No wonder we get confused.
When it comes to the details,
the experts who write books on retirement planning all seem to tell us different things.
But if you look beyond the conflicting advice, you will find a common thread: Have a plan and take responsibility for the success of your own retirement.
“Who else is going to do it?” said Patrick Astre, author of “This Is Not Your Parents’ Retirement.” Not the government, not your employer, but you. And planning for retirement “is not a difficult thing, but you have to believe you can do it,” he said.
Astre’s book, which came out in August, is one of half a dozen new books on retirement we’ve read the past couple of months.
Clearly, retirement is a hot topic. And every author seems to have a different opinion on how to go about investing for retirement and, once retired, how to spend your nest egg so you don’t do without but also don’t run out of money.
This subject can be quite complex and goes beyond the scope of this column. All we want to do today is acquaint you with three books we found useful. We also want to stress that you, not any book author or us, is responsible for the success of your retirement and any decisions you make.
Here are the books we liked:
“It’s Not Your Parents’ Retirement” argues for a new “non-linear” approach to retirement. Rather than do things in a preset order
- go to school, get a job and work hard, get married and have kids, then finally retire to a life of leisure - you take periodic breaks to travel and enjoy hobbies rather than wait for “retirement” to do these things.
“I don’t want to use the word retirement anymore,” said Astre, a certified financial planner in Shoreham, N.Y. “I like the use of the word financial independence.” To attain this independence - to be able to live this non-linear life - you have to believe you can do it and take responsibility for following a disciplined financial strategy.
“Retire Early? Make The Smart Choices,” by Steven Silbiger, explains thoroughly and clearly the many factors to consider in deciding when to start taking Social Security benefits.
“People think the decision to retire early and collect Social Security benefits (at age 62) is a simple one, but it is not,” said Silbiger, a certified public accountant. “Even financially aware people are in the dark” about how a decision to take early benefits could adversely affect a spouse later on, he said.
Or they may not consider the tax impact of taking early benefits, or how benefits may be reduced if they earn more than a certain amount from work before their full retirement age. Silbiger’s book also discusses how to estimate cash needs in retirement and how to tap a retirement nest egg.
“Double Your Retirement Income” by certified public accountant Peter Mazonas makes a compelling case for long-term investing, both before and during retirement, in a diversified portfolio of index-tracking, low-cost mutual funds and exchange-traded funds.
We like the strategy and have followed it for years with a portion of our own money. But we take exception to the author’s claim that this strategy can sustain annual withdrawals that start at 8 percent of the portfolio value and are adjusted for inflation each year. The common advice, which we believe is sound, is to withdraw no more than 4 or 5 percent the first year in retirement.
Four years ago, when Georgina and I bought our home in Vero Beach, Fla., we purposely chose one in a regular neighborhood for people of all ages. The idea of a retirement community did not appeal to us.
Today, with both of us in our 60s, the idea of living in an “active adult” community with less work to do around the house is becoming more attractive.
And, boy, do we have choices. New communities for seniors are springing up all around Florida, as well as other states. These communities promise the luxuries of resort-style living from golf to spa facilities, a ready-made social network from community activities, a maintenance-free lifestyle and the availability of nearby or on-site health-care facilities.
We’ve visited several of these communities and ordered brochures from others. We’ve found many similarities but also significant differences.
In some communities, you don’t own your home but simply hold an “equity interest” some or all of which is returned if you leave or after you die. In others, the prices quoted for the homes do not include the lot, which could add another six figures to your cost. In some, you can rent rather than buy, an option worth considering if you think we are in a housing bubble about to burst or simply to get a taste for the place before committing to a move.
They vary widely in the amount and type of health-care support given to residents, with many providing none - truly “independent living” - and others offering on-call services and live-in assistance.
How to choose from so many communities? Or simply decide whether a retirement community is for you?
“Think about how you want to spend your days in retirement, what sort of things you want to do both in your home and your community,” advises Robert Carlson, editor of the newsletter Retirement Watch and author of the book “The New Rules of Retirement.” Once you know that, decide whom you want to do it with.
Send questions and comments to Humberto Cruz at AskHumberto@aol.com, Georgina Cruz at GVCruz@aol.com.
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