JANUARY, 2013

Get Your Retirement on Track in 2013

        by Steve Vernon, FSA

 

While you're making resolutions for 2013, why not add in a few that will help you improve the odds that you'll live long and prosper in your retirement years? In this first post, I've listed six suggestions that will put boomers on the right track. Get started by choosing just one of these steps right now. Then, each month, select and implement another step. Continue through the list, and by mid-year, you'll be well on your way to significantly improving your retirement years.

 

A note to my faithful readers: Thanks for sticking with me after a two-month absence of newsletters due to my recent surgery. I'm happy to say it was a success, and I'm back in the saddle again, although sobered by my experience and hopefully a little wiser about aging (see "Lessons Learned From My Surgery" below). Please keep reading for this month's selections of helpful blog posts and articles.

 

4 Retirement Planning Steps for Gen X and Yers

 

When I give retirement planning workshops to boomers, audience members often express one of these two thoughts:

  • I wish I'd heard you 20 years ago.
  • My kids need to hear your message.

If you're a member of Gen X or Gen Y, why not get 2013 started off right by taking steps to increase the odds that you'll be able to enjoy your retirement years without the stress of worrying about your finances? It's never too early to start planning for a long and prosperous life. But don't try to do everything at once -- you're more likely to succeed by taking just one step at a time. So act on just one of the ideas in this post each month, and before you know it, you'll be well on your way to financial freedom in your later years.

 

Stock Market "Double Double": A Reason for Optimism          

 

Each year I update a chart that shows the annual percentage returns in the S&P 500 for every year since 1926. Here's the version through the end of 2012. This chart provides a good visual of what I call the "stock market double double" and gives us good reasons to be patient with retirement investing.

 

2012 Market Recap: Bulls Continue Charge  

 

Despite painfully slow economic growth and dysfunctional partisan politics, U.S. stocks closed up 16.12 percent this year measured by the Wilshire 5000 Total Return, the broadest measure of the U.S. stock market. Read here for an excellent summary of the 2012 stock market by fellow CBS MoneyWatch blogger Allan Roth.

 

Another Poor Showing for Active Managers          

 

The debate about which strategy -- using actively managed or passively managed funds -- is the most likely to allow you to achieve your financial goals should have ended long ago. Yet the debate continues, and it will probably continue for a very long time, despite evidence such as the Standard & Poor's "Indices Versus Active" scorecards. The latest one, measuring persistence in fund performance, provides further evidence that passive investing is the winning strategy. Read here for an excellent analysis of these investing strategies by fellow CBS MoneyWatch blogger Larry Swedroe.

 

Avoid This Critical Retirement Planning Mistake       

I was at a holiday party last month when a friend started talking to me about her retirement plans, hoping to get some free advice. I'm always glad to help out my friends, but my advice wasn't exactly what she was expecting to hear. Read here to learn more about the stark reality of surviving in your retirement years if you're relying on 401(k), 403(b), or IRA accounts for most of your retirement income.

  

The story I mentioned immediately above is just one example of a serious lack of knowledge people have about how to generate retirement income from their savings. Here's a post I wrote about a study that illustrates how widespread this problem is among boomers who are approaching their retirement years.

 

Say Goodbye to the 4% Rule 
               

 

If you've been studying up on retirement income, or have been reading my blog posts and newsletters, you've probably come across the 4% rule. This is a rule of thumb that helps you determine the amount that you can withdraw from your retirement savings each year, with the goal of having your income last throughout your lifetime. The 4% rule has been much analyzed and debated over the years, and it has its critics and advocates. For a good review of the weaknesses of the 4% rule, and how to address them, read this excellent post from one of my favorite retirement bloggers, Dr. Wade Pfau.

   
5 Retirement Planning Tips for Single Women

Single women face significant retirement planning challenges, whether they've always been single or are now divorced or widowed. If you're a single woman, you'll be making most, if not all, of your financial planning decisions by yourself, so you're largely on your own to make sure you're financially secure during your retirement years. To do that, you'll want to learn as much as you can to make the best use of your financial andsocial resources.

 

To help with this goal, I'd like to suggest five retirement planning tips for single women. Read here for details.

 

How to Best Work With Financial Advisors

      

 

Your retirement planning decisions get more complex as you approach retirement and in the years following your departure from the workplace. It's entirely understandable that you might seek the advice of a financial planner. But many planners don't have the specialized training that's needed to help people in their retirement years. The following post describes the credentials you should look for when hiring a financial planner.

 

Another challenge with financial advisors is that they're often compensated in a way that conflicts with your best interests. Read here for some thoughts on finding an advisor who has your best interests at heart.

  

Finally, here's a helpful list of 10 questions to ask a potential financial advisor to weed out the good from the not-so-good, provided by CBS MoneyWatch Editor-at-Large Jill Schlesinger.

 

A Great Way to Stretch Your Retirement Savings

 

How much money do you really need? While this question applies to most of us, it's an especially critical question for older Americans who have meager retirement resources and who'll need to make every dollar count, both before and during retirement.

 

"Just enough" is a smart spending strategy for people who want or need to make the most of their financial resources, particularly retirees and workers approaching retirement. Read here for details.

 

Lessons Learned From My Surgery


On Election Day last year, I had major surgery to remove a noncancerous mass that was attached to my liver. The experience, including getting a first-hand look at the wonders of modern medicine and learning what what life could be like in your 80s and 90s, has been quite sobering. As a result, I'm not afraid of getting older, but to maintain this confidence, I'll need to plan appropriately for my later years, as I've summarized in the following post. 

  

Perhaps the most powerful lesson I learned, however, significantly dialed up my motivation to improve my health. Read here for details. 

 

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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, 2012, 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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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."

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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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