in May and can’t contribute for the rest of the year. In this example, the executive gets a match of only $4,500 at a company that frontloads contributions. If the executive chose a 7% contribution rate instead, the $16,500 limit wouldn’t be reached until December and would get the full company match of $12,000 — or $7,500 more.

For those without that enviable dilemma, there are some relatively pain-free options to boost retirement savings while maintaining contributions to an emergency fund. If you quit smoking for a New Year’s resolution, tuck the suddenly extra money into your savings. Another strategy is to take advantage of this year’s 2% decrease in FICA taxes.

“Why not just put part or all of that 2% tax cut into your 401(k) or 403(b) account? It is money you aren’t used to spending anyway,” said Greg Burrows, senior vice president of retirement and investor services for Principal Financial Group (NYSE: PFG-News). Principal points out that a 30-year-old earning $50,000 a year who defers an extra 2% into his or her 401(k) account over the next year would boost the weekly 401(k) contribution by a little more than $19. That amount could potentially grow, however, to more than $16,600 by retirement at age 66.

Buying property is better than renting.

A common refrain, even on the heels of the bursting real estate bubble, is that renting an apartment is “throwing money away” compared with homeownership and the ability it offers to build equity and wealth.

As if staggering foreclosure rates and underwater mortgages aren’t enough to make a different case, consider that it is not just mortgage payments to worry about. There are interest payments, property taxes, homeowner’s insurance, furnishings, utility bills, maintenance and repairs to add to the mix. Treating a home as an always-appreciating investment is no longer a smart strategy, and those who base their ability to pay a mortgage on projected earnings, rather than current paychecks, may be dangerously optimistic.

Make paying off debt a priority.

Reducing your debt and excising the interest payments and accompanying fees is usually a good idea. But paying down debt shouldn’t derail a savings plan. It is important to knock down those credit card bills, but be careful you don’t shortchange your retirement savings or emergency fund to do so.

Also, not all debt is bad, suggests Morrison Creech, head of private banking and executive vice president for Wells Fargo Private Bank (NYSE:WFC-News). In a recent interview with The Street, Creech suggested that if you have debt maturing in the next 24 months, you might consider extending that to a five or 10-year horizon and taking advantage of the current historically low-interest rate environment. If you are contemplating additional debt over the near term again, locking in a rate now would be advantageous. For some, allotting money that would be used to pay down low-interest debt might be better used to improve liquidity, diversify portfolios and mitigate risk, he says.

The Millionaire’s Retirement Plan


Now that we have looked at retirement planning, and how to go about it, I’m sure that you would want to know how to retire a millionaire! We all want to accumulate as much money as we can during our active life, so that by the time you reach retirement all you will be doing is cruising around the world. This is will not be an easy task, and a lot of sacrifices will be required on you part, but the bottom line is: it can be done. The following article by Fleur Bradley demonstrates the steps you will have to take in order to retire a millionaire.

If you’re just entering the workforce, retirement probably seems like a lifetime away. A million dollars by retirement? That’s someone else’s dream, right? It doesn’t have to be. Here is the millionaire’s retirement plan. For these calculations, assume an average annual return of 8%, adjusted for inflation at 3% – a reasonable estimate of average market returns.

Age 25: A Good Beginning

You’re 25 and landed that first job on your career ladder – congratulations! Before you start living to your new paycheck’s standards, budget your retirement savings. If you have a 401(k) plan that matches your contributions, use it! These matching dollars are like a guaranteed return on investment. If you don’t have a matching 401(k), look for a mutual fund through an investment firm with low fees; many now offer target funds, which allocate your investment risk with your targeted retirement year in mind – great for a beginning investor.

Choose a Roth IRA if you can; you don’t get to deduct your contributions from your taxes, but you’ll enjoy tax-free withdrawals at 65. Plan to start by saving about $200 a month to reach your millionaire goal; increasing this monthly amount by $10 annually as you get a raise or promotion will only speed up your saving.

Age 35: Rolling Along

By now you have saved about $45,000 and you’ve grown in your career with a bigger paycheck, but often, family commitments like children and a mortgage will seem more pressing than saving for your golden years. Don’t make the mistake of slowing down your retirement savings. By now, you should ramp up your contributions to about $400 a month – remember that a matching 401(k) will help you in attaining this amount.

If you have kids and worry about saving for their college, look at it this way: the best way to help them in the future is by ensuring you’re financially sound in retirement. Make saving for retirement a priority.

Age 45: Holding Steady

You’re mid-career, and things are looking good in your retirement portfolio. Your savings have grown to about $160,000 – not bad, but it still isn’t quite time to slow down. Increase your retirement contributions to about $450 a month or more, and you’ll be rolling your way to millionaire status by 65.

Age 55: Close to the Finish Line

By age 55, your retirement portfolio should be at $400,000 or so. You can start to see the finish line, but begin to wonder about risk. If you’ve been investing in a target fund, your portfolio has been adjusting its allocation for you; otherwise, look at adjusting some of your investments to reflect a lower risk tolerance. And remember: your income at, say, age 70 won’t be withdrawn for another 15 years – plenty of time to ride out market fluctuations.

At age 55, expect to really ramp up your retirement contributions, to roughly $600 a month, and more if you can manage it. The more you save, the sooner you can leave the nine-to-five behind.

Age 65: Prudent Asset Management

You’re at the finish line: a millionaire at 65! Since you have no way to add to your savings now that you’re out of the workplace, prudent asset management is vital. Keep a close eye on your portfolio so you can make your nest egg last. Protect yourself against inflation as well as market risk, and you’ll be enjoying your golden years without financial worries.

The Bottom Line

With steady savings and smart financial habits, you can retire a millionaire – maybe even before you’re 65.

Retirement Checklist: What to Do From 35 to 55+


A lot of you are probably wondering what I mean when I mention the word retirement plan. Well, a retirement plan is just like any other plan, and this is where you develop a strategy on how to accumulate funds that will be enough to sustain your current lifestyle in your retirement years. And just like any other plan, a retirement plan will change to reflect the changes in  your circumstances, for example, the kind of life a person of 30 years is living is totally different from a 50-year-old, and this will be reflected on their take on life in general. So as we get older, we should always amend our plans to be at par with our goals. We can achieve this by having a retirement checklist that will basically guide you in retirement planning as it is explained in the following article by Walter UpDegrave.

The road to retirement is littered with distractions. In the hurly-burly of life, so many things compete for your attention that you can lose sight of what really matters most. That’s where MONEY’s checklist comes in. We’ve created to-do lists for each of the main stages of retirement planning. Think of them as basic reminders you can set aside and refer to on occasion — say, every year or so — to make sure you’re on the right track.

It needn’t be a complicated list. Says Charles Farrell, a financial adviser and author of Your Money Ratios: “Simpler is better. Focus on a few key goals and you won’t miss the forest for the trees.”

TO DO: Mid-30s to early 40s

Goal: Develop the habit of saving. Savings: 1.5 times your annual salary by age 35.

  • Take full advantage of my 401(k) match. Your employer-sponsored retirement plan is the easiest way to put your savings on autopilot. And if you take full advantage of your company match, you could earn 50% to 100% on your money before taking on any market risk.
  • Boost my 401(k) contribution. As your paycheck grows, your savings rate should too. Sign up for “auto escalation” to boost your contributions by a percentage point or so a year. If your 401(k) doesn’t offer this feature, sock away half or more of each raise.
  • Find other tax-advantaged ways to save. Already maxing out on your 401(k)? If you make less than $120,000 — or $177,000 for married couples filing jointly — check out a Roth IRA. Already hitting the $5,000 annual IRA limit? Move on to investment options such as index funds that don’t expose you to stiff tax bills.
  • Cover six months of expenses. Make sure you’ve got an emergency stash, so if you get laid off you won’t be forced to dip into your 401(k) and IRAs. Put this money in a safe place like an FDIC-insured bank account or CD, or a high-quality money-market fund.
  • Invest for growth. You may feel skittish about stocks, given the recent market turmoil. But with retirement still two to three decades away, your best shot at building an adequate portfolio is to put most of your retirement savings — 80% or so in your thirties — in stocks and ride out turbulence along the way.

TO DO: Mid-40s to early 50s

Main goal: Focus on how you invest your money. Savings: 3 times annual salary by age 45

  • Rebalance my portfolio. Periodically reset your holdings in stocks and bonds back to your desired mix to smooth out the market’s bumpy ride. Keep it simple by rebalancing annually on your birthday or after you get your year-end statements.
  • Go over my investment strategy. You still need to invest for growth, but now’s the time to start gradually dialing back your stock exposure to guard against another downturn. So if you started your late thirties with an 80% or higher stake in stocks, trim that to 70% or so by your early fifties.
  • Make my catch-up contributions. The extra $5,500 you can throw into your 401(k) starting at 50 will not only grow into a surprisingly big stash down the road (see the chart), but will also reduce your taxable income now. You can also stuff a bonus $1,000 a year into an IRA starting at 50.
  • Give myself a reality check. Assess whether you’re on course for a secure retirement. The Retirement Planner at will tell you the odds of meeting your goals — based on your current balances, savings rate, and investment strategy. It will also let you know how to catch up if you’re off track.
  • Consolidate my far-flung retirement accounts. After career changes and job switches, you may very well have left a trail of 401(k) accounts scattered among former employers. Rolling these funds over into an IRA or your current 401(k) will make it easier to manage your entire nest egg.

TO DO: Mid-50s and beyond

Main goal: Decide what type of retirement you want. Savings: 6 times your annual salary by age 55.

  • Prune my stock portfolio. Going into the 2008 crash, nearly four out of every 10 401(k) investors in their mid-fifties to mid-sixties had 80% or more of their accounts in stocks. To avoid damage from market meltdowns near the end of your career, scale back your stock stake to 60% or less by your early sixties. And once you’re close to retiring, keep two years’ worth of expenses in cash.
  • Map out a blueprint for my retirement. When you quit working, how will you fill the hours of each day? How much traveling will you do? And will you stay put or relocate? Fill in the blanks and create a real budget.
  • Run (and rerun) my income plan. A financial planner or the Retirement Income Calculator tool at can help determine if your savings plus Social Security and any pensions will generate enough income — safely — to meet your needs.
  • Look into when to take Social Security. Should you collect Social Security benefits at 62, or wait longer to boost your checks by as much as 77%? The Social Security Administration’s Retirement Estimator tool will help you map out your options.
  • Work on my Plan B. Things don’t always go as planned. So keep your income options open. In case you need part-time employment, maintain ties to colleagues at work even after you retire. And look into ways you can tap home equity, for instance through a reverse mortgage.

7 Expenses You Can Ditch In Retirement


Once a person retires, there are some expenses that an individual will save, for example, transport charges, lunch costs for those not taking home-made food, gas expenses for those using personal cars etc. This will eventually lead to an increase in your income, that can help in taking care of expenses that may be increasing in other areas, for example, medical costs. The following article by Mark P Cussen shows seven types of expenses that you can reduce or eliminate from your retirement expenses.

Although retirement can mean the cessation of some forms of income such as earned compensation, it can also mean the elimination of certain types of expenses. Although some studies have indicated that the cost of living for retirees is just as high as it is for younger taxpayers, there are still many everyday expenditures that may disappear at some point. Here are the expenses you might be saving once you hit your golden years.

Mortgage Payments

The best thing about any mortgage is that, at some point, it eventually gets paid off. The removal of this expense is huge burden off the back of any homeowner, and can mean the difference between positive and negative cash flow for many retirees.

Child Care

By the time most parents are ready to retire, their children are grown and gone, and do not require sitters or daycare, which can cost thousands of dollars each year. (With many people ill prepared for retirement, seniors are moving in with their kids.)

Car Payments

Houses aren’t the only things that are eventually paid off. Although some owners choose to trade in for a new car every few years, others keep their cars in good condition until they are paid for, which not only results in the elimination of the car payment, but can also allow the owner to opt for cheaper liability insurance coverage.

Retirement Savings

Many workers automatically opt to put 15% of their earnings away in some sort of employee-sponsored retirement plan, such as a 401(k) plan. Others allocate money each month into a traditional or Roth IRA. But all qualified plan contributions will cease upon retirement (although IRA contributions can continue until age 70.5 or beyond). For someone who earned $70,000 and contributed the maximum amount into their plan, this equals $11,500 per year of contributions that are no longer made. (IRA designed to help Americans without access to a company retirement plan invest easier. What makes this new idea so different, and how does it work?

Smaller House

For those who still have a mortgage, this can mean a lower payment every month. Those who have paid off their homes will realize a windfall that they can either use to bolster their retirement savings or pay off other bills, such as cars or medical expenses. In most cases this can also mean lower property taxes and utility bills.

Life Insurance

Those who have cash value policies may get them paid off by the time they retire, and those with term policies may no longer need them, or may not be able to afford to continue the coverage. In any of these cases, it spells the end of monthly or annual premium payments for the policy. This can free up thousands of dollars in some instances, depending upon the amount of coverage involved.

Miscellaneous Debt Payments

Student loans, credit cards and other consumer debt can constitute a large portion of many budgets. But older consumers often get these debts paid down in later years, and their elimination can substantially ease even the tightest budgets. The removal of credit card debt in particular allows retirees to get out from under usurious interest rates and direct their monthly payments toward other obligations.

The Bottom Line

For many retirees, the elimination of some or all of the debts listed above can make a huge difference in the amount of income that is required to make ends meet. Many retirees are able to live on Social Security plus their retirement savings with relative ease if the major debts that they incurred earlier in their lives are finally paid off.

10 Part-Time Jobs for Retirees


Ok, you are about to retire and you’ve just realized that you don’t have enough money to sustain yourself during retirement, and the one risk you don’t want to take is wait until you are dead broke to start looking for another source of income. You are not alone, many individuals are retiring without having enough retirement funds to sustain their current standards of living. One way you can counter this problem is by finding a part-time job to supplement your retirement income, so as to be able to not only maintain your current lifestyle, but also enjoy an active retirement life. The following article by Jennifer Lawler gives example of part-time employment you can undertake in your retirement.

If you’re at or near retirement, you may find that a part-time or occasional job would make a big difference to your budget. Beyond paper routes and baby-sitting, how can you make a few extra bucks on the side? Here are some good options you might not have considered.

Consult or Freelance

Many consulting companies need people to come in on a project basis, says Dick Dawson, vice president of CareerCurve, who coaches many workers over age 55. “Explore the company — write to the person who heads up the unit you would want to work in.” Other organizations, especially those that are downsizing, look for freelancers to fill gaps in their staff. Try online bidding sites, like, to find this kind of work.

Do the Same Job, Only Less

Larry Schaffel, director of public relations for Magellan Development Group, says that he retired after selling his PR agency. Then, a former client offered him his current job on a two-day-a-week basis. “Impossible to say no,” says Schaffel. Many professional jobs allow for a phased transition to retirement, in which you may work fewer hours each year over several years. Or, keep your former employer as a client and work part-time.

Research for Businesses or Universities

Career counselor Anne Headley knows a retiree who volunteered at the local university, which led to a part-time job. “Because he has lots of experience in researching, delving through records to answer questions, he came to the attention of the archivist.” Also needed are researchers who can help scholars find the studies or do the data collection they need to complete their research projects. Let departments related to your area of expertise know you’re available.

Go to the Government

Age discrimination is less likely in government jobs, says Dawson. Government agencies have seasonal and part-time work. Visit to start. You may also find appropriate work in state, county and city governments.

Think Seasonal

Retailers need part-time workers during the holiday season, says Dawson. The key to making this kind of work satisfying? “Don’t think of Wal-Mart only,” he says. “There may be other fun things to get into. For example, if you’re interested in organic food, try Whole Foods.”

Show Your Team Spirit

Many sports teams hire workers seasonally or part-time. These kinds of jobs can run the gamut from ushering spectators to their seats to running the front office. Retiree Harold Jaffe manages the Diamond Club, the premier seating facility for Safeco Field, home of the Seattle Mariners.

“This is my eighth season doing it,” says Jaffe. “I started when I was 64. I’ll do it another 40 or 50 years. It’s great fun!”

You won’t find a job like this advertised, though, and you have to be willing to start at the bottom of the ladder. “Call up your local ball club,” he says. “It’s something you have to go after. If you have the ability to network, it will lead you to this kind of thing.”

Customer Service

Many older works excel at customer service. Alpine Access, for example, employs many part-time retirees who work from home as customer service agents. They still have the flexibility to travel and enjoy their retirements. Headley says that many older workers can find “help desk” jobs that require the kind of knowledge they have amassed over a lifetime of work.

Monetize Your Gifts

Look at what you’re good at and try to find a way to make money from it. If you’re handy around the house, you may be able to find work helping people unstop their sinks, put together their bookshelves or hang pictures. If you’re good with a needle, you could alter clothes or fix torn hems.

Tell your friends and family, post fliers and connect with places that might need your skills. The dry cleaner may need someone who can sew buttons back on or the rental management company may need an occasional handyman. Don’t discount your skills, says Alicia LaFrance, a psychological marketing strategist and retirement coach. “These are all goods and services that people buy.”

Teach or Tutor

Many organizations need class instructors. For enrichment (noncredit) classes, oftentimes the only credential you need is experience. Try your local college or university, art center, or parks and recreation center. If you have aptitude and patience, you can tutor local students in math or English. Connect with local school principals and teachers to get started.

Or start your own program based on your hobbies or interests, as Dennis Golden did. He’s the founder of IM-Safe, an organization that provides personal safety training, which he began after retiring.

Sell Online — But Not the Way You Think

You know you can sell your prized doll collection on eBay or use Craigslist to get rid of your furniture. But to build a sustainable source of income, establish a Web presence around an area of expertise and then sell ad space and related items.

For example, when Al Wiener retired, he built as a hobby. When the recession hit his retirement savings hard, he focused on turning it into a profitable e-business. He’s able to work on his business even when he’s in his RV. Now, he says, the money he earns from ad sales on his website exceeds his monthly retirement income.

The New Realities of Retirement


If there was a way a person could increase their retirement income without jeopardizing the their living standard, a lot pre-retirees and retirees would live a less stressful life. One of the things people fear when they retire, is to run out of money when enjoying your retirement years. This forces many people to look for a job so that they can survive, something they vowed they will never do again. One way to ensure that this does not happen to you, is to make sure that you keep on evaluating your retirement and pension funds to reflect the changes in your life. The following article Mary Beth Franklin show how you can go about keeping your retirement income flowing reflecting the changes in your life.

It’s the year 2020, and you’re easing into another day in retirement. You kiss your wife goodbye on your way to the golf course. She sips her coffee before heading for the mall. But tee time, and shopping are not on today’s agenda. You’re staffing the local pro shop, and she’s working part-time as a cashier at Macy’s in an effort to supplement your savings and make the money last another 25 years.

Meanwhile, your thirtysomething kids, who are climbing the corporate ladder, are saving 15% of their gross income (including matching employer contributions) for their eventual retirement. And they don’t even have to think about it. When they were hired, they were automatically enrolled in their company’s 401(k) plan, their retirement contributions are automatically increased by two percentage points each year, and their contributions are automatically directed to a target-date fund that contains a mix of investments geared to their age and anticipated retirement date.

Theirs will be the first generation to benefit fully from an automatic 401(k) system throughout their careers. If they stick with it, they should be able to easily replace about 80% or more of their preretirement income — including Social Security benefits, which will be smaller than today’s retirees receive. Given the nation’s budget-deficit problem, reductions in future Social Security benefits are inevitable.

Even workers who choose to work for one of the nation’s millions of small businesses will find it easier to save for retirement in 2020 than it is today. Automatic payroll deductions to fund IRAs will become more prevalent, and government incentives will encourage more small businesses to offer their own retirement plans. That’s a far cry from the nearly half of private-sector workers who had no access to employer-based retirement-savings plans in 2010.

Boomer blues

During its 30-year history, the grand experiment known as the 401(k) has evolved from a sideline plan designed to supplement retirement savings to the only retirement plan a lot of workers have. But it has been less than successful for many of the 78 million baby-boomers, who started turning 65 this year at the rate of 8,000 people per day. For them, age 65 probably won’t be a magic milestone marking the beginning of retirement. It will just be another year they get closer to their goal. In this new world, 70 is the new 65.

Many boomers first encountered 401(k) plans midway through their careers and initially received little guidance about how much to save or how to invest the money. By the time employers and plan sponsors got serious about helping workers figure out how to estimate and fund their retirement goals, severe market losses at the beginning and end of the past decade snatched back most of their gains.

Average 401(k) account balances — after increasing in 2003 and for the next four consecutive years — fell 28% in 2008, according to a recent joint study by the Investment Company Institute and the Employee Benefit Research Institute. Although the average account balance bounced back 32% in 2009, rising to $109,723, it was still below 2007 levels. Overall, accounts rose by an average annual growth rate of 10.5% from 2003 to 2009. But most of the increase was due to continued contributions rather than investment gains.

Thirty years after the plan first appeared, some critics wonder whether the 401(k) — which is a defined-contribution plan and leaves investment decisions to employees — was such a good idea. They bemoan the loss of traditional, defined-benefit pension plans, in which employers shouldered the cost and risk of their employees’ retirement. “The experience of the baby-boomer generation clearly demonstrates that individual investors do not have the skills, time or interest to properly manage their retirement investment portfolio,” says Lee Saunders, secretary-treasurer of the American Federation of State, County and Municipal Employees. “We need to recognize that our current retirement programs, based on individual accounts such as 401(k) plans, are a failed experiment.”

Gregory Burrows, vice-president of retirement planning for the Principal Financial Group, a leading provider of 401(k) plans, disagrees. “The 401(k) is not a fully mature system yet. No one has started working at age 25 and retired at 65 with 40 years in the system,” he says. However, Burrows concedes, attempts to turn average workers into accomplished investors have failed. “The focus should be on making people professional savers, not professional investors,” he says. “Picking the best funds is not the key to retirement security. Contribution rates have the biggest impact.”

You may not be able to depend on roaring stock markets to compensate for inadequate savings, but you can reduce your portfolio’s volatility and increase your chances for better returns by diversifying your retirement savings among a broad group of domestic and international investments.

Pension myths

Don’t blame the boomers’ underfunded retirement predicament solely on disappearing pensions. The golden age of the gold watch is largely a myth. A recent Investment Company Institute report noted that although 90% of private-sector workers who had access to a retirement plan in 1975 were covered by a traditional pension, only 20% of them ever received any income from those plans. Back then, more-stringent vesting rules prevented many workers with fewer than ten years on the job from qualifying for any pension benefits, and the biggest checks were reserved for those who stuck with one employer for 20 years or more. In reality, few did.

The 401(k) was created in 1978 so that an increasingly mobile workforce could take their retirement savings with them as they moved from job to job. Today, more people receive retirement income from defined-contribution plans than they ever did from traditional pensions, says Peter Brady, senior economist at ICI. In 2009, 34% of private-sector retirees received income from an employer plan — either directly or through a spouse — compared with just 21% in 1975. “The good news is that private-sector pension income has increased over time, and the shift from traditional defined-benefit plans to defined-contribution plans has not led to a decline in private-sector pension income,” Brady says.

Now the challenge is how to take a lifetime of savings and convert it to a stream of income. Increasing life expectancies and rising health-care costs mean those dollars have to stretch even further. To help you get a head start on a secure retirement, see our exclusive Countdown: Prepare Your Portfolio (below), developed by financial planner Philip Lubinski, head of the Strategic Distribution Institute in Denver. It will help preretirees create a game plan to safeguard a portion of their savings while investing the balance for long-term growth. “Having the proper mix of guarantees and market opportunities provides you with the best mix for a smooth retirement,” says Lubinski.

Prepare Your Portfolio

Many preretirees leave their investment asset mix alone until the day they retire and then consider making changes. That proved to be a disastrous strategy for those who planned to retire in 2008 and 2009, as they watched the stock market plunge more than 50% (and mush of their savings along with it).

Here are some guidelines for how to rejigger your investments five years before you retire to protect your income for the first five years in retirement — and how to position the balance of your portfolio for growth for the next 25 years.

Five years before retirement

Step 1: Add up your current savings: List the value of all your retirement accounts.

Step 2: See how much it will grow by retirement: Multiply by 1.28 (assumes 5% annual growth).

Step 3: List monthly contributions: Include your contributions and any employer match.

Step 4: Estimate future value of contributions: Multiply by 68 (assumes 5% annual growth).

Step 5: Project your total savings at retirement: Add the amounts in steps 2 and 4. To estimate how much annual income your projected savings would generate, multiply by 0.05. If that’s not enough to supplement your Social Security benefits, see the accompanying article for ways to rescue your retirement.

Step 6: Determine the amount to protect now: Multiply the amount in step 5 by 0.22. This is how much you should transfer now to create income for your first five years of retirement. You can use a five-year CD, stable value fund, or five-year fixed annuity.

When you retire

Purchase a five-year immediate fixed annuity. Use the money you transferred to a fixed account in step 6. This will create an income stream for your first five years of retirement to supplement Social Security and any other retirement income.

Transfer 26% of your retirement fund balance to a five-year fixed account, such as a CD, bond or five-year fixed annuity. Aim for a 4% rate of return, without taking any market risk.

Keep remaining funds invested in a 50% stocks/ 40% bonds/ 10% alternative investments (commodities and real estate funds) mix, aiming for a 6% return. Use our tool to find the portfolio that’s right for you.

Repeat these three steps every five years. That will ensure a steady stream of retirement income while always keeping a portion of your money invested for growth.

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