I have spent a lot of time thinking about the best way to estimate how large of a nest egg we will need to retire. I have concluded that there is only one practical way to do this and it involves creating a comprehensive retirement spending budget. Many so-called experts suggest using an income replacement ratio or an income multiplier to arrive at a retirement “number.” In my humble opinion, that is a flawed approach.
Archives for June 2012
Baby boomers are bombarded with articles and books about how to reinvent themselves, pursue a second career, and “finding their passion” after leaving a traditional workforce position. I support all of these concepts. However, implementing a “second career” plan requires a lot more care than some people realize. Curt Schilling, a highly successful professional baseball player, is now a prominent example of being careless in his “second career” planning.
In 2009, I wrote a post on the key concepts of Social Security spousal benefits. This popular post continues to receive numerous search hits and comments. I regularly receive email questions about different claiming strategies involving married couples and Social Security. A frequent area of confusion is what happens if the spouse with lower lifetime earnings retires early and begins receiving Social Security retirement benefits at age 62.
Identity protection, security and monitoring is a hot topic these days. You can buy identity theft insurance. You can also pay for monitoring services designed to prevent a third-party from using your name and credit for their financial gain. I am skeptical of the need and benefit of a lot of this. I prefer a low cost, pro-active approach. In no particular order, these are the ID protection steps we have taken:
Another retirement list has been published by Topretirements.com. This one ranks the ten best states for retirement. I’m confident that many will shake their heads at some of the states on the list. But either way, reviewing retirement location lists and why certain places are there is worth your time.
I wrote recently that I am trying to be more active and vigilant in managing our retirement investment holdings. In particular, I want to be sure that (a) there is a reason that we own each of the particular investments in our portfolio and (b) that I have targets for selling if necessary. Part of the vigilance is monitoring the performance of our portfolio in comparison to overall market conditions. If and when the market tanks, I don’t want our portfolio to suffer an identical fate.
For me, the last four years of economic turmoil have exposed many personal finance rules of thumb as rules of dumb. One of those may be the entrenched principal of “buy and hold” as a retirement investment strategy.