| How to Avoid Going Broke in Retirement
by Steve Vernon, FSA
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I'm proud to announce the release of my latest book, Money for Life: Turn Your IRA and 401(k) into a Lifetime Retirement Paycheck. It addresses one of the most critical retirement planning challenges today: how to use your retirement savings to generate a reliable, lifetime income.
I've already introduced the main themes in three posts at CBS MoneyWatch:
Your most critical retirement planning challenge
How to avoid going broke in retirement
3 ways to turn your IRA and 401(k) into a lifetime retirement paycheck
Please continue reading below for the latest helpful blog posts and articles on retirement planning.
Just a quick note to my faithful readers: This newsletter is my last for 2012. I'm having major surgery on November 6, so I'll be out of commission for awhile. My docs say I'll be as good as new by the new year, so look for my next newsletter in January.
I hope your holidays are merry, and wish you all the best for the new year!
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Retirement Income Scorecard
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Each calendar quarter, I update my retirement income scorecards that show how much retirement income you can generate with $100,000 of retirement savings for each of the three retirement income generators (RIGs) I've discussed in the past. Each RIG has its pros and cons, and each RIG produces a different amount of retirement income. The retirement income scorecards help you see how much income each method can produce.
Retirement income scorecard: Interest and dividends
Retirement income scorecard: Systematic withdrawals
Retirement income scorecard: Immediate annuities
It's well worth your time investigating which retirement income generator works best for you.
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| Should You Accept a Pension Buyout? |
Should you accept a lump sum cash-out of your pension from a former employer? A number of readers have received such an offer and have asked me whether this is a good idea. If you have a sizable pension, this is one of the most important financial decisions you'll make, so it pays to carefully consider the pros and cons.
One of our readers sent me his cash-out election kit to analyze. (To protect his privacy, I'll call him "Jim" and refer to his former employer as XYZ Company.) I've taken a detailed look at Jim's offer. If you have a similar pension buyout offer, my considerations and conclusions for Jim will likely also apply to you.
This is a complex subject, so it took three posts to fully cover the issues:
Should you accept a pension buyout?
Should you accept a pension buyout? A closer look
Pension buyouts: Who wins and who loses?
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What is the Safe Withdrawal Rate?
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How much can you safely withdraw from your retirement savings if you use systematic withdrawals to generate retirement income? This question has been hotly debated among financial analysts and advisors for years. I highly respect the views of Dr. Wade Pfau, who recently wrote this excellent post on the considerations for the safe withdrawal rate.
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| Your Portfolio: Better Off Now Than 4 Years Ago? | |
When you go to the polls this week, the presidential candidates want you to ask yourself if you're better off now than you were four years ago. (They definitely don't agree on the answer!) But I've got another question for you: "Is your portfolio better off than it was four years ago?" The answer has nothing to do with Democrats or Republicans, and everything to do with how you chose to allocate your savings. For a very insightful article, read this post from my fellow CBS MoneyWatch blogger Allan Roth.
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| Active Funds Too Risky for Most Investors | |
If you're like most investors, you don't like risk -- at least, you don't like taking more risk than necessary. And you like it even less the higher the stakes. The result is that the greater the amount of money involved, the greater the odds you require to take the risk. These simple facts show why most investors should prefer passive funds over active funds. A recent Morningstar article went one step further by breaking down the performances of both active and passive funds. For more details, read this excellent post from my fellow CBS MoneyWatch blogger Larry Swedroe.
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| 5 Things to Know You Don't Know About Investing |
The ability to accept randomness in life is a challenge most people are unable to meet. Yet in the investment world, coming to terms with this fact of life is the key to success. In that spirit, read this post from Allan Roth about five things that we must accept that we don't know to be a successful investor.
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Social Security Errors That Can Cost You Big-Time
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6 Ways to Save Money During Open Enrollment
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Open enrollment season is approaching for many U.S. employees, and it's a good use of your time to learn what choices you can make that will help save you hundreds, or even thousands of dollars regarding your health-care expenses. The money you save can then be invested for retirement in a Health Savings Account (HSA), making this a win-win activity. Read here to learn more.
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Retiring Boomers: Are Roommates in Your Future?
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Thanks for your interest, and stay tuned for future newsletters that explore how to best live the rest of your life. Best regards,
Steve Vernon
Rest-of-Life Communications
P.S. If you think this newsletter will help a friend, please pass it along.
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Recently Released
Money for Life
Turn Your iRA and 401(k) Into a Lifetime Retirement Paycheck
My latest book, published in October, answers two of the most important financial questions you'll ever face:
How much money do you need to retire?
How can you generate reliable income from your retirement savings that lasts for the rest of your life, no matter how long you live and no matter what happens in the economy?
Addressing these questions is one of the most critical challenges facing the retirement industry today.
Money for Life is an easy-to-read, easy-to-understand book that outlines specific action steps and includes illustrations and graphs to reinforce the main points. It describes in simple terms the three methods you can use to generate a "retirement paycheck" from your retirement savings. It explains the pros and cons of these methods, as well as their many varieties and permutations. One critical element is the amount of the retirement paycheck you'll be able to generate, which can vary widely depending on the method you choose to generate retirement income.
This new book complements my other published works on retirement planning -- my book, Recession-Proof Your Retirement Years; my DVD, The Quest for Long Life, Health and Prosperity; and my retirement planning website, Money for Life.
Please see my website for details on all of my books and DVDs.
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Welcome to
Our Newsletter!
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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.
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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, and writes a regular column for CBS MoneyWatch titled Money for Life.
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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
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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:
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| © 2012 Steve Vernon/
Rest-of-Life Communications
All rights reserved.
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