Tag Archives: Retirement countdown

Why I Can’t Wait to Retire

Good Day,

The word retirement is a word that many would-be retirees fear nowadays, maybe it’s because of their retirement portfolios taking a serious hit during the financial crisis of 2008, and with the negative publicity about retirement that is all over the place. While a big chunk of the information may be true, there are thousands of people who are retiring to a happy retirement life with just enough to cover their annual expenses. Retirement is part of your life that is basically inevitable, and it would for your own good to prepare for it eventually. So for all those who are about to call it quits, think of all the wonderful things that you are going to do while retired, as illustrated by Dave Bernard in the following article on why he can’t wait to retire.

As baby boomers, my wife and I are right in the middle of the 75 million member generation that is rapidly entering the retirement years. We have overcome numerous challenges simply to arrive at this age. But even once we make it to retirement, there is no guarantee of smooth sailing, especially once health concerns enter the picture.

Some people approach retirement with a bit of fear and uncertainty, while others jump in with both feet and go for it. Personally, I can’t wait to retire. Here are a few of the reasons I’m looking forward to my retirement years:


Once retired, I can choose to do absolutely nothing whenever I want to, and for as long as I would like to. I can get up late, enjoy a second cup of coffee at my leisure, read my book for as long as I want to, exercise when it is most convenient, and basically flow into an unstructured day at a pace most comfortable to me. I am in control of the amount of energy I choose to exert on any given thing, if I choose to exert any effort at all. I plan to frequently immerse myself in this wonderful downtime as I travel into my retired years.

Pursuit of new interests.

While mired in the working world my energies were focused on day-to-day performance at my job. When the weekends rolled around I was confronted with a list of things to do that did not get done during the week. If I was lucky enough to get all the way through the list, I was usually too tired to spend time on hobbies or other interests. And then before I could even take a rest, Monday rolled around again. In retirement, I will have that precious time to do the things I have always wanted to do. The list is already under way and growing steadily.

I will decide when and how I work.

After giving some serious thought to what my retired life will look like, I plan to continue working in some capacity. I enjoy the interaction with others as well as the feeling of satisfaction upon successful completion of a project or goal. I want to avoid the stress of a full-time demanding career, but I still want to do something. The good news is that if one particular direction does not work out as hoped, I can quit and try something different.

I can act spontaneously.

While working, supporting a family, and paying the bills, what I did and when I did it was often beyond my control. Monday through Friday were spent at the office, with the hope of recharging a bit over the weekend. Dreams of doing something on short notice were just that: dreams. In retirement, if I discover a special offer for a mid-week hotel on the coast, I can do it. I look forward to doing new and exciting things without too much planning and acting as the opportunities arise.

Spend more time with my wife.

Throughout our lives one or both of us has always been working. Our timing was never quite in sync so that both of us were out of work at the same time, which was probably a good thing considering health insurance costs. In retirement, we will finally be together to do new things. We are fortunate in that over the years we have each developed our own interests and can keep busy via many different avenues. In retired life we can together undertake the spontaneous adventures we have dreamed of. We could head away for an extended visit to a foreign country, perhaps take some formal dance lessons, and maybe wander the countryside in a RV. It is all out there just waiting for us. I can’t wait.

The Middle Class Retirement Delusion By the Numbers

Good Day,

We are fast approaching 2013, and as usual, for some this will be the year they kiss employment goodbye, while for others, it will be their first entrance into the job market. But the one thing that both groups will have in common is retirement. Ok, it’s not funny, I’m trying to be serious. Maybe for those starting employment, this will probably be the last thing on their mind, but as time goes by, it will take center stage. But over the years, what most have done is base their retirement on unrealistic views of what kind of retirement life they will have once they call it quits, and they go ahead and make retirement calculations based on this wrong information. As we approach retirement, reality checks in a little too late for us to take any drastic action. So, as we are about to say goodbye to 2012, lets also make a promise that our retirement will be based on realistic figures and not delusional numbers, as explained in the following article by Jason Hull.

The need to save for retirement is accompanied by plenty of hints. Ads like ING’s from a few years ago have neighbors toting around large orange numbers, or simply the word “gazillion” to demonstrate what they thought that their retirement numbers needed to be. Popular authors and academics like Lee Eisenberg, author of The Number, discussed what you’d need in retirement, while in-depth research from William Bengen came out with the 4 percent drawdown as well as, more recently, Wade Pfau’s research arguing that even a 4 percent withdrawal rate in retirement might be too risky. There’s no shortage of good information.

Yet, as an October study by Wells Fargo shows, most Americans are woefully unprepared to manage their own retirement. It’s not just that people have been hit by the most recent recession and economic downturn, it’s that many middle-class Americans have a picture in their minds of what will be sufficient to retire that falls far short of what they will actually need.

Let’s look at some of the numbers in detail:

Some 30 percent of Americans say they will need to work into their 80s to be comfortable in retirement.

Where is the delusion? The reality is that many people won’t be physically able to work into their 80s. According to the U.S. Administration on Aging’s Aging Integrated Database (AGID), 22.5 percent of Americans aged 60-84 reported employment disability–they were physically unable to work and receive disability payments because of that disability.

Some 34 percent of Americans think they’ll need less than 50 percent of their retirement income; yet, median household income is approximately $50,000.

Where is the delusion? One-third of middle-class Americans think that they will need $25,000 annually in retirement. For a family of two, since we can assume that the kids will have left the nest by then, this puts them less than $10,000 above the federal poverty line.

Middle-class Americans believe, on average, their retirement healthcare costs will be $47,000.

Where is the delusion? Medicare out-of-pocket costs are expected to be between $240,000 and $430,000 for a 65-year-old couple retiring today.

Middle-class Americans say they will need a median of $300,000 to retire. The same respondents said that, to date, they have saved a median of $25,000.

Where is the delusion? The average age of the interviewees was 50 years old–the ages ranged from 25 to 75 in the interview. This means that, assuming a retirement age of 66 years, they have 16 years to save $275,000. If you assume that the stock market goes up 5 percent per year–perhaps not the safest assumption one could make–then to hit that savings number, they need to save $11,070.69 per year, or 22.1 percent of the median income. However, 68 percent of middle-class Americans who have a 401(k) plan contribute 10 percent or less of their income to retirement.

Middle-class Americans think that a median safe withdrawal rate in retirement is 10 percent.

Where is the delusion? Dr. Wade Pfau, CFA, ran historical simulations for retirees from 1926 to 2000 to see how long retirement savings would last at a 10 percent withdrawal rate. Through 2009, only one year group would still have money–those who retired in 1982. Everyone else ran out of money, with their retirement funds lasting between 8 and 25 years. In more than two-thirds of the cases, retirees ran out of money before reaching the average life expectancy. Most financial planners recommend a 4 percent withdrawal rate, and some, like Dr. Pfau, indicate that 4 percent may be too aggressive.

So how can you snap out of these delusions in time to save your retirement? Here are some suggestions:

  1. Max out retirement plan contributions. There are real benefits to retirement plans, including employer matching and tax-deferred or tax-free growth of contributions. If it means that you have to cut back on going out to restaurants or not buy that 183″ flat screen TV, so be it. You do not want to be a cat food connoisseur when you’re 75.
  2. Start now. If you’re not saving for retirement, get started. Build the habit. Budget. Figure out what you need to do to start socking away money for your retirement.
  3. Envision your future self. Our limbic systems cause us to discount the pain or pleasure of our future selves in exchange for current pleasure; it’s called hyperbolic discounting. It’s why people say they’ll start the diet tomorrow and never do. One way to combat this tendency is to picture yourself doing something in the future, such as retirement, and actively think to yourself, “This is my family.” Studies show that if we think of our future selves as family, we’re less likely to discount that future self’s needs.
  4. Watch fees. Just like inflation, fees and loads are a silent killer. They take away your money that could go to work in funding your retirement, and they line the pockets of salespeople and money managers, which is particularly painful given that actively managed funds usually underperform their benchmarks.
  5. Get a plan and stick to it. The aforementioned Wells Fargo study says that only 36 percent of Americans have a written plan. Meet with a financial planner (preferably an hourly, fee-only planner–see the previous bullet) to discuss where you want to be in the future and what you have to do in the meantime to get there. As Lewis Carroll said, “If you don’t know where you’re going, any road will get you there.” Unfortunately, many middle-class Americans think that they know where they’re going, but they’re using outdated maps. We need to come to grips with the investments and savings we required to create a secure retirement.

Avalanche of Boomers May Bury Social Security

Good Day,

It’s no secret that America’s and probably the rest of the world’s population is rapidly aging fast, and what this means is that the Social Security system of many nations will be strained as they try to keep a balance between the Social Security checks that are due to the current aging population, and also ensuring that enough is invested to cater for the needs of future generations. This calls for a wake up call on all of us, especially those looking forward to relying on the Social Security system to finance their retirement. I’m not dismissing Social Security all together, but what I’m simply saying is that, as governments around the world are forced to meet the needs of retirees, some policies may be implemented to ensure that the funds are enough to satisfy everyone. Theses policies may have positive or negative impacts on the monthly paychecks, and my question to you is this, do you really want to bet your retirement to find out what happens ? In the following article, Robert Powell points the facts about how an avalanche of Baby Boomers may bury Social Security, and hopefully this will get you seriously considering about your own retirement plan.

There are those who like to say that demography is destiny. And if that’s true, then our destiny is becoming increasingly clear. The unclear part may be what to do because of it, particularly as it affects Medicare and Social Security.

Consider, for instance, a recent release from the U.S. Census Bureau.

According to that release, the population in the U.S. is projected to grow much more slowly over the next several decades, but the population age 65 and older is expected to more than double between 2012 and 2060, from 43.1 million to 92.0 million.

What’s more, the older population in the U.S. would represent just over one in five U.S. residents by the end of the period, up from one in seven today, the Census Bureau said.

And the increase in the number of the “oldest old” would be even more dramatic—those 85 and older are projected to more than triple from 5.9 million to 18.2 million, reaching 4.3% of the total population,” according to the release.

Read the report: U.S. Census Bureau Projections Show a Slower Growing, Older, More Diverse Nation a Half Century from Now.

The Census Bureau also said baby boomers, defined as persons born between 1946 and 1964, number 76.4 million in 2012 and account for about one-quarter of the population. In 2060, when the youngest of them would be 96 years old, they are projected to number around 2.4 million and represent 0.6% of the total population.

In addition, the Census Bureau said projections show the older population would continue to be predominately non-Hispanic white, while younger ages are increasingly minority. Of those age 65 and older in 2060, 56% are expected to be non-Hispanic white, 21.2% Hispanic and 12.5% non-Hispanic black.

Other highlights from the release:

The nation’s total population would cross the 400 million mark in 2051, reaching 420.3 million in 2060.

In 2056, for the first time, the older population, age 65 and over, is projected to outnumber the young, age under 18.

The working-age population (18 to 64) is expected to increase by 42 million between 2012 and 2060, from 197 million to 239 million, while its share of the total population declines from 62.7% to 56.9%.

So what to make of all this? What might policy makers and retirees and those planning to retire do in light our destiny?

A crisis brewing for Social Security and Medicare

Timothy Harris, a principal at Milliman and author of “Living to 100 and Beyond,” had this to say: “We’ve seen the economic and social turmoil in Europe where countries have promised more to their populations than they can deliver,” he said, making reference to a recent article in The Atlantic. “As I was doing research for my “Living to 100 and Beyond” book, I kept wondering how European countries were able to afford the retirement and health programs that were on their books. Apparently they weren’t.”

In the U.S., he said, we’re starting to grapple with the impact of our aging population on state and municipal retirement programs, but have yet to face the impact of these demographic changes on Social Security and Medicare. “Politicians have a short-term focus, the next election, and the voters that elect them are aging,” he said. “Given that short-term focus and an aging electorate, we’re headed for gradually increasing crises in these programs.”

Growing population will strain resources

Harris also said projections such as those from the Census Bureau fail to consider the impact of limited resources on long-term population growth.

He noted, for instance, that he’s member of a committee of the Society of Actuaries that is looking at not just population growth and demographic changes, but also the resources needed to support future populations and what our country, and the world, must do in order to manage these limited resources.

His advice, though it might sound trite, for those struggling to make sense of a world with limited resources was this: “Think long term and plan for the future, the same thing that we should all be doing.”

Of note, the issue of managing limited resources in light of population growth and demographic changes will be addressed at the next Living to 100 Symposium, which will take place in early 2014.

Issues that need revisiting

Despite the news that population growth might slowing, Anna Rappaport, who is the head of a consulting firm bearing her name, doesn’t think the latest Census Bureau report contains much that we haven’t known for a long time already. “From the perspective of the individual, there is not a lot new to say about this, except that it reinforces the need to think about a society with a different age balance,” she said. “It is important to think about the different balance and that leads us to the need to keep people engaged as long as possible.”

Rappaport said the report does serve, however, to remind us of the issues that require revisiting, such as the retirement age, innovative work options, better management of health care, long-term care, and innovative housing.

For instance, she said laws that permit phased retirement and later retirements are definitely needed given the aging of America. “Work options to help people work longer, particularly if they can do so on a more limited basis will be important. “This should be a focus of policy, employers and individuals,” said Rappaport. “From a policy point of view, removing barriers to phased retirement is a help. Maybe some tax credits or incentives to support innovation would also be a good idea.”

Rappaport said retirement ages should gradually rise and disability programs need to be adjusted at the same time. “More focus on implementing programs to help people with disabilities work is also important,” she said. “Disability is a huge area of concern in several different ways.”

The Census Bureau report also highlights the need for creating livable communities and affordable housing. “We need to create good options and making them affordable,” she said. “Continuing Care Retirement Communities or CCRCs are very nice but involve a lot of risk and are too expensive for most people.” Rappaport estimated that just 5% to 10% of the population can afford to live in a CCRC.

Rappaport said the “village” movement, which creates networks of people to help each other in their communities, holds a lot of promise. Her advice to retirees and would-be retirees: “Think about village options and support integration,” Rappaport said. “Build and maintain a good support network and put a lot of thought into where you want to live and remember it can change.”

Specifically, for pre-retirees, Rappaport recommends working as long possible and not forgetting risk protection. “Plan with a long-planning horizon,” she said. “Focus on paycheck replacement and don’t spend too much.

And finally, she offered these thoughts in light of the Census Bureau report. “Think a lot about what is important to you,” she said.

What you need to know before refinancing

Good Day,

When things become tougher by the day, sometimes you’re forced to look for alternative ways to get the job done. When repaying the mortgage becomes unbearable at the rate determined by the financier when you entered the contract, it is worthwhile to consider refinancing to a cheaper mortgage that will be beneficial to both parties. And that is exactly what is happening with the current low-rate environment, refinancing has become the order of the day, but the easier way out is not always the best option for everyone. As Diana Bocco explains in the following article, it is always advisable to know all the facts before signing the deal with the first company that offers a refinance arrangement for you.

Here’s the thing: Refinancing a mortgage could save you a lot of money. But, it’s no walk in the park, and it definitely is not for everybody. In fact, there are multiple factors to consider before determining if refinancing is right for you.

“People should always look at the big picture when they are refinancing,” says Keaton Hutto, branch manager for Hometown Lenders in Lubbock, TX. Hutto says more often than not people are concerned with how much refinancing is going to save them monthly, and that’s a mistake.

Instead, says Hutto, people considering a refinance should ask themselves two questions: “How much is this going to save me yearly?” and “How much is this going to save me over the life of my loan?”

Here are five more questions to ask yourself before you decide to refinance…

Question #1: Is My Credit Score Good Enough for Refinancing?

Remember your credit score? It’s that thing you worried about when you bought your first car and home. News flash: It’s just as important when you refinance your mortgage.
And the better your score, the better your chance at scoring a low interest rate.

“Any borrower with a credit score of 740 and above can potentially qualify for the best rates,” says Dean Vlamis, a mortgage expert at Perl Mortgage, an independent Chicago-based correspondent lender. “There is a price hit to the interest rate at every level, so the lower the credit score, the higher the interest rate.”

What if you don’t have a soaring credit score? It’s not the end of your refinancing road. Your debt-to-income ratio, which looks at your housing payment and other monthly debts, versus your gross monthly income, could be your way out.

“If the ratios fall in line; preferably under 45 percent, then the borrower can get a preliminary approval,” says Vlamis.

Question #2: How Much Equity Do I Have?

Before you shell out thousands of dollars to refinance, you should first consider how much equity you have in your home. Equity is calculated by subtracting the total balance of your mortgages from the appraised value of your home.

And the more equity you have, the better your chance of saving money when you refinance. In fact, with higher equity, you’ll likely qualify for lower interest rates and fewer additional fees.

“Ideal amount of equity is of course 100 percent [your home is paid off], but what you really want to look at when taking out a loan is hopefully having at least a 20 percent equity position,” explains Barry Habib, vice president and chief market strategist of Residential Finance Corporation.

If your equity is poor, don’t despair. Habib points out that federal programs such as the Home Affordable Refinance Program (HARP), allows you to refinance with zero equity (or if you owe more than the house is appraised for).

Question #3: Is the Current Rate Climate Good For Refinancing?

If you’re looking to refinance today, the answer to this question is “yes.”

“Today’s rates are close to an all-time historic low,” says Malcolm Hollensteiner, director of retail lending sales at TD Bank. “It’s easy to second guess ourselves, but rates are so attractive today that it may not make sense to wait for a ‘better’ future opportunity.”

If you purchased a home in the past five years and have not looked into refinancing, Hutto says now is the perfect time to do so.

“You could easily shave off as much as 3 to 4 percent or more off your current interest rate, which will translate nicely to extra cash in your pocket every month,” says Hutto.

Question #4: Can I Afford to Refinance?

Refinancing isn’t cheap. That’s why potential refinancers should consider all costs before deciding to refinance, says Mike Ward, vice president of mortgage lending at Guaranteed Rate, Inc.

According to the Federal Reserve, which oversees national monetary policy and the banks, refinancing costs could include appraisal fees, loan origination fees, application fees, inspection fees, and much more.

“While these fees may seem small separately, they really can add up to a large amount that can alter when you’ll actually begin to experience savings from your refinance, commonly called the break-even point,” says Ward.

And knowing your break-even point is key to determining if refinancing is worthwhile. To figure out your break-even point, Ward recommends adding up all refinancing fees and dividing the result by the monthly savings you’re expecting from your refinance.

“This number will show you the amount of months it will take to break even,” he says.

Question #5: How Long Do I Want to Stay in This House?

Thinking about moving soon? Or do you see a job relocation in your near future? If so, refinancing might not be in your best interest.

“The industry rule of thumb is that if the cost of the refinance (closing costs and points) are made up with the monthly savings within five years, then it is considered to be worthwhile to refinance,” says Amy Tierce, a regional vice president for Fairway Independent Mortgage.

“Of course, the borrower needs to know that they will be staying in the house beyond five years for this formula to make sense,” adds Tierce.

However, Tierce explains that if the savings are immediate (because your closing costs are very low, for example), it can be worthwhile to refinance even if you have your heart set on moving out within a short period of time.

8 Surprising Truths About Retirement

Good Day,

Even with all the wealth of information that is available for free, there is still a percentage of the population that is still ignorant of their retirement. Some of the questions people are asking, and the ignorance of noting how your retirement account is performing has reached a new high. C’mon people. this is money you are going to rely on to sustain your lifestyle in retirement, so ensure that it is adequate to meet your needs. The following article by Renee Morad gives illustrations of the 5 surprising about retirement when a survey recently on this topic.

This week is “National Save for Retirement Week,” an educational campaign to raise public awareness about the importance of long-term retirement planning.

The program, created by bipartisan Congressional action, encourages Americans to utilize retirement savings and investment plan strategies. The week also encourages individuals to reflect on their current financial situations and their potential for a secure retirement in the future.

Below, some surprising statistics and insights on where Americans stand today, as well as their expectations, fears, and hopes about retiring:

1. How much money do we need to retire? There’s no real rule of thumb

There are varying estimates of how much money an individual needs to retire. One guideline suggests $1 million, while another recommends you save 10 times your last annual salary. But there’s no one-size-fits-all approach, and you’ll have to consider a variety of factors to determine what’s best for you and your family – like your age and current annual income, desired retirement age and income, and expected annual pension and Social Security. Then, of course, your personal spending habits weigh in.

There are plenty of retirement calculators available, such as CNNMoney’s calculator, AARP’s retirement predictor, and SmartMoney’s retirement planner. Working with a financial adviser can also help determine how much money you’ll need.

2. Half of Americans aren’t saving for retirement

According to a Life Insurance and Market Research Association study, 49 percent of Americans say they aren’t contributing to any retirement plan. Those least likely to save for retirement: individuals between ages 18 and 34.

What are Americans doing instead? In another survey by Wells Fargo, planning a home remodel and planning a vacation ranked higher on the list of priorities within the past year than planning for retirement (which ranked third).

3. Eighty is the new retirement age?

Apparently 80 is the new 65 for many middle-class Americans when it comes to retirement. One-third of survey respondents plan to delay retirement till age 80 or older, according to a Wells Fargo study of 1,000 adults with income less than $100,000. That’s up from 25 percent who planned to retire at age 80 during last year’s survey.

Another study by My New Financial Advisor, a service that connects clients with advisers, suggests the average baby boomer will retire at age 75. Some of the top issues preventing an earlier retirement: loss of income, insufficient savings, low returns, higher than expected current expenses, past-due taxes, and low wage growth.

4. The majority of middle-class Americans aren’t confident in the stock market

According to a Wells Fargo study, 70 percent of middle-class Americans aren’t comfortable investing retirement money in the stock market. When survey respondents were asked what they’d do if given $5,000 to invest for retirement, only 24 percent said they’d invest in stocks – compared to 40 percent who would choose a CD or savings account and another 22 percent who would invest in gold or precious metals.

5. Women are less engaged in retirement planning

Women are more concerned about retirement risks than men, according to a Life Insurance and Market Research Association study – but they’re less likely to do anything about it.

Only one-third of women are actively involved in their family’s retirement planning, compared to nearly half of men. Meanwhile, 32 percent of women admit they do no retirement planning at all.

6. More Americans are tapping retirement funds

More than 20 percent of Americans have borrowed against their 401(k), the highest percentage since 1996, according to the Employee Benefit Research Institute. The average loan size is 14 percent of the remaining account balance.

7. Employers are more willing to offer 401(k) plans, but many employees don’t care

About 95 percent of companies are back to matching 401(k) contributions, but only 30 percent of employees are taking advantage of this, according to a survey by the nonprofit Plan Sponsor Council of America.

The reality: Many individuals need their current income for living expenses and can’t afford to put it away.

8. Forty percent of Americans fear lack of retirement funds

Nearly 4 in 10 Americans are worried that they won’t have enough money saved to retire, according to a Pew Research Center survey. The fear is more prevalent today than it was at the end of the Great Recession in 2009.

Thirty-somethings are among the most worried: Half of adults aged 36 to 40 are worried that they won’t be able to save enough to sustain a comfortable retirement, noted the Pew survey. This age group was reportedly more concerned than those near or at retirement age.

The good news: There’s a wealth of valuable retirement advice and tips out there. Are you looking for ways to boost your nest egg? Hoping to improve your outlook on retirement planning?

Countdown to retirement: 10 years to go

Good Day,

Whenever we talk about retirement, most of us have this vision in our head of something that will happen in the distant future. But before we know it, retirement is knocking at your door and you realize that your retirement portfolio will not be enough to cater even the first ten years of your retirement. Some experts are of the opinion that for you to have a successful retirement, you must start preparing for D-day 10 years before the actual date. I know, it sounds like we are exaggerating things a little bit, but come to think of it, you are about to embark on journey that is totally different from what you have been doing for the last 30 years of your life. So, believe me, you’ll need all that time to adjust yourself, and as Donna Rosato and Carla Fried point out in the following article, there are certain decisions that you’ll have to make as you countdown to retirement.

Figure out the big picture. If you’re saving enough for retirement, position your portfolio for growth.

NEW YORK (Money Magazine) — Congratulations! After 30-plus years of working and socking away savings, you can finally see retirement on the horizon. But it’s not time to coast just yet.

The actions you take in the final decade before you quit working are crucial to getting the next phase off to a smooth start.

“This is the time to evaluate your progress, make adjustments, and take steps to make your retirement a success,” says Jeff Townsend, a Westminster, Colo., wealth manager and the author of “The Road to Retirement.”

From claiming Social Security to managing health care costs to deciding on a place to live, you’ll come away knowing exactly what you need to do to shore up your plan.


Figuring out the big picture

Align your compass with your destination. See if you’re saving enough, position your portfolio for growth, coordinate with your spouse, and keep yourself indispensable at the office.

What to do

Behind? Decide how to catch up. Even if you haven’t put away that seven-times-salary figure savings target, you can still make it to the finish line with what you need (12 times your pay at 65).

Your choice: Seriously power-save, or work a bit longer while saving a lot less, says Denver investment adviser Charles Farrell, author of “Your Money Ratios.”

Say you have five times your income; you could sock away 33% a year, or delay retirement 24 months while banking 20%. Either way, don’t miss out on catch-up contributions! Those 50-plus can put $5,500 extra in a 401(k), $1,000 more in an IRA in 2012.

Unsync with your spouse. Among two-income couples, nearly one in five retires in the same year, and another 30% within two years of each other, reports the Urban Institute.

But quitting in tandem isn’t necessarily the best move, says Tim Golas, a wealth manager in Avon, Conn.

For a 62-year-old couple, there’s a 62% chance the woman will outlive her husband — and the average length of widowhood is 12 years, per the Center for Retirement Research at Boston College. That’s for spouses the same age; on average, married men nearing retirement are almost four years older than their wives, the Urban Institute found.

“If one spouse works just a few years longer, you can draw less from your portfolio in those initial years,” says Golas. And that improves the chances the survivor will have assets to draw from.

Don’t quit on stocks — unless you really can. To achieve returns to sustain a 30-year retirement, you need to still be investing for growth. Stocks should make up 50% to 60% of your allocation, with the rest in bonds, says Rick Ferri, founder of Troy, Mich., Portfolio Solutions.

The caveat: Those within 10% of their ultimate savings goal can choose to dial back to 40%, he adds.

Keep the mortgage, maybe. Of course you don’t want to carry credit card debt into retirement, but what about the mortgage?

The old advice was to burn it before you left work, but in today’s low-rate environment, maybe not. Assuming that your rate is less than 5% and that you’ll be able to afford the payments from guaranteed-income sources in retirement — or, if you’re planning to move — there’s no rush, says San Diego financial planner Saleah Hewitt. You may do better by investing money you would have put toward the loan.

On the other hand, if you won’t be able to swing the nut later on, or simply want peace of mind, use the repayment calculator at bankrate.com to figure out how to erase the debt sooner.

Or consider a cash-in refi to a shorter-term loan. Say you have $200,000 and 20 years left on a 30-year mortgage at 5%. Refinancing to a 15-year at 3%, and putting in $50,000 would shave off five years and cut the monthly payment from $1,381 to $1,074. Keep up the original payment, and the loan will be paid off in 11 years, and you’ll save $10,300 in interest.

Manage down. Sure, you still want to dazzle your boss, but you’d better be working just as hard to make allies below you.

These young’uns are likely to move up the ranks over the next 10 years and have a say in whether you stay or go, notes New York executive recruiter Steve Viscusi. Hanging onto your job for the next decade will be essential to keeping your plan on track.

So train subordinates, mentor up-and-comers, even sign up for reverse mentorships (in which a junior person trains you on something new).


While you can claim Social Security as early as age 62, your payment will increase by about 6% a year for every year you delay filing before your full retirement age (between 66 and 67 for most folks).

After that, holding off earns you another 8% a year until age 70. Altogether, for someone whose full retirement age is 66, the payment is 76% higher at 70 than at 62.

“With very few exceptions, you’re nuts to claim at 62,” says Evanston, Ill., financial planner Danielle Schultz.

That said, postponing may require you to rejigger your plans. So begin strategizing now. Start by determining what you’re entitled to, at ssa.gov/estimator, then consider the tactics here for putting off your benefit.

You may also want to use certain software — Maximize My Social Security ($40; maximizemysocialsecurity.com) or Social Security Solutions ($20 to $50; socialsecuritysolutions.com) — to run scenarios using your and your spouse’s ages, earning histories, and savings.

What to do

Stay on the job. If your portfolio won’t generate enough income to let you delay to 70, putting off your quit date can help, as you can build your savings and postpone drawing from them. Or, work part-time from 62 to 70 to replace the benefit you’d have received, says Jim Blankenship, author of “A Social Security Owner’s Manual.” (The max benefit for a 62-year-old this year is less than $2,000 a month.)

Benefit from your spouse. You have the option to collect payment on your spouse’s benefit instead of your own — assuming you are at least 62 and your better half has filed for benefits. The maximum is 50% of your partner’s payout; you must be at full retirement age to get it.

Best move: The spouse with the higher benefit should postpone collecting until 70, to maximize the bigger payout and possibly lock in a greater benefit for the other, says Baylor University professor William Reichenstein. And in the meantime…

…if you each paid into Social Security.The lower earner can claim his or her benefit as early as 62. The higher earner can claim 50% of that at full retirement age, then at 70 switch to his or her own benefit. The low earner’s check will be recalculated if the spousal benefit is greater.

…if only one of you earned a benefit. That person should file at full retirement age — allowing the non-earner to claim a reduced spousal benefit — then suspend his or her own payouts until age 70.

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