Does Working Longer Increase Your Lifespan?
by Steve Vernon, FSA
|
One recent morning, while I was having some tea and reading one of my
favorite mortality tables (the RP-2000 Mortality Study, for the
detail-oriented among you), I noticed a table that compared the annual
death rates among two groups of men aged 50 to 70. The first group was
men who were working, and the second group was men who were fully
retired. The death rates of those who were still working were roughly half that of the death rates of men the same age who were fully retired.
What's going on? I thought retirement was supposed to be good for you?
To learn more about this fascinating topic, please read my recent post titled Does Working Longer Increase Your Lifespan? at CBS MoneyWatch. It has intriguing implications for planning the rest of your life.
As described in my February newsletter, I'm continuing this new format of sharing the most helpful blogs and articles that I find in my research. Please continue reading for this month's selections.
|
Beware of Insurance Salespeople Selling Roth Conversions
|
Fellow CBS MoneyWatch blogger Kathy Kristof recently wrote an excellent titled The Crooks Are After Your Retirement Plan. She discusses tactics that insurance salespeople are using to sell deferred annuities and universal life insurance, and urges you to be careful. I totally agree, which is why I'm referring you to her post.
There's a lively exchange of comments after her post, where she appropriately points out the difference between buying an immediate annuity at retirement and buying deferred annuities, universal life insurance or other complicated insurance products as an accumulation vehicle before retirement.
Kathy and I both think that simple, immediate annuities have an appropriate place in your portfolio as a way to manage the risk of outliving your assets. I like buying low-cost annuities through www.immediateannuities.com. See the article in the next section below from Jonathan Pond for more details on immediate annuities.
Kathy and I also are in agreement that complicated insurance products, such as deferred annuities and universal life insurance, have the potential for high expenses and mediocre returns. For details, read her excellent post The Crooks Are After Your Retirement Plan.
|
| Does an Income Annuity Make Sense For You? |
Financial writer Jonathon Pond is AARP's Financial Ambassador. His compelling article Does an Income Annuity Make Sense For You? provides an excellent discussion of the pros and cons of income annuities, a.k.a. immediate annuities.
Most older working Americans don't have substantial lifetime income from their employers' defined benefit plan at work, and they'll be relying on making their 401(k) balances last for their lifetimes. This is a difficult and significant challenge. An immediate annuity is one effective way to meet this challenge. It is, in effect, a do-it-yourself pension, and many economists and financial advisors think that it has an appropriate place in your retirement portfolio.
However, annuity is a dirty word in many circles, usually from the unsavory sales tactics regarding deferred annuities, or due to expensive bells and whistles that are added to immediate annuities. As a result, many Americans don't buy an immediate annuity.
Jonathan Pond's article addresses some of the objections to immediate annuities that people have, and offers possible solutions to address these objections. If you're approaching retirement, I highly recommend that you learn about immediate annuities and the right and wrong way to buy them. Jonathan's article is a good place to start. |
|
The Stock Market--One Year After Armegeddon
|
Fellow CBS MoneyWatch blogger Allan Roth recently wrote an excellent post titled
The Stock Market--One Year After Armegeddon.
In this article, he recommends that we invest in a portfolio balanced between stocks and bonds, and stick to that asset allocation in bull and bear markets. He shows how investors who followed this strategy might have portfolios today that are near their all-time high, in spite of the recent market meltdown.
I heartily agree with his views, which are similar to those expressed in my recent newsletter What Have We Learned From the Crash? Allan tells us that no good bear market should go wasted, and his post offers five lessons to learn from the recent stock market crash.
|
Frugal Living Could Change Your Life
|
I've written previously about the inadequate retirement resources of most older Americans--see my earlier newsletter Baby Boomers Face Significant Retirement Challenges. This makes it essential for Americans who are contemplating retirement to make every dollar count by minimizing their living expenses.
Basically, here's the question you need to answer: How much do you want your retirement freedom? Is it worth significantly reducing your living expenses--before retirement so you can save more for retirement--and during retirement to make ends meet? The answer will be different for everybody, and I encourage you to make conscious decisions so you can best meet your life goals.
The Frugal Dad website explores these ideas in more detail, and I encourage you to read this interesting blog titled Frugal Living Could Change Your Life.
|
This Month's Video Highlight: Money and Happiness
|
This clip comes from an interview in The Quest DVD with Dr. Somnath Basu, director of the California Institute for Finance at California Lutheran University. In this clip, he discusses the surprising relationship between money and happiness. I suggest that what we really want in retirement is to be happy. Answering the question "how much money do we need to be happy" is critical to deciding how much money we need to retire.
For more informative clips, visit the Video Library on my website.
|
|
| Thanks for your interest, and stay tuned for future newsletters which explore how to best live the rest of your life.
Best regards,
Steve Vernon
Rest-of-Life Communications
PS If you think this newsletter will help a friend, please pass it along.
|
|
|
| _______________ |
|
Just Released
The Second Edition of
Recession-Proof Your Retirement Years
Simple Retirement Planning Strategies That Work Through Thick or Thin
I've updated this popular book to include investment results through the end of 2009 and the latest changes to Social Security. I've also added about 20 pages of content to cover topics that readers have requested. It's still short--under 100 pages--so it's easy to follow and easy to finish. And it still provides a step-by-step program to build reliable sources of retirement income that cover your living expenses and strategies to address the threat of high medical and long-term care expenses. The book is available for bulk purchases by employers and other organizations, or for individual purchase. Please see my website for details on all of my books and DVDs. |
_______________
Welcome to
Our Newsletter!
|
We fulfill a need for trusted, practical strategies that you can use to plan your rest-of-life (aka
retirement). We rely on the latest research and analyses, and we'll
keep it simple! And that's all we provide; we don't sell insurance, investments or health products, so we can "tell it like it is."
Here's an archive of past issues.
|
|
|
|
Steve Vernon has spent 35 years as a consulting actuary, helping large employers design and manage their retirement programs. Now he's president of Rest-of-Life Communications, where he specializes in providing unbiased, trusted information about retirement. He also consults to Mercer's US Retirement, Risk and Finance business.
|
| _______________ |
For information on keynote addresses, workshops or presentations on retirement issues, visit Steve's website at www.restoflife.com, or email him at steve.vernon@restoflife.com
|
____________
Want to Learn More?
If you want to learn more about a topic, or if you have any ideas or thoughts on the topics in this newsletter, please send Steve an email at:
|
|
We do not share our mailing list or send advertisements. You will not receive any spam as a result of subscribing to this newsletter.
|
|
| © 2010 Steve Vernon/
Rest-of-Life Communications
All rights reserved.
|
|
|
|
