Planning Retirement

Many Americans worry about whether they have saved enough to have a comfortable retirement. But, surprisingly, most haven’t actually crunched the numbers to estimate how much money they will need in retirement in order to live comfortably.

According to a survey by the Employee Benefit Research Institute, just 42% of Americans have attempted to calculate how much money they might need for retirement. In other words, almost 60% haven’t estimated how income they might require.

A Gap Between Retirement Confidence and Readiness?

In the survey, just 3 in 10 people said they have tried to estimate how much they might pay in healthcare expenses during retirement. These are sobering findings, considering that many people report they are confident in knowing how much money they need to live comfortably in retirement.

Six in 10 (67%) said they were “somewhat confident” about their understanding of their income needs. As for higher levels of assurance, two in 10 (23%) said they were “very confident.”

However, as the Employee Benefit Research Institute’s other findings show, the vast majority of retirement savers haven’t actually calculated how much money they might actually need. This could set retirement savers up for a future of unnecessary stress – and even reduced lifestyles. Read More

When you near retirement it’s an important life transition. Your approach to money matters will probably change. Now is time to examine portfolio assets and consider how you will use them for income to sustain your retirement lifestyle. A good retirement planning company can help you plan for this transition.

Retirement Planning Companies May Have Different Specialties

However, investors have many options of financial firms in today’s industry. Different firms can vary in the unique expertise to the table. Some companies specialize in investment management and others in financial planning, for example.

While similar in some ways to financial planning and investment management, retirement planning is different. It concerns advice on the distribution of money and how people will use the money for income needs.  

Business Type Also Matters

There is also the question of business organization. Some firms are just one of many broker offices for huge financial companies, while other firms are small, local businesses. Whether they have a captive or an independent status may influence the kinds and selections of the retirement products they can offer you.

So, all of this adds up to many retirement planning options for investors. How do you choose the right partner for you? Let’s take a look at some questions to answer. Read More

After we enjoyed the sweet ride of an 11-year bull market, market volatility is back in style now. Where things will go from here is anyone’s guess. But even more importantly, what about you and your personal outlook?

How can you take steps to protect what you have accumulated over the years? Can you do anything to help you ride out this wild wave of volatility?

You can, and there are steps you can take right away. If they make sense, some tools and strategies that you might consider could add more stability, predictability, and certainty to your portfolio.

Here are six ideas that you can put to work right now. Read More

Not everyone thinks this way, but the idea of ‘living forever’ appeals to many people. Or, at least, the thought of living a longer, healthier life.

There can be many upsides to living longer. Think about how you could share more in the lives of loved ones from younger generations. You would have a front-row seat to see exciting developments in technology and medical services.

You might have the chance to witness new history-making events. At the very least, it would give you the opportunity to see the impact of your lifelong legacy.

Over the past century, life expectancy in the United States rose by over 30 years. It’s no wonder why financial researchers say that people can spend as much as one-third of their lives in retirement nowadays.

Advances in healthcare, medicine, and technology have led to better management of childhood infectious diseases as well as improvements in healthcare for adults’ quality of life. Because of this, people face the prospect of longer retirements and more years that they will have to cover financially than was so in the past.

It’s clear that increasing life expectancy has and will continue to have big effects on retirement. Among other goals, the primary challenge is figuring out how much income you will need to sustain your preferred lifestyle over many years. Read More

Several factors come into play when you plan for your retirement. Your age, longevity, and the returns that you will earn from your retirement portfolio are just a few. In some form or fashion, all of those can play into your target retirement age.

But one frequently overlooked factor is the day that you will stop working. You may think that you will keep working until you are 70. Nevertheless, this is often an overestimation of how long you will stay in the workforce.

The fact is that you will probably not continue to work for as long as you think you will. That might be due either to health factors or the need to care for parents (or maybe other elderly family members).

This factor can substantially impact your retirement plans by either forcing you to forego retirement goals such as traveling and hobbies or live a significantly diminished lifestyle. Read More

A new year has dawned, and you can feel the anticipation in the air. People everywhere have scribbled down their New Year’s resolutions, as 2019 has swept in the allure of new beginnings.

A world of opportunity awaits!

Perhaps with a nod to another passing year, many of us will put eating healthier at the top of our list of resolutions. Hitting the gym more often (or even at all), being more productive with our time, and perfecting our work-life balance are perennial New Year’s Resolution favorites.

And for those in their 50s who have visions of their ideal retirement, the New Year is an ideal opportunity to take stock of what they want to achieve. It’s a time to evaluate where they are in terms of reaching that goal, and to reflect on whether they need to create or refine a retirement plan that will help them get there.

Especially for those who are planning on retiring within the next five years, here are three New Year’s Retirement Readiness Resolutions. Read More

For skiing enthusiasts, the concept of ups-and-downs is quite exhilarating. Just the thought of cutting powder on tall, sloping moguls can make even the “hard cores” blush.

But as recent market volatility reminds us, the goodwill doesn’t apply to ups-and-downs in every situation. Sometimes it can bring just the opposite.    

Earlier this month on Morningstar, Director of Personal Finance Christine Benz observed how equity market down-spurts can disrupt a retirement portfolio.

Portfolio losses might not matter as much as when people are younger, as they have time to recover – and to grow past the point when portfolio asset values dipped. In fact, Benz writes, for those with many years to retirement (or under age 50), “not taking full advantage of the historical outperformance of riskier asset classes is a bigger risk than being too conservative.”

But as retirement draws near, some flight to safety may well be a prudent course of action. Benz explains: “At that life stage, you’re much more vulnerable to what retirement planners call sequence of return risk. That means that if you encounter a calamitous equity market early on in retirement and need to spend from the declining equity portfolio, that much less of your investments will be left to recover when stocks finally do.”

And what if a portfolio has gone into reverse mode? “Your only choice to mitigate sequence of return risk–assuming your stock portfolio is in the dumps and you don’t have enough safe investments to spend from–will be to dramatically ratchet down your spending,” Benz says. “Needless to say, that’s not something most young retirees are in the mood to do.”     Read More

If you are a retiree in your 70s or older, you may feel well positioned to weather potential financial shocks. But if you have yet to enter your golden years, you may face more difficulty maintaining your future retirement standard of living in the aftermath of financial shocks.

That is the consensus of a 2018 report from the Center for Retirement Research (CRR) at Boston College. Unveiled back in February of 2018, the report is entitled “Will the Financial Fragility of Retirees Increase?”

Its conclusion? Future retirees may not be able to rebound from financial jolts, such as those from unexpected medical expenses or the death of a spouse.

That brings up an important question. Why would tomorrow’s retirees be at a greater disadvantage than those who have already retired?

Current retirees may be benefitting from company-sponsored retirement plans in addition to their own retirement assets.  Not so for future retirees who face “inadequate savings and the limited income that safe withdrawal rates provide, reducing the cushion between their incomes and fixed expenses,” according to the report.

Another alarm sounded in the report: “If households choose to hold a significant portion of their savings in equities to increase the income their savings provide, they will be more exposed to sharp market downturns that arrive early in retirement.” Read More

According to the American Psychological Association, about 40 to 50 percent of married couples get divorced. While it’s no secret that divorce disrupts lives, it can also threaten a divorcing couple’s financial future, according to new research.

The Center for Retirement Research at Boston College (CRR), with the support of Prudential Financial, just released a study. Their findings? Divorced Americans are at greater risk of not being able to maintain their standard of living in retirement. 

The study compared the risk divorced households face using the center’s National Retirement Risk Index (NRRI). It revealed divorced households have a 7-percentage-point greater risk of not having adequate retirement income than households not experiencing divorce. Among all households, exactly half are at risk of not having adequate retirement income.

“Millions of American households are at risk for not having adequate retirement income, and the challenge is even more acute among divorcees,” said Kent Sluyter, president of Prudential Annuities. “These are sobering numbers that highlight a fundamental shift that needs to take place in the way we think about retirement. Instead of solely thinking about accumulating savings, people also need to consider a plan for protecting and generating retirement income.” Read More

The latest is in on how many people think they will be financially comfortable in retirement.

Nearly half of non-retired Americans said they foresaw an uncomfortable retirement, according to new findings from Gallup. Meanwhile, 51% predicted they would have enough money for comfortable living in the golden years.

What’s the verdict for after retirement? Good news on that front, as the numbers go up. Almost 8 in 10 retirees (78%) reported that they were financially comfortable.

It’s a trend that has been pretty consistent since Gallup started tracking the data in 2002. In past years, 72% and 83%, respectively, were the lowest and highest measures of retired Americans reporting financial retirement comfort. Read More