All retirees and pre-retirees need to think about their life expectancy a/k/a longevity. There are at least two important reasons for this. First, one goal of your retirement plan is to limit the risk that you will outlive your money. Second, anticipated longevity is a key factor in deciding the age at which you want to claim Social Security retirement benefits.
Do you have a plan for generating retirement income? Do you have any idea how much retirement income you can expect to generate from your existing retirement investments? There are at least two fast and easy ways to make this prediction. (And forget the outdated and discredited “4% rule.”)
July has been and will be a busy month for me. I just returned from a two week stay at Lake Barkley in Kentucky. This stay included the ninth in a series of extended family gatherings at the lake. (More about this awesome event later this week.) Towards the end of the month I am traveling to Ithaca, NY for my 45th high school reunion. Finally, I have been busy with an updated assessment of my retirement plan and net worth performance as of the end of the second quarter.
Lots of alleged experts publish suggestions to help baby boomers crawl out of a retirement planning mess. By “mess” I am referring to a boomer taking a hard look at his or her “number” and realizing that there are probably going to be more years in retirement than there are dollars to pay for it.
A recent Federal Reserve report contains some disturbing news about personal debt trends in the U.S. First, total consumer debt is at its highest level since 2011. ($11.5 trillion if you like to read large numbers!) Even worse, the level of consumer debt (mortgages, car loans, student loans and credit card debt) increased by 2.1% during the last quarter of 2013. That’s the fastest rate of increase since the third quarter of 2007. Do you remember what happened shortly after that? I sure do, which is why I am so reluctant to trust the equity markets with my retirement money.
I like free advice under two conditions: (1) If I ask for the advice; and (2) the advice comes from someone with experience and knowledge. If you are looking for some retirement or financial planning advice – free and from a financial planning professional, read on.
The Gallup organization has been polling baby boomers on a number of different topics and periodically releasing the results and drawing conclusions. A recent conclusion is this: When it comes to our retirement age, baby boomers are acting in accordance with our “live to work” reputation. I think that is kind of sad, don’t you?
Millions of baby boomers are like me – still in the accumulation phase of retirement planning. Being in the accumulation phase doesn’t necessarily mean you are actually “accumulating.” That requires being a “saver.” A saver has opportunities to save and sufficient discipline to exploit those opportunities. So what separates the successful savers from the not-so-successful retirement savers?
It doesn’t seem right that anyone should have to pay income tax on Social Security retirement benefits, at least until the benefits paid exceed the amount of money that the recipient paid into the system over the years. But, this ship has sailed and many of us will be taxed on Social Security income. The question for today is whether you might get hit with a double tax whammy – taxed at both the federal and state levels.
I don’t like using detailed budgets because of the time involved in monitoring and entering expenses in multiple categories. Using a detailed budget also conflicts with my continuing goal to simplify my life. On the other hand, I like to know and confirm that my pre-retirement outgo is less than my income. That brings a peace of mind that is important to my “big picture” goal of increasing my net worth while I am still in the accumulation phase of retirement planning.