10/17/17

Americans Underestimate Long Term Financial Needs

By Javier Simon, September 2017, Plansponsor.com

Despite being confident about their current financial situation, a large portion of Americans significantly underestimate the projected costs of living in retirement, according to a recent survey by independent adviser Financial Engines. The study found that 58% of respondents at least 65 years of age and 76% of those between the ages of 55 and 64 believe the average married couple retiring at age 65 would need between $50,000 and $200,000 for health care. Financial Engines estimates the actual figure is $266,000.

Moreover, 64.9% of respondents to a financial literacy quiz offered by Financial Engines did not know they could defer claiming Social Security benefits until age 70, potentially earning between 6% and 8% in additional lifetime benefits under current conditions for each year they delay between ages 62 and 70.

And even though 47.3% of respondents said they felt “somewhat or much more secure” about their finances compared to five years ago, only 8% of those people passed the financial literacy quiz. Overall, only 6% passed the quiz, which covered topics around financial decisions people are likely to make during their lifetime.

“It’s not surprising that Americans are feeling better about their financial situations given low unemployment and a record-breaking stock market,” says Andy Smith, CFP and senior vice president of financial planning at Financial Engines. “But as our quiz shows, there’s a persistent problem with financial literacy in this country. When it comes to your finances, poor decisions you make today can cost you for the rest of your life.”

Financial Engines found that people struggled most with quiz questions regarding long-term financial decisions such as paying for health care in retirement. And as the health insurance industry undergoes ongoing uncertainty, studies show many Americans are highly concerned about health care costs in retirement. Many workers currently facing increasing costs have stomached the blow by cutting into their retirement savings.

But managing health care costs is not the only long-term financial issue many people are having trouble with. The Financial Engines survey found more than half (51.4%) of people significantly underestimated how much life insurance they should have, which is recommended to be 10 times their annual income. Several survey takers also undermined expected longevity in retirement. Plan sponsors may be able to help employees alleviate the financial downside of living longer by introducing longevity annuities to investment menus.

Financial Engines notes, “While no one knows exactly how long they will live, many people underestimate standard assumptions for life expectancy, which can lead them to save much less than they need. Nearly three out of four people (72%) were unaware that the typical 65-year old man can expect to live about another 20 years, on average, with 61% underestimating longevity by at least five years. The Social Security Administration estimates that a man age 65 today can expect to live, on average, until the age of 84.3 years old. A typical woman age 65 today can expect to live, on average, until age 86.6.”

Smith adds, “Often, people don’t have a realistic idea of their cost of living or how expensive things will be in retirement. While each person has a unique financial situation, it’s important to remember that you are not alone. Take advantage of helpful online planning tools and if you want more personalized help, reach out to a financial professional you trust – someone who can help clarify complex issues and guide you through the financial planning process.”

For its study, Financial Engines surveyed 1,000 individuals between the ages of 18 and 65 who are employed full-time, part-time or self-employed. The survey and panel were both fielded using the Survata Publisher Network. Fielding was executed in July 2017.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP® 

08/29/17

The 3 Phases of Retirement and How to Plan for Them

By Wendy Connick, Aug 16, 2017, Motleyfool.com

When workers think about what retirement will be like, they often imagine it as a single monolithic event — as if they can pursue their favorite activities every day until their last. But in reality, retirement is a three-stage event, and for most retirees, each stage is considerably different. Knowing how your expenses will likely change over time will help ensure that your money lasts as long as you do.

The first decade: retired life begins

During the first decade or so, new retirees are stretching their wings and learning just what this retirement thing is really like. Because new retirees are relatively young, they’re often in good health and have a relatively high energy level, so they’re ready and eager to embark on adventures like world travel. However, our natural desire to live it up after decades of work means that this first decade is typically an expensive one for retirees. That’s why it’s important for retirees to build significant flexibility into their initial budget, perhaps planning to spend 10% to 20% more per year during the first 10 or so years of retirement. For example, if you think you’ll need $50,000 in annual income in retirement, aim instead for $55,000 or $60,000 per year. With this approach, if it turns out you were optimistic about your income needs, you’ll still have enough to get by.

Part of the challenge of this early retirement period is that while you need a relatively large income, you also want to keep your retirement account withdrawals fairly low. After all, the money in those accounts needs to last you for the next 20 to 30 years; if you deplete them too much early on, you’ll be sure to run out of money down the road. Assuming your investments earn average returns (say, 7% per year if you’re invested mostly in stocks), it’s best to limit your withdrawals to 3% to 3-1/2% of the entire balance per year for the first five to 10 years of retirement. If your returns are particularly good during the year, you can take a little more. On the other hand, if your returns are bad or even negative, keep your withdrawals as small as you can possibly manage.

The second decade: settling in

Once the first decade of retirement has passed, you’ve had time to get used to this whole retirement thing and have likely sated your taste for adventure. You may also begin to experience some chronic health issues that reduce your energy or even your mobility. Thus retirees in their second decade tend to live more quietly. This is a time when many retirees choose to focus on family activities. Some feel like their current home is “more house than they need,” inspiring them to downsize and perhaps to move closer to family or friends.

Spending typically drops during this phase of retirement. Americans aged 75 and older spend 23% less on average than those aged 65 to 74, according to a Bureau of Labor Statistics study. That’s partly because elderly Americans travel less — the BLS says the 75-and-up crowd spends 35% less on transportation than the 65-to-74 group — and downsizing your living situation also helps to cut expenses. At this point, you can also bump your retirement account withdrawals, raising the percentage to 4% to 5% per year depending on your returns. On the other hand, medical expenses are likely to be somewhat higher than they were during the first decade. If your healthcare expenses are much higher than they were in the previous decade, consider switching to a different Medicare plan – a plan with higher premiums but better coverage might end up saving you money at this point.

The third decade: winding down

By this time you’re in your 80s or 90s and probably have much less energy than you did at the beginning of retirement. Many retirees at this stage move to assisted-living facilities or require other types of long-term care. It’s best to explore different long-term care options before you actually need them so that you can find the best caretaker or facility for you. It’s also a good idea to arrange for a power of attorney with a trusted advisor or family member so that if you become unable to make decisions for yourself, someone with your best interests at heart will make them for you.

Most of your living expenses will drop still further at this point, but your medical expenses will likely rise, especially if you’re getting substantial long-term care. Unless everyone in your family lives past 100, you’re probably reaching the end of your life and can thus increase your retirement plan withdrawals to 8%, 10%, or even more depending on your returns. That said, if you want to preserve capital for your heirs, then you may choose to cut back on your withdrawals.

Planning for the three stages

Since your health and energy levels will be highest at the beginning, it’s wise to pursue your highest-activity desires during your first decade of retirement. Just keep an eye on your budget so you don’t overspend and cause problems for yourself later. During the middle and later stages of retirement, many retirees experience feelings of isolation — so this is a good time to be close to family and friends. And remember: You worked hard for decades to be able to enjoy a pleasant and comfortable retirement. This part of your life should be all about you, so put your time and energy into enjoying yourself!

To Your Successful Retirement!

Michael Ginsberg, JD, CFP® 

08/22/17

9 Ways to Maximize Your Retirement

By Dave Hughes, August 17, 2017, US News and World Report

When you retire, a wide array of new possibilities become available to you. You have the opportunity to create a life that’s determined by your interests, desires and priorities, unencumbered by the constraint of having to earn a living. Yet many people don’t take advantage of the possibilities that retirement offers. They just continue with their daily routine, minus the job. Here are nine suggestions for how to get the most out of your retirement years. Most of them cost little or no money, but they may require some effort, new habits and a positive attitude adjustment.

Be open to adventure. Most of us are creatures of habit and routine. If you don’t add some new things to your life when you stop working, then everything that’s part of your current routine will just expand to fill the time vacated by work, probably supplemented by more time spent watching TV. After you leave work, try some new things. Be open to new adventures. Don’t say yes to things you don’t want to do, but don’t say no due to fear of leaving your comfort zone.

Create a new identity. When you are working you have a job identity, such as doctor, engineer, teacher, accountant or manager. When you meet someone new and they ask what you do, you have a ready answer. After you retire, what will you say? Saying you are a retired doctor or a former teacher lets the other person know what you did, but not what you’re doing now. Simply saying you are retired doesn’t tell your new acquaintance much about you either. Being retired shouldn’t mean there’s nothing interesting about you.

So create a new identity for yourself. If you are working on your memoir or writing the great American novel, you’re an author. If you plan to travel a lot, you’re an explorer. If you have dusted off your trumpet and you’re playing in a community band, you’re a musician. Create a role for yourself that is descriptive, inspiring and opens the door for further conversation. You may have several roles.

Set some goals, and then create a schedule and a plan. You probably have some ideas about what you want to do after you retire, such as places you want to travel, hobbies or interests you want to spend time on or new things you want to learn. You may have compiled some of these goals into a bucket list. If you haven’t written them down yet, you may find doing that to be very helpful. But simply creating a list is only part of the process. Unless you create specific plans for accomplishing things on your list, then all of these goals are likely to remain things you’ll do someday – and that illusive someday may never arrive.

So look at your list and select the first few things you want to accomplish. Set a date for each of them. Write down what you’ll need to do to make each of them a reality and get started. For example, if one of your goals is to visit France, decide that you’re going to go in May of next year. Create a list of steps such as making airplane reservations, making hotel reservations, renewing your passport and gathering information on what you want to see once you get there. Do this for each of the first few items on your list, and then update your list and your plans periodically.

Make plans for upcoming birthdays, holidays and special events. While major trips and events come along only occasionally, smaller special occasions occur far more frequently. Taking advantage of them just requires a little advance planning, but that effort will result in memorable, quality time spent with those you love and a life filled with purposeful enjoyment. As an added benefit, you’ll always have something coming up to look forward to.

All you need is a wall calendar or scheduling software for your computer or phone, such as Outlook or Google Calendar. Enter each significant birthday, anniversary, holiday or other event in the tool, and then set them to recur annually and set the advance notification feature to remind you at least two weeks in advance. If you use a wall calendar, make sure you allow yourself time at the end of each year to transfer all of your important dates to next year’s calendar. You may want to use sticky notes on the prior month’s page to remind you of events coming up.

Create and nurture a network of people you enjoy. Friends come and go throughout your life. When you leave your job or move, you’ll leave many of those friends behind. It’s up to you to keep the flow of new friends coming into your life to replenish those who naturally drift away for one reason or another. Just as the curator of an art museum seeks out the best artwork to display at his or her museum, you can think of yourself as a curator of quality friends for your life. Choose people who are positive and supportive and have qualities you value. Steer clear of people who constantly complain and gossip about others. Of course, you should be civil and polite with everyone, but you are not obligated to be friends with people just because you are related to them, you work with them, they go to your church or you’ve known them for years.

Continue to learn and grow. After you leave work, you may be grateful to be relieved of the stress of making difficult decisions and the pressure to keep up with industry trends and new information. That doesn’t mean you should shut off your brain and coast for your remaining years. One of the best ways to keep your days enjoyable and purposeful is to indulge your curiosity. Learning can be fun during retirement because you can choose to learn about the topics that are most interesting to you. You don’t have to worry about studying for exams or being graded. You can read books, visit museums, take classes, seek information on the internet, engage people in discussions – the possibilities are limitless. Staying mentally stimulated is one of the best ways to keep your retirement interesting.

Spend your money – wisely, of course. You would be surprised how many people live through their whole retirement and leave most of their money unspent. Throughout your working years, you have been conditioned to save money for retirement. Often, it’s difficult to adjust your mindset so that you can allow yourself to spend some of that money you have saved. While everyone’s situation is unique, a widely accepted guideline is that you can spend 4 percent of your portfolio each year and not run out of money. Check with a financial advisor to determine how much money you can safely spend each year. You may find that you can take that vacation or buy that convertible you have wanted. Live a little.

Get rid of possessions you no longer need. Just as it’s important to adjust your mindset from saving money to spending it, it’s also helpful to adjust your mindset from accumulating possessions to getting rid of them. Maybe you have amassed a large collection of books, movies or music that is just sitting on your shelves collecting dust. Your closets may be overflowing with clothes that you haven’t worn in years. Perhaps your guest bedroom has turned into a walk-in storage facility and your garage is so full you can’t park your car in it. Regardless of whether you sell, donate, recycle or throw away all those things you’ll probably never use again, you’ll feel better once they are gone. You will have fewer things to clean and keep organized. If you move, you will have fewer things to pack. Most people who declutter and tidy their home are glad they did it. People rarely miss those old possessions after they get rid of them.

Enjoy each day. Despite your best intentions and plans, you may not get to do everything you hope to do during your retirement. You may experience a physical setback that eliminates some things from your bucket list. You may realize that there are a few things you won’t be able to afford. Or, sadly, you may pass away before you get to everything. While it’s wonderful to have goals and plans for the future, the most important determinant of whether you will have a happy retirement is whether you enjoy each day as it comes along. As you are getting ready for bed each night, think back on your day. Did you enjoy it? If not, why not? Figure out what you can add or eliminate from your life so that you will enjoy each day a little more. Sometimes an average day can turn into a great day with a little spontaneity. If it’s a nice afternoon, find something to do outside. On a whim, call a friend and ask if they would like to have lunch or dinner with you. If the day seems too routine, do something out of the ordinary. When you’re retired, you have more freedom to do what you want with each day. Avail yourself of that freedom. Time spent doing something you enjoy is time very well spent.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP®

06/26/17

If you build it, they’ll stay; Boomers remodel their homes

By Joyce Rosenberg, April 5, 2017, AP.com

The small businesses that dominate the home remodeling industry are expecting robust growth in the next few years, thanks partly to baby boomers who want to remain in their homes.

Home remodelers say they’ve had a pickup in projects from boomers who are in or approaching retirement and are seeking to modify their houses. It’s a trend known as “aging in place,” an alternative to moving to smaller quarters or a warmer climate. Many of these homeowners are hoping to make their surroundings easier to manage and safer in case they have health problems.

They’re replacing bathtubs with walk-in showers, installing safety rails, widening doorways and building ramps — features known as “universal design” since they can be used by anyone, regardless of physical ability. Boomers are also redoing their kitchens and sprucing up other areas — since they’re staying put, they want to enjoy their surroundings.

Zach Tyson estimates that 30 to 40 percent of his revenue is now coming from boomer renovations, up from 15 to 20 percent five years ago. Most of the projects come from homeowners who are healthy and mobile now, but want to be prepared if illness or injury hits.

Besides making bathrooms safer, they’re enlarging rooms so wheelchairs or walkers can be used more easily, and also to give the rooms a more open feel. “It’s trending up, for sure,” says Tyson, co-owner of Tyson Construction in Destrehan, Louisiana.

The oldest of the 76.4 million boomers, the U.S. generation born after World War II, are turning 71 this year. As more of them retire and make decisions about where they want to live, there will be a great need for accessible housing, according to a report released in February by Harvard University’s Joint Center for Housing Studies.

“A large share of these households live in older homes in the Northeast and Midwest, where the housing stocks have few if any universal design features,” the study said.

The report predicts home improvement spending by homeowners 65 and older will account for nearly a third of the total amount of remodeling dollars by 2025, more than twice the portion that group spent in 1995-2005. Owners age 55 and over already account for just over half of all home improvement spending.”The boomer activity seems to be driving the market,” says Abbe Will, a research analyst at the Harvard center.

That’s a change from the past, when older homeowners generally handled maintenance, repairs and landscaping but tended not to renovate. And some of the boomer-driven remodeling is coming from younger homeowners who expect their parents might later come to live with them and want to be ready, Tyson says.

The requests Tiffany and Bryan Peters get from boomer customers include replacing traditional turning doorknobs with lever handles that can be pushed down. Homeowners want motion-sensor light switches and faucets, and non-slip flooring.

In bathrooms, they’re replacing fixtures with models that are designed for people with disabilities — showers than can accommodate wheelchairs, and toilets at the same height as wheelchairs, Tiffany Peters says.”We’ve definitely experienced an increase in requests for aging-in-place work,” says Peters, who with her husband owns a Handyman Connection franchise business in Winchester, Virginia. “We get several requests a month.”

Home remodeling companies began seeing an increase in boomer spending about 18 months ago and expect it to contribute to their growth in the next few years, says Fred Ulreich, CEO of the National Association of the Remodeling Industry, a trade group.

“We see this as something that is dramatically affecting the marketplace,” Ulreich says.

Boomers typically live in homes that are several decades old, prime targets for remodeling, Ulreich says. Unless they move to a brand-new home that’s designed for aging in place, their decision is likely to mean remodeling.

Sal Ferro says boomers are his biggest group of customers, but he’s not getting many requests for aging-in-place projects. It’s more renovations to make their homes more enjoyable.”They’re finally getting the projects done that they always wanted. They’re getting that kitchen or bathroom,” says Ferro, owner of Alure Home Improvements, based in East Meadow, New York.

Some remodeling companies are specifically marketing to boomers, sending salespeople to trade expos and events those customers are likely to attend.

Miracle Method, a franchise business that refinishes kitchens and bathrooms, has increased its outreach to boomers, says Erin Gilliam, the company’s marketing manager. Franchise owners say much of the 11 percent growth in the franchise’s overall business in the past year was driven by boomers, she says.

Gilliam’s husband, Gabriel, sees the trend in the franchise he owns in Salt Lake City. He estimates that revenue from boomers has risen between 10 and 20 percent, and the growth is prompting him to hire more workers. He has five staffers now, having added one per month the past three months, and expects to reach 10 in the next year.

“I’m hiring as quickly as I can,” he says.

 To Your Successful Retirement!

Michael Ginsberg, JD, CFP® 

06/12/17

Prepare Now For These 3 Retirement Risks

By Jim Sandager, April 10, 2017, DesmoinesRegister.com

Navigating retirement is difficult. What makes retirement planning so challenging is that there are so many unknowns that you need to prepare for, including the length of retirement, your spending needs and the performance of your portfolio.

These myriad of unknowns produce specific risks that can jeopardize your financial future. Fortunately, the chances these risks sabotage your retirement can be lessened with a bit of proactive planning. Today, I want to focus on three risks that can jeopardize your ability to sustainably spend in retirement, and what you can do today to prepare for them.

Sequence Risk

If your retirement happens to last 20+ years, there’s a good chance you’ll experience a market downturn at some point. Sequence risk is the risk that there’s a market downturn early in retirement rather than later in retirement. Imagine you’re retiring with $500,000 in savings and need to withdraw $100,000 living expenses after the first year and $0 after the second year. If the markets have a great first year and return 50%, you’d have $650,000 after your spending needs. If the markets drop 33% the second year, you’d wind up with $435,500.

Now let’s flip those results and assume a 33% drop after the first year and then a 50% gain the second year. In this scenario, you’d have $352,500 remaining. In other words, because you were unlucky to retire in a bear market, you have about $80,000 less than the person retiring in a bull market. That’s why you need to have an adequate amount of money in less volatile investments to weather a rocky market.

Longevity Risk

No one knows how long retirement will last. Because of this uncertainty, it’s better to take a more conservative approach and plan for a retirement that could last into your mid-90s (or maybe even longer!). As we continue to live longer and longer, it’s important to continue to have a portion of your portfolio allocated in stocks. Historically, equities have been great at outpacing inflation, and it’s these long-term gains that will be critical in preserving your savings and spending power throughout retirement.

Risk of Unexpected Expenses

Unexpected expenses may not be unique to retirement, but how they impact you is. When you retire, your income is relatively fixed. Every time you need to increase the amount you’re withdrawing in order to pay for a large unanticipated expense further endangers your long-term financial security. When thinking about your retirement spending plan, make sure you have an outlet to tap into so that it doesn’t wreak too much havoc on your overall financial plan.

There are key retirement risks outside of the realm of spending that you need to be ready for (I’ll touch on those in my next column). That said, preparing for these spending risks is a fundamental tenet of financial planning. Having a plan to better ensure sustainable spending is a key to accomplishing the goals you have for your retirement.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP® 

05/1/17

The 7 Elements of a Successful Retirement

By Nick Ventura, April 12, 2017, Marketwatch.com

Start with well-defined goals, and revisit them at least annually. The closer you get to retirement, the more often you should sit down and think about your overall retirement strategy. In Ernie Zelinski’s “How to Retire Wild, Happy and Free,” the author makes the argument that setting your retirement goals expands far beyond managing your finances. Retirement planning should encompass all areas of your lifestyle, from where you live and where you travel to how you spend your day and what truly are your income requirements. Cookie cutter percentages and rules of thumb serve merely as benchmarks. Successful retirement planning requires flexibility and the willingness to look at all aspects of your life.

Many people get great satisfaction from work. So, if you are retired, and you like to work, pick something you like to do and gain emotional satisfaction from that activity. This includes working for charitable causes, hobbies, family involvement, etc. These “jobs” may or may not come with financial remuneration. But that’s not the point; many people derive emotional satisfaction and self-worth from working.

Another aspect of retirement is lifetime learning. Staying relevant in today’s technology economy requires a willingness to learn and adapt. Consider this: most medical professionals would agree that 20% to 30% of medical knowledge becomes outdated after just three years. Keeping current on technology and medicine will certainly enhance your retirement success.

Budgeting is more than setting a top-line spending number based on a pre-arranged percentage. Often times, we work from the bottom up, exploring what a client actually spends, instead of what they think they spend. It is not uncommon for individuals to drastically underestimate their spending on non-essential items. How much is your cell phone bill? Cable bill? Groceries? Starbucks?! We encourage clients to look at these as recurring payments. Not $140 a month, but $1,680 a year. Big difference, right? Getting as granular as possible is liberating when planning your retirement income.

While many planners suggest that a client will need two-thirds of their working salary to live comfortably in retirement, our experience shows that they may need anywhere from 50% to 150%. That’s a big range. Only by taking the time to define your goals, and the expenses that accompany them, can we put an accurate “spend” and “income” figure on a retirement portfolio. Even the best crafted budget has to be flexible. Emergencies happen. Grandkids happen. Sadly, health concerns happen. For both positive and negative circumstances, budgets can, and will, expand and contract. Build contingencies into your budget and income plan for a successful retirement.

Let’s consider income. Retirement income can come from many sources. Social security, pensions, retirement accounts, annuities, dividends, even earned income. As financial planners, we often hear stories from clients who “forgot” that they had earned an pension from an employer that they had left decades ago.

Take the time to go through your employment history and discover what benefits you may have forgotten. The impact could be meaningful from a cash-flow perspective. Inheritances can also create retirement income. Again, we often see clients receive an inheritance and immediately spend it. We’d rather go with the gift that keeps on giving – by investing the inheritance along the same lines of a retirement asset and creating a lifetime income stream.

Invest for your whole life. Just as your budget is not going to be static during your retirement years, the idea that your investment portfolio should never change is obsolete as well. We live in a world of massive disruption and change. Years ago, retirees would abide by the rule taking 100%, subtracting their age, giving them the “appropriate” allocation to the equity market (blue chips only!). Today’s world does not permit such simplicity of thought.

This philosophy created an asset allocation for retirees that was heavily dependent upon the fixed income markets. Risk in today’s fixed income markets is considerably less predictable. When creating income in a portfolio, investors should examine many different sources of income. Is it time for fixed or variable rate income sources? Are dividend producing stocks inexpensive or overvalued? Is real estate a proper asset to produce income? In finding these answers, a successful retirement income stream can become multifaceted and flexible.

Some investors have opted for “all-in-one” strategies, where a glide path mutual fund encompasses their entire retirement portfolio composition. These funds become gradually more conservative the closer an investor gets to retirement. Some funds manage “to” the retirement date, while others manage “through” the retirement date. If you own one of these vehicles, do you know what the fund is designed to accomplish? These funds use historical data to project out into the future the ideal asset allocation. We don’t know what the future holds, and advocate investments that have the ability to be flexible.

Successful retirement comes down flexibility. Flexibility of goals. Flexibility of income streams. Flexibility of spending. Flexibility of retirement investments. Flexibility of the overall plan. As you design your retirement plan, take the time to build in flexibility. It will help build peace of mind, and lead to a more successful retirement.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP®

04/17/17

Worried you’ll run out of money in retirement? Then don’t make these rookie mistakes

By Katie Young & Sharon Epperson, April 13, 2017, CNBC.com

Being newly retired is definitely a reason to celebrate — and spend — some of the hard-earned money you’ve saved over the years.

Yet with Americans living longer, experts say you need to plan for a retirement that could last 30 years or more. Add in ever-rising medical costs, mostly stagnant Social Security checks and all of a sudden that pile of cash doesn’t look so big.

The issue of outliving your money is a real threat. To avoid having that happen don’t make these classic new-retiree mistakes.

Spending too much too soon

Making the transition from earning money to spending money when you first stop working is tricky. Especially if you’re healthy and eager to enjoy all that new free time.

“We get this all the time, where recently retired clients will do a trip to Europe or Asia, then spend four weeks in the Caribbean, saying, ‘When we get older we’ll slow down,’” said Chris Schaefer, who leads MV Financial’s Retirement Plan Practice Group, Bethesda, Maryland. “They’re eating so much of principal in early retirement that they don’t have enough to last.”

Schaefer suggests that working with a financial planner to create a withdrawal strategy for your retirement accounts is key. He says a good starting point is taking out no more than 4 percent of your total nest egg a year.

Overspending on the house

Wanting to be debt free is an admirable goal and one that works for many retirees. However, if you haven’t paid off the mortgage yet, rushing to do so may not be your best move.

As long as you have the cash flow to comfortably make the payments, Schaefer says don’t sacrifice your retirement savings by using a big chunk to pay it down. Instead keep it invested where it should continue to grow.

Plus having a mortgage offers tax benefits you can still claim as a retiree.

Overspending on the kids

Once you retire it’s time to let the 35-year-olds take care of themselves.

“Over the last 10 years we’ve seen this more and more with millennials not able to get out on their own,” Schaefer said.

So, if you’re paying rent for your adult children, or their cellphone bill, car payments or other recurring costs, it’s time to sit down with them and tell them it’s over.

Making smart decisions early on will help stretch your money further so you can retire well.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP® 

03/14/17

5 Ways to Mark the Occasion of Your Retirement

By Emily Brandon, Feb. 6, 2017, US News & World Report

Accumulating enough money to retire is an achievement that deserves to be celebrated. You can finally take a long-awaited trip around the world, or invite your colleagues and family members to join you for a retirement party. Or maybe you want to retreat from the working world in a little cabin by a lake where no one will bother you. Here’s how to commemorate your retirement…

Plan a party. Break out the champagne and invite all your colleagues, clients and customers to join you for a party. The party theme might center around your retirement plans, such as a luau for a retiree about to take off for Hawaii or a nautical-themed party for someone who is planning to set sail on her boat. Sometimes the type of work the retiree performed also plays a role in the party, with references to things you bought or sold on the job. “This is not a time for an airing of the grievances,” cautions Jeffrey Seglin, director of the Harvard Kennedy School Communications Program and author of “The Simple Art of Business Etiquette: How to Rise to the Top by Playing Nice.” “Celebrating how much you have liked working with the people could be the focus.” Introverts might prefer a smaller gathering with the colleagues they worked closely with or a dinner with family and friends.

Take a trip. You’re no longer limited by your vacation days. You can take off on a world tour, drive across the country in a recreational vehicle and linger in a given place as long as it holds your interest. Retirees can also use travel deals for flying midweek or on short notice. “You can actually take advantage of those last-minute airfares online that you could not do while you were working because you had to go to a meeting,” Seglin says. “You could leave on a Tuesday to go to Iceland.” Traveling at off-peak times might also mean smaller crowds and more personal attention. Many hotels, buses, trains, tourist attractions, museums and entertainment venues provide senior or AARP discounts.

Relax. You can turn off your alarm clock. There’s no reason to hurry in the morning. Pour yourself a second cup of coffee and read the paper. Now that you don’t have a job with deadlines, you don’t need to rush to get everything done. Having no set schedule can take some adjustment, but also gives you the freedom to do what you want to do. Go ahead and enjoy a two-hour lunch with a friend. You no longer have a pressing meeting to rush back to work for. “A lot of people do want to plan a trip right when they retire, but then they relax and kick back for a little bit,” says Keith Deane, a certified financial planner for Deane Retirement Strategies in New Orleans, Louisiana. “Some people will relax for two or three months or two or three years.”

Reflect. You probably accomplished a lot during your career. “If you had a career where you were constantly building it and thinking about your next opportunity, stopping work may be a big deal,” says Barbara Pachter, a career coach specializing in business etiquette and author of “The Communication Clinic: 99 Proven Cures for the Most Common Business Mistakes.” “If you were a senior vice president someplace and all of a sudden you are retired, you have no positional power.” Retirement can be a time to reflect on what you have done in your life. You could collect and caption pictures in a photo album, or write down your thoughts in a memoir. Perhaps you would like to pass on your skills to a young person through a tutoring or mentoring program. You might want to share your own childhood memories with your grandchildren. Think about how you would like to be remembered and start telling your story.

Plan your next chapter. Many retirees need to relax after several decades of work, but a time will come when sitting around the house starts to get a little boring and you are ready for your next project. This might mean accepting a volunteer position with a local charity or taking a college class in a subject that interests you. “You could take a course at a local community college with people who are younger and see the world in a different way,” Seglin says. “Most people retiring now can do an online course. If MIT is offering something and you live in Kansas, you don’t need to travel to Cambridge to take the course.” Maybe you will want to take on a part-time job to bring in some extra income and to have a place to go to be among people every day. “You could take care of the grandchildren. Working parents are very grateful for that,” Pachter says. “The flip side of that is your daughter might expect you to be available every time she calls.” Some retirees spend their days engaged in hobbies, such as working in the garden or playing regular rounds of golf. Taking on a new project will bring a sense of purpose to your retirement years.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP®

01/30/17

These Are The Top 10 States For Retirement

By Alana Stramowski, January 3, 2017, Homehealthcarenews.com

The majority of older Americans wish to age in place, but aside from living near family and friends, they also are looking at other factors to choose where they want to live as they age.

The best states for retirement were found based on life expectancy, tax friendliness ranking, violent crime rate per 100,000, the cost of living index and health care costs, according to a recent study from MoneySavingPro.com.

Taking the No. 1 spot on the list is Idaho. The state has a life expectancy of 79.5 years, a tax friendliness ranking of 28, violent crimes per 100,000 is 212.2, a health care cost per capita of $5,658 and a cost of living index rating of 88.2.

Following Idaho is Utah in second place. Utah has a life expectancy of 80.2, a tax friendliness ranking of 27, violent crimes is 215.6 of 100,000, a cost of living index rating 92.4 and a health care cost per capita of $5,031, which is the lowest on the top 10 list.

The states with the best tax friendliness rankings are Alaska in first place and Colorado in second place, the study found.

There are also a few warmer-weather climates on the top 10 list, which many seniors strive for. Those states include Hawaii, Arizona, Kentucky and Georgia.

These are the top 10 best states for retirement:

1. Idaho

2. Utah

3. North Dakota

4. Hawaii

5. Arizona

6. Colorado

7. Kentucky

8. Georgia

9. Iowa

10. Kansas

On the flip side, the 10 worst states for retirement were revealed, according to the study. The worst is West Virginia. The state has a life expectancy of 75.4, a tax friendliness ranking of 46, 302 violent crimes per 100,000, a health care cost per capita of $7,667 and a cost of living index rating of 103.7.

The worst 10 states for retirement are:

50. West Virginia

49. Tennessee

48. South Carolina

47. Alaska

46. Nevada

45. New Jersey

44. Massachusetts

43. Texas

42. New York

41. Wisconsin

To Your Successful Retirement!

Michael Ginsberg, JD, CFP®

01/23/17

The 10 Best Places in the World to Retire in 2017

By Richard Eisenberg, January 2, 2017, NextAvenue.com

There’s a new best country in the world to retire, according to the experts at International Living (IL), an authority on global retirement and relocation opportunities. In its Annual Global Retirement Index, Mexico — one of the most popular countries among U.S. expats — has edged out last year’s No. 1, Panama.

But truth be told, Mexico (which was ranked No. 3 in 2016), Panama and Ecuador are within a hair of each other in the new International Living rankings. “There’s just a tenth of a percentage point difference in their total rankings,” said Dan Prescher, an International Living senior editor who lives with is wife Suzan Haskins in Cotacachi, Ecuador.

Retiring Abroad Is Growing in Popularity

If you’re intrigued because you’re considering joining the expat community, you’re in good company.

According to a recent AP story by Maria Zamudio, the number of Americans retiring outside the U.S. grew 17 percent between 2010 and 2015. Currently, about 400,000 American retirees live abroad. And, Zamudio noted, that number is “expected to increase over the next 10 years as more baby boomers retire.”

The big news in the past year regarding retiring around the world was the strength of the dollar. It has made living in some countries incredibly cost effective.

— Dan Prescher, International Living

Where the International Living Top 10 Countries Are

Six of IL’s Top 10 places in this year’s ranking are nearby, in Latin America — either in North America (No. 1 Mexico), Central America (No. 2 Panama, No. 4 Costa Rica and No. 8 Nicaragua) or South America (No. 3 Ecuador and No. 5 Colombia). Just three are in Europe (No. 7 Spain, No. 9 Portugal and a new addition to the winners’ list, No. 10 Malta); just one is in Asia (No. 6 Malaysia). Thailand, No. 7 in last year’s rankings, fell out of the Top 10. (See the slideshow below for specifics about each of the 10 countries atop International Living’s 2017 list.)

Incidentally, communities in Mexico, Colombia, Spain, Nicaragua and Portugal are also in the just-released Top 10 Best Places to Live Overseas in 2017 from Live and Invest Overseas.

Most of International Living Top 10 countries this year “have been heavyweight contenders in our Index for some time,” said Eoin Bassett, IL’s editorial director, who is based in No. 21 Ireland. This year, IL turned its sights on 24 countries, adding Bolivia to its list (No. 18, by the way).

Where the Buys Are

“The big news for U.S. citizens in the past year regarding retiring around the world was the strength of the dollar. It has made living in some countries, especially Latin America, incredibly cost effective,” said Prescher. “The exchange rate was outrageous in our favor. The Mexican peso today is 20 to 1 against the U.S. dollar, which has made Mexico an incredible deal.”

Expats in Mexico told IL that they live well there on as little as $1,200 a month. “My rent is $575 a month for a two-bedroom apartment with a great modern bathroom and nice kitchen,” San Francisco native turned Puerto Vallarta resident Jack Bramy told International Living.

How International Living Ranks Countries for Retirement

To compile its 2017 ranking, International Living’s editors, correspondents, contributors and contacts around the world crunched data and personal insights for 10 categories (from Cost of Living to Visas & Residence to Fitting In to Climate).

Cost of living is a major retirement concern for Americans, according to a recent Transamerica Center for Retirement Studies survey of U.S. workers. Respondents told Transamerica that an affordable cost of living was their most important criteria for where to live in retirement.

So what else made these 10 countries so great this year?

Mexico was best among International Living’s Top 10 for Entertainment & Amenities, but also had impressive scores in every other category.

I asked Prescher why Mexico scored so well for entertainment and amenities. Turns out, he and his wife were visiting the picturesque town of Ajijic, in western Mexico, at the time. “Oh man, there’s nothing like good quality Mexican food and music,” he said. “We’re just 50 minutes from Guadalajara, the second largest city in Mexico and a world-class city like Miami. If you can’t find it or do it in Guadalajara, it’s not worth finding or doing.”

What Made the Winners Win

Runner-up Panama received IL’s best scores for Benefits & Discounts and Visas & Residence. “Panama changed its visa situation a little and it’s now incredibly easy to get a residency visa,” said Prescher.

The country is also well known for its Pensionado program of discounts for retirees there who receive at least $1,000 a month in income. The deals, which Prescher says are “some of the best in Central America and South America,” include 50 percent off entertainment; 30 percent off bus, boat and train fares; 25 percent off airline tickets and 20 percent off doctor’s bills. Prescher also calls health care in Panama City “world-class.”

Ecuador had top scores for Buying and Renting (tied with Nicaragua) and for Climate. “Ecuador has always been one of the most affordable places for real estate in Central America and the strong dollar did nothing but improve that,” said Prescher. And don’t get the ex-Nebraskan started on the unbeatable weather in his now-home country; living near the Equator, he pays nothing for heating or air conditioning.

Costa Rica led the Top 10 for Healthy Lifestyle (tied with Nicaragua); Malaysia for both Fitting In (“it’s a nexus for world cultures,” said Prescher) and Health Care (it’s a popular medical tourism destination); Spain for Infrastructure (great mass transit and Internet) and Nicaragua for Buying & Renting, Cost of Living and Healthy Lifestyle.

Bassett calls Nicaragua “the lowest-cost retirement destination in Central America,” adding that “every year it offers more and more by way of amenities and opportunities.”

Along with Spain and Malta, Bassett noted, Portugal “is an even more appealing destination heading into 2017 with the strength of the dollar against the Euro.”

Advice for Retiring Abroad

Even the International Living folks don’t think you should move to a foreign country for retirement just because it scores well in their (or anyone else’s) ranking, though. Before relocating, said Prescher, “profile yourself ruthlessly about what you really want in a place. Find out what you can and can’t live without.” Then, be certain any locale you’re considering is a match.

And before making a permanent move to a particular place, Prescher added, “try it out for as long as you can. See what it’s like to be there not just on vacation, but long enough to set up Internet access and to open a bank account.”

I’d add one giant caveat about the International Living rankings: The political and economic climate in the U.S. in 2017 could change considerably, which could, in turn, affect the lure of some countries as retirement havens.

As Prescher said presciently: “The presidential situation has changed completely, so everyone will be watching. What we will do with our relationship with Mexico and European countries is anybody’s guess.”

To Your Successful Retirement!

Michael Ginsberg, JD, CFP®