This week we have a hard look at your optimized retirement. Make sure you are not missing something in your retirement planning. Plus, keep a keen eye on your retirement plan … what is your goal and what is your strategy?
Optimized Retirement – never miss a trick.
If you are like most, you are behind the curve on saving. Here are some tips to beef it up as quickly as you can. 7 Retirement Planning Steps Late Starters Must Take
We can’t say it enough, make the most of your tax advantaged retirement plans. Four 401(k) Benefits You Should Take Advantage Of
This is not what you may think … beware of concentration in one company’s stock … your company. Wells Fargo Is Your Last Warning: Check Your 401(k)
No surprise here, but the mistake is pretty simple, be more aggressive. Over 50% of Americans are Making This Colossal Mistake How to Get Over Your Worries and Invest Like You Should for Retirement
If you are close to retirement, read this now. 5 Things Near-Retirees Need to Do Before Calling it a Career
Optimized Retirement – do your planning and start early.
This one is not precise, but it is thought provoking, and that is what matters. How Do You Know How Much Income You Need In Retirement?
Planning is great, but you need to act, too. Here are some reminders on that front. Retirement Planning Moves to Make Right Now
Here is an interesting blog focused on retirement income planning. Fish around, you may find something that strikes a chord. The Retirement Cafe
This blog is a little more basic, explaining some fundamentals, but that does not mean it is not worth a look. The difference between a managed fund and an index fund, for example, may be a worthwhile read for some. AssetBuilder
Optimized Retirement – this crazy election threatens to tear us apart, don’t let it.
For one thing, this is not the first time. The Top 10 Ways 2016 Presidential Politics Are So 1840
Now I will say this again, for those who get this far down, I take no side in this and feel everyone should educate themselves about each candidate … since most agree there is no perfect solution this time. So, with that in mind, I give you some interesting background reading. Even critics underestimate how catastrophically bad the Hillary Clinton-led NATO bombing of Libya was The Daily Trump The Clinton Russia Fiction HSBC case blows lid off Clintons’ offshore empire
Each week we consider ways to improve your retirement health. This week we look at the right things for each phase to maximize your savings and optimize your retirement.
Your Retirement Health – use the tools they give you during the accumulation phase.
We will harp on HSAs (Health Savings Accounts) until you have one…it will improve your retirement health, both ways. 4 Things You Should Know About Health Savings Accounts
Don’t miss an opportunity, either, especially those given to you. 3 Valuable Incentives to Save for Retirement
Plus, of course, maximize all those tools you are given. 3 Questions That Can Help You Get the Most from Your 401(k)
Your Retirement Health – the transition from wealth accumulation to distribution.
Not everyone has it made, especially when it comes to retirement savings. So, what can you do if you really are not prepared? A retirement plan for the working 99%
Even if you think you have enough, can you weather an extended period of low returns? Retiring Early in a World of Low Returns
One thing to be sure of is avoiding missteps anywhere in the process. Derailing the Plan: How Retirees Shoot Themselves in the Foot How Couples Screw Up Retirement Planning
Your Retirement Health – be creative when you do retire.
For the real adventurer … or simply someone who has not saved enough … explore your options beyond the borders. After this election, you may thank yourself as it improves your retirement health. 8 Countries Where $200K in Retirement Savings will Last 30 Years The World’s 10 Most Livable Cities A Breakdown of Costs for Those Who Want to Retire Overseas
If you are not that daring, there are always these great spots right here at home. 10 of the Prettiest U.S. Towns to Retire
Your Retirement Health – be aware of the investing/retirement environment.
These gems are exquisitely crafted, quick condensations of 50 years investment experience. These are data driven, data laden even, yet they are easy to grasp and worth remembering. Bob Farrell’s (Illustrated) 10 Investment Rules
Everyone knows how great the bull market has been since the bottom in 2009. You also know that central banks around the world have been stoking the fire constantly since 2008, or before. How do the two relate? Are they doing your retirement health any favors? Deutsche Bank Calculates How Much of the S&Ps Value is Due to Central Banks
In a small twist on our normal approach we seek to help you improve your outcome. Retirement planning is a multi-faceted issue, and our regular focus on cost and strategy will get you to a better place. Sometimes, though, it is worth taking a bigger picture view to understand the landscape. We believe you can improve your outcome by having a better handle on the investing environment.
Improve your outcome by doing the right things during the accumulation phase.
We talk a lot about the active vs. passive investment debate raging in the industry. No doubt the bull markets since the bottom in 2009 have helped passive investments. It has also made it hard to outperform as an active investor. The tide continues to flow from active approaches to passive. Investors Have Pulled $109 Billion from Active Equity Funds in 2016: Here’s Why At the same time, the debate rages on in ever more unpredictable ways. Are Index Funds Communist? and Why the hottest investment trend in the world could have worse economic outcomes than Marxism
We should not miss the other rising star in the investment community, robo-advisors. Here is an interesting introduction and comparison of the robo advisor approach to the passive. Robo-Advisors vs. Passively Managed Funds: Which is Better? (WFC, SCHW)
Improve your outcome by understanding your retirement options.
We like to give you as much information as possible about your expenses during retirement. That is one key – along with longevity – to understanding how much you need to save in your working years. Here is a good overview to help you understand your retirement expenses from Forbes. How to Budget for Retirement
Hopefully by now this does not bring a lot of new information to you, but it does summarize a number of salient points with respect to your likely retirement cornerstone. 14 Things You Really Should Know About Your 401(k) Retirement Plans
Improve your outcome by understanding the data.
We talk about longevity often and healthcare costs in retirement about as much. Here is a damning piece on just what our expensive healthcare system buys the US compared with the rest of the world. Life expectancy vs. health expenditure over time (1970 – 2014)
As if that were not bad enough, the implications worsen with lower incomes … and geography. The Rich Live Longer Everywhere. For the Poor, Geography Matters
Improve your outcome by improving your world view.
We rarely venture to the trivial any longer. Since it is August, why not indulge in some mind expanding beyond the retirement arena? 20 Gifs That Teach You Science Concepts in Seconds
If you want to talk really big picture, try on the Fermi Paradox for size. The Fermi Paradox
Since we are talking big picture things beyond your retirement, how about solving the potable water problem? The solar-powered sculpture that could desalinate 1.5 billion gallons of drinking water for California
With each installment, I find the best thinking on retirement, and this week is a treasure trove of commentary on the longevity quandary. Michael Phelps presumably just wrapping his competitive swimming career is a great model for longevity. Both Michael Phelps and Usain Bolt competed in four Olympic Games … and neither won a medal the first time. There may be an analog here because that is not what you remember about either of them. The lesson for the rest of us is to work harder, longer on your savings because you will be retired longer.
Leverage the longevity quandary by watching expenses in your retirement accounts.
Sad to say I would not think to ask a Department of Labor employee for advice on retirement. This former one, however, makes a series of worthwhile points about common mistakes. I encourage you to read it. 10 Retirement Mistakes Baby Boomers are Making
We always harp on costs. When you consider the longevity impact on costs, it is even worse. So you must strive to lower your total investment cost structure. It can be as easy as having a simple, effective strategy and sticking with it. A financial planner says most people don’t need to pay someone to manage their investments
Leverage the longevity quandary by ensuring you save enough for retirement.
Here is a really good, comprehensive piece on just what challenges longevity brings, and ways to address them. The Longevity Paradox
We have mentioned HSAs before, but this drives home the point about. Fact is you will spend a lot of your own money on healthcare in retirement. An HSA is a way to save pre-tax money now, not get taxed on growth, and not get taxed when you withdraw for medical expenses … there is simply no better answer. Why Advisors Need to Know about HSAs
Just in case you forgot, or simply don’t believe me, here’s the latest on medical expenses in retirement. Health Care Expenses for Retired Couples Hit Record $260,000 : Fidelity
On a related note, long-term care insurance is an important thing to consider … just weigh the cost/benefit wisely. These tricks can help tilt the balance in favor of buying. 4 Tax-Friendly Ways to Pay for Long-Term-Care Insurance
Here is an advisor’s eye view of these medical costs in retirement. More importantly, the implications of the DOL fiduciary rule on advice you will get on them. It lays out some hard dollar costs and is promising in anticipating incorporation into plans under the new rule. Add this to your DOL checklist: health, LTC costs in retirement
Leverage the longevity quandary by focusing on building an income stream for retirement.
Switching mindset from accumulating wealth to generating income is a key retirement transition. Longevity, though, may have some bearing on when you make that move. Longevity and Your Retirement
Changing your mindset should begin with understanding your needs. This piece helps you put your retirement income needs into perspective. How to Solve the Retirement Income Equation
Here is some interesting insight on IRAs, and 401(k)/403(b) for that matter. They may not be the best in retirement vehicle for you when you consider longevity risk. IRAs are for retirement planning, not for retirement
Here is a fascinating, refreshing look at the retirement income puzzle. Is retirement spending a level pattern? Should you use a simple rule like the 4% rule? This says no. What is the “Retirement Spending Smile”
The election continues to provide plenty of action, strange, but action, but you still need a secure retirement. The best way to get a secure retirement is by maintaining focus on the important things: saving enough, achieving the lowest possible cost, leveraging tax incentives, and building a reliable income stream in retirement.
Enjoy a secure retirement by ensuring you are saving enough for retirement.
Should you have an IRA? Look at this amazing chart anyway because it gets to the impact of time on your savings. The Most Important IRA Chart You’ll Ever See
If you really want to be diligent in preparing for your retirement, doing some or all of these things will likely pay off in the long run. Is your 401(k) helping or hurting your retirement savings?
As you can see from the comments on this one, it stirred some controversy. Still, it is a valid point and worth your consideration. Estimate Your Retirement Income Needs Based on Your Spending, not Your Income
Maintain a secure retirement by focusing on building an income stream during retirement.
This one helps you fine-tune your Social Security strategy and gives you some savings tips, too: fits in both categories! How the Average Retiree Can Gain $5,000 Per Year in Retirement
One thing is certain in retirement, you want as much control as possible. That especially applies to RMDs. Here are some good ideas for managing them. 6 Tax-Smart Ways to Lower Your RMDs in Retirement
More good, short information on the brave new world of retirement income. Most notably, more commentary on the 4% rule. Navigating the New World of Retirement Income
Be sure of a secure retirement by keeping an eye on the economy, too.
With continuing anemic growth in the US, just how good is the economy? Have we ever recovered from the 2008 downturn, except for financial markets? “Policymakers Have Been Calling a ‘Depression’ a ‘Recovery’ for Nearly a Decade”
Not to overdose on Zero Hedge, as they tend to have a negative bent, but here citing Goldman’s analysis of the markets it may be worth a look. Goldman: The Last Two times P/E Multiples Expanded This Much, The Result Was A Historic Crash
We have touched on this before, but a focused reminder of the very real implications of Washington’s never ending drunken binge: the national debt will mean you must save more for retirement. Doesn’t seem fair, does it? How Government Debt Affects Your Retirement
Some friends and associates may pass over my periodic posts here thinking they are not relevant to them, which is why I am focusing on retirement: why worry? You see, regardless your situation, well prepared or ill prepared, knowing more and acting on it with respect to your retirement is entirely relevant for each of you.
First, some context on where things stand.
Americans are astonishingly ill prepared for retirement, and Social Security is no panacea. You truly do have to invest in your retirement, and the leaner things are now, the smarter you need to be about it.
We are way behind: Ready to get serious about saving for retirement? Here’s what you need to do.
Compound interest helps: Ask a financial planner: ‘What is compound interest?’
Managing your investments does not end when you retire: 3 Reasons it’s important you continue investing long after you retire
Healthcare remains the elephant in the room: These 5 charts predict what retirees will pay for healthcare over the next 10 years Near retirees can expect $400K in health care costs
We continue to live longer, so the old rules no longer apply: We’re living longer – get ready to pay for it 4% Retirement Rule: Why It Might Not Work for You, and What You Should Do About It Managing your retirement nest egg and making it last as long as you do
Now that you have a sense for things, what can you do about it right now?
- No news here, start by leveraging your best tools first. That means employer sponsored plans like a 401(k) or 403(b). Maximize your contribution to optimize the employer match, and use pre-tax contributions to get as much as possible in there. if you can save more, do it, using other tax advantaged tools like IRAs, KEOGH plans even some life insurance and annuities come with tax advantaged saving features, e.g. The Swiss Army Knife of Retirement
- Maintain a laser-like focus on fees. Even inside your employer plans, IRAs and KEOGH plans, be sensitive to all ‘hidden’ costs. These eat your earnings right off the top.
- Periodically loop back to ensure you are still good on points one and two … that’s right, rules change, fees change, and you might not notice. Vanguard raises some expense ratios
- Have a strategy and stick with it. What’s Your Excuse for Having No Investment Plan for Retirement?
- Keep learning. Hard Truths for Investors to Wrap Their Heads Around Is Everything You Think You Know Wrong?
I realize I seem to have a one track mind, retirement. That’s because it is how I best feel able to help each of you. Now, though, here are some other, thought provoking articles.
You may have read about this AI from Google beating the world class Go player. It is said to be quite a feat, and this article expands on this. Most interestingly, the article delves into the ‘what-ifs’ around AI given this one’s ability to think of things a human would not consider. Fascinating. Google just proved how unpredictable artificial intelligence can be
As you think of desirable traits for a President, predictability has to be pretty high on the list. Admittedly most campaign promises go by the boards, but you hope the candidate is truthful and sticks to their core beliefs (as outlined during the election). Incredibly, The Economist has taken a strong stand on our current election cycle. What do you think of this? ‘President Donald Trump’ in Top Ten Risk Events for Global Economy
“If everybody is thinking alike, then somebody isn’t thinking.” – Gen. George S. Patton
The market mayhem continues pretty much unabated since the beginning of the year. Today the Dow is down significantly – over 2%. So, what may be driving this, and will it continue?
One obvious answer to what is driving this, China. How China accumulated $28 trillion in debt in such a short time Government intervention is the only thing keeping China’s stock market afloat
Then there is the market at home, is there simply a problem with fundamentals? A Year of Living Technically: Charting the Markets of 2015 (I urge you to look at the first chart, at least) Ralph Acampora: “We’re falling apart here and no one seems that worried.” US stocks suffer their worst first week since records began
Now that your head is spinning from the current state of markets, let’s focus back on the long term, your retirement:
I will start, as always, with fees. The Huge 401(k) Hit You Can Avoid Do you know where your 401(k) fees are hiding? Of course, it can’t always be that simple. New 401(k) suit targets Vanguard fund fees
How about some simple advice? You may not agree, or may not follow these, but they tend to be pretty sound. Everything You Need to Know About Money on One Index Card Warren Buffett’s 15-Minute Retirement Plan 7 Personal Finance Lessons from Bruce Lee
Another great idea on retirement, know your way around the retirement playing field. Newly improved retirement tax rules Understanding the retiree benefits of HSAs
A couple of iPhone tips for the weekend:
Everyone with an iPhone will like this trick. How to Force-Refresh the iOS App Store on iPhone or iPad This hidden iPhone trick does wonders to speed up your phone
“Great minds discuss ideas; average minds discuss events; small minds discuss people.” – Eleanor Roosevelt
Markets and the Economy –confusion reigns, with conflicting data points everywhere:
The US employment picture continues to baffle those who care to look beyond the stated unemployment figures. This is Why Participation in the US Workforce Has Plunged to Its Lowest Since 1977
In case you thought you were getting a clear picture of markets and the economy, these articles shed some light on government intervention (directly or indirectly) into markets beyond the numbers games and Fed intervention. Are Big Banks Using Derivatives to Suppress Bullion Prices? Citigroup Just Cornered the “Precious Metals” Derivatives Market Red China Goes Redder, Stocks Tumble Despite Government Ban on Bearish Talk
Your retirement – one quick one on fees:
Just about every week I harp on fees. In fact, I’ve touched on FeeX before. While it has limitations, it should help you understand your current fee structure. That is a win in itself. Can Technology Solve the Mystery of 401(k) Fees?
Special one-time notice:
If you’re an Amazon Prime subscriber, be ready for July 15 “Prime Day.” Amazon to celebrate 20th birthday with Prime Day sale
Boring, but worth noticing:
Do you suppose this was intentional, or simply an unintended consequence? Regardless, is it a good thing? Amid New Overtime Rules, More Employers Might Set Email Curfews
Of course we all saw this coming, but still it’s particularly offensive from that role. Eric Holder Back on Wall Street After Years Refusing to Jail Bankers
Thrifty, but smart, ways to save on long hauls. Best Airlines to Fly International Economy
Science at work:
These are fascinating … now to apply them. 4 unbelievable chemical substances humans have discovered
If you are particularly lazy, and in a rush, this is for you: Cloud of Breathable Cocktail Can Make You Drunk just by Breathing
“Attach yourself to those who advise you rather than praise you.”— Nicolas Boileau-Despreaux, poet and literary critic
Retirement tips – diligence on our savings is the best advice:
This is a fascinating read on where we stand today and why you may need to change some attitudes … and allocations. This is Why You Are Diversifying Wrong
Have I mentioned fees lately? I should, and this article points out the most insidious ones hidden in your 401(k). Warning: You May be Handing Over $155,000 in 401(k) Fees
Since you are already now kicking around in your 401(k), take the time to ask these questions, too. Having been there for the birth of Ameriprise, it’s near and dear to me. Four Ways to De-Bug Your 401(k)
Leadership tips – behavioral changes that will make you a real leader:
I beat this drum as often as possible, open communication, accessibility, and an understandable strategy are keys winning long term. Employee Engagement and the Communicator’s Role
I loved the heart of this article, simple, to the point, worthwhile. The 5 Best Pieces of Advice Any New Leader Will Ever Get
Travel tips – a few minutes now can save you a lot of hassle on the road:
Thanks to modern security protocols, sometimes you make the gate well before your flight … try to catch that earlier flight. How to get on earlier flight without paying fee
If that fails, then you might be interested in this app. LoungeBuddy Airline Lounge Locator App
This week, something to ponder:
With the Iran nuclear framework announced, plenty will be written on both sides of this story. I happened across this one earlier today. Have you formed an opinion yet? Obama’s nuclear deal with Iran puts the world’s safety at risk
Just for a little added context, there are crazy guys like this running around. A Russian ‘Doctor of Military Sciences’ says Moscow should just nuke Yellowstone if tensions boil over