03/20/17

How Not To Retire

By The New Zealand Herald, Feb. 3, 2017

Election years are always interesting because the topic of retirement age comes to the fore. We all have a vested interest in who receives what and when. When I think about the retirement age, I often recall a conversation with a client who employed a “re-potting strategy” throughout his life. While he would be at retirement age now, I doubt he has considered retiring.

His strategy has been to “re-pot” every 7-8 years. He retires one aspect of his life and embarks enthusiastically on a different path. For him, re-potting involved making a significant change in his life to refresh and gain a new perspective. His re-potting journey before I met him had extended to a new country, a new career, new friends and associates, a new wife and a new house. He had plenty of ideas to pursue in the years ahead to ensure sufficient re-potting opportunities to keep him interested and interesting.

He was about as far away from the traditional idea of retirement as I could imagine. But, as we are all living longer, retirement for many will simply be a change of some aspects of life but not others. The traditional approach to retirement is relatively straightforward. You save and invest as much as you can for as long as you can, starting as early as possible to accumulate enough retirement savings so you don’t need to work anymore.

For those who can’t save enough, the Government pension provides a retirement safety net. For everyone else, the more and faster they save, the earlier they can retire and the more leisure time can be enjoyed. At retirement, work ends and leisure begins…or so the theory goes.

However, a growing body of research finds the traditional retirement journey is less and less common. Fewer people actually want a retirement of all leisure and no work. Retirement is regarded as boring for many!

Apparently only half of today’s retirees (in the US) state they never intend to work again and only 30 per cent of pre-retirees intend to give up work indefinitely in retirement. Instead, whether it’s part-time work or starting a business, an encore career or some other path, retirement is less about not working at all and more about finding a different kind of engagement. Re-potting, you might call it.

Retirement for some might be semi-retirement, with a period of working part-time and potentially continuing to earn. For others, it might be a series of “temporary retirements” or sabbaticals in between periods of work. The significance of these changes is that it might not take nearly as much to retire as commonly assumed.

Some retirement lifestyles might simply need some savings to provide a buffer for the transitions between work. Some people might be able to retire earlier with a small pot of retirement savings, since that pot will be replenished at odd intervals with earnings from part-time or periodic employment.

If we’re not all going to retire according to the modelling – and I’ve never bought the concept that suddenly golf courses and cruise boats are going to be teeming with retirees – then the argument about the retirement age becomes easier.

A retirement age band, offering flexibility to those who wish to retire earlier and later, could be palatable for many. But it is election year, so who knows how the debate will unfold?

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®

03/6/17

Why Retirement Savings are at an All-Time High

By Paul Davidson, Feb 2, 2017, USA Today

Americans are again socking away money for retirement at record levels. Fidelity Investment’s average 401(k) balance hit an all-time high of $92,500 at the end of last year, up 4,300 from a year ago and above the previous high of $92,100 in early 2015. Fidelity, one of the nation’s largest investment firms, cited both increasing contributions and rising stock prices.

The average contribution rate reached 8.4% in the fourth quarter, highest since the second quarter of 2008. And more than one in four of Fidelity’s 401(K) customers stepped up their savings rate last year, the most ever. “This shows people are taking the right steps towards reaching their retirement savings goals,” says Kevin Barry, Fidelity’s president of workplace investing.

People with retirement plans outside of work are also ratcheting up their contributions. The average balance in Fidelity’s Individual Retirement Accounts (IRA) was $93,700 at the end of 2016, up $3,600 from a year earlier. Nearly 500,000 IRA accounts were added last year, bringing the total on the firm’s platform to a record 8.5 million.

National data reflect similar trends. Total 401(k) plan assets in the U.S. hit a record $4.8 trillion in the third quarter and total IRA assets reached a record $7.8 trillion, according to the Investment Company Institute.

Many Americans scaled back their contributions to retirement accounts during and after the 2008 financial crisis and recession. With the 4.7% unemployment rate near prerecession and stocks at all-time highs, workers are again putting away large sums for their golden years.

An Ipsos/USA Today survey in mid-January found that 65% of 45- to 65-year-olds are very or somewhat likely to put at least $100 toward retirement over the next six months.

Americans are also less likely to borrow from their 401(k)s to pay living expenses. The share of Fidelity account holders with an outstanding 401(k) loan fell to 21% in the fourth quarter, lowest since late 2009.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP®