Planning Retirement

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

An income-rich retirement takes diligent effort to reach. Living well in the golden years means you have to start saving early. Over the years you save and invest some of your income in tax-advantaged retirement accounts, like a 401(k) or a Roth IRA. When retirement starts to draw near, it’s time to create an air-tight financial plan that generates the income that would make your ideal retirement possible.

But, if you’re like the majority of Americans, you may not have planned for a big-ticket item that can derail even the best-laid retirement plan: the nest-egg-depleting cost of long-term care.

We know from recent studies that we are living longer than previous generations. However, most of us have our blinders on when it comes to planning for long-term care (LTC). A study by Northwestern Mutual revealed that 56 percent of Americans say that saving for LTC is one of their top financial priorities. But a whopping 73 percent haven’t planned for this need. Read More

Scottish poet Robert Burns famously wrote, “The best-laid plans of mice and men often go awry.” No doubt you likely have a plan for your retirement, even if you might not have a formal written financial plan.

You may know when you want to retire and what you’ll be doing afterwards with your newfound freedom. You may even have a roadmap to get you there.

Now imagine that a big hand reaches down from the sky, crumples up your roadmap, and tosses it aside. But wait, you protest! Too late, your circumstances have changed forever. While that sounds like a stretch, just being caught off-guard with your retirement plan would be less than pleasant, huh?

This is essentially what happened to half of the retirees in The Retirement Preparedness Study from Prudential Retirement. When surveyed, 51 percent said they retired earlier than planned. Sounds good, right? A chance to get to that retirement wish list sooner?

Not exactly. Only 23% retired earlier than planned because they wanted to, either because they had enough money to retire, wanted to retire, or were simply tired of working. Everyone else was dealt an unplanned event, either partially or fully out of their control:

•  46 percent retired earlier than expected due to health problems
• 30 percent were laid off from their jobs or offered an incentive package to retire early
• 11 percent were forced to leave work to care for a loved one

For that 51 percent, their “best-laid plans” went awry, forcing them to adapt to a future they hadn’t foreseen. Read More

Editor’s Note: This is Part 2 of a two-part series on common retirement planning mistakes made by high net-worth investors and households. For more information on the retirement and financial challenges awaiting today’s investors, request your personalized copy of The New Retirement Report. This resource spells out many of the risks awaiting you in retirement and potential solutions to address them.

In the first half of this two-part series we addressed key mistakes that can drain your wealth in retirement. From the high-ticket expenses of long-term care and healthcare to unaddressed asset protection or liability issues, there are many potential missteps. Here are a few more retirement mistakes to avoid.

Review them with your retirement planning professional or advisor to ensure your plan has strategies to address, or even avoid, these possible financial mishaps. Read More

Editor’s Note: This is Part 1 of a two-part series on common retirement planning mistakes made by high net-worth investors and households. For more information on the retirement and financial challenges awaiting today’s investors, please consider a review of The New Retirement Report. Many investors have found this resource useful for planning out for their financial futures.

With even more on the line than traditional retirees, high net-worth households need to be cautious of several all-too-common retirement mistakes that can cause a reversal of fortune.

Review these threats with your retirement planning professional or advisor to ensure your plan has strategies to address—and avoid—these potentially costly pitfalls. Read More

No matter how much we have prepared for retirement, it often seems that we could be doing more. As people live longer and need more money, there’s increased pressure to step up saving. But what if, in addition to funding your own retirement, you also had to provide financial support to your parents?

According to TD Ameritrade, 25% of baby boomers already support another adult. Around 8% of those adults are aging parents. What’s more, 20% of Gen Xers also support other adults, with 13% being their parents.

Most of this support went to general living expenses and medical bills, with financial supporters paying an average of $12,000 per year to help loved ones. 

So, what if your parents don’t have enough money for their retirement needs? It’s more than likely you will help them with care and support, but this could inhibit your own retirement plans in the process.  Read More

Sure, many people stress over money issues. From mortgage payments and other bills to household spending and transportation costs, more than a few financial stressors are taking a toll. But retirement is quite different from the earlier stages of life. What may be Americans’ top money stressor as they venture into their retirement years?

According to a recent survey by Allianz Life, a top economic worry is inflation. Nearly one-third, or 32% of Americans said that they are “panicked” or “very worried” about inflation and its effects on their retirement.

It’s good that retirement investors are aware of inflation, but many underestimate it as a significant risk. In the survey, 64% said they don’t have a plan to address inflation. Among the 36% who do, 51% indicated “being more frugal with their money” would be their plan of action. And what about when it comes to actual planning? The Society of Actuaries reports that 45% of retirees and 28% of pre-retirees neglect inflation in their retirement plans.

Because inflation can be a real dealbreaker for retirement lifestyle – especially as lifespans increase – here’s a look at the power-punch that inflation can land over time. Read More

Whether you are in your 40s or approaching retirement, long-term financial planning should be on your mind. If you want to enjoy a comfortable lifestyle, but you will no longer receive income from a full-time job, you will need to think about cash-flow from other sources, including Social Security, lifetime savings, a retirement portfolio, and maybe some other sources.

While each individual situation will require a specific approach, it’s a good idea to get a general idea of some retirement planning fundamentals. Two primary aspects of financial planning for retirement are wealth preservation and income certainty. Not only should a financial plan match retirement expenses and costs of living with income streams, it also needs to account for how income-producing assets will last as long as you need them to.

Say your risk tolerance tilts toward the conservative spectrum, or where appetites for stomaching financial losses are low. Then you may want to evaluate retirement strategies that provide the emotional comfort of knowing where your money will be coming from, month-to-month, to pay household bills and expenses. We call this Safe Money retirement planning – or making assurances that the money you can’t afford to lose is under the “lock and key” of contractually guaranteed protections.

Of course no retirement success springs up overnight. So, here’s a quick look at 4 simple steps to help you reach more long-term financial wellness and peace of mind. Read More