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You can have a secure
retirement even if you don't have the biggest nest egg. A special
BusinessWeek report explains how.
First, focus on two core
principles: safety and efficiency. Safety means not gambling on high-risk
investments to rescue your portfolio. Efficiency means being smart about how you
deploy the money you do have.
To begin with, the report
advises, stop making a fetish of The Number—“that fearsome string of digits some
online calculator or investment adviser said you need to retire comfortably ….
[for] Retirement is not an all-or-nothing contest. Rather, let some low-risk
strategies come into play, such as postponing retirement; tapping equity in a
home; delaying when you start taking Social Security; moving to a lower-tax
state or into a smaller house; or simply cutting daily living expenses.
The report also advocates:
- buying annuities that will keep paying as long as you
live.
- long-term-care (LTC) insurance to save yourself from
dreary years in a substandard, Medicaid-supported nursing home
Both annuities and LTC
insurance should be indexed to inflation. Save money with annuities that don’t
kick in until an advanced age, for example, 85.
The report also recommends a
software packages from Economic Security Planner. Its basic version is available
free online while its enhanced product ESPlannerPLUS may be purchased for $199.
Other calculation methods
reach similar conclusions. "The bottom line is that many people even within five
years of retirement can recover from the losses of 2008," says Wei-Yin Hu,
director of investment analysis and research for Financial Engines, a
math-oriented advisory firm. Doing so, though, requires discipline.
When a service member
retires, he or she is entitled to receive military retirement pay, either
voluntary retirement benefits or disability retirement benefits. If the service
member becomes divorced, his or her spouse might well be awarded a part of the
military spouse's retirement pay (if, as and when received) as part of the
division of the community estate.
If a service member is
disabled, or becomes disabled, he or she may elect to receive Veteran's
Administration disability benefits instead of military disability retirement
benefits. Veteran's Administration disability benefits are considered personal
to the service member and cannot be divided upon divorce because they are not
part of the community estate.
What sometimes happens
is that a retired, disabled service member will opt to waive all or part of his
military retirement pay for Veteran's Administration disability benefits. To the
extent that the former service member receives Veteran's Administration
disability benefits in lieu of military retirement pay, his or her military
retirement pay is reduced. As a result, the amount of military retirement pay
the former spouse then receives decreases because there is less of it to split.
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Clark County (Nevada)
Fire Department employees routinely received extra pay, in the years immediately
preceding their retirement in order to boost their retirement pay.
This practice is called
"spiking" and has been reported in other public agencies across America as well.
Spiking is also thought to be an important cause of the Nevada Public Employees’
System’s unfunded liability of $7.2 billion.
Cocaine Nixes
Retirement Benefits
The Baltimore
County (Maryland) Board of Appeals recently denied retirement benefits to a
police officer previously charged with cocaine possession because the officer
had “failed to render honorable and faithful service.”
Retirement Revolution
In a nationally broadcast
special to air this fall on PBS, television news anchor Paula Zahn will report
on new glimmers of hope and dramatic changes people are making to help ensure
they can afford to retire. Zahn will share the deeply personal stories of
several families on Retirement Revolution: The New Reality(R), premiering
September 15, 2009 on PBS, and sponsored by Massachusetts Mutual Life Insurance
Company.
New research by Charles Schwab
& Co., Inc shows that as many as 9.5 million retired Americans are considering
at least a partial return to the workforce while 32% of those currently employed
expect to hold their job and delay retirement.
The Journal of
Psychology has published a study on “Coping with Retirement: Well-Being,
Health, and Religion” by Michael Lowis, Anthony Edwards, and Mary Burton. The
authors sought to identify variables associated with older adults' ability to
cope with their retirement years. One of the most significant variables in
retirement coping was good self-rated health.
Utah's public employee
retirement fund has lost nearly $4 billion over the past year and has prompted
state lawmakers to look at making changes. One proposal is to require employees
to pay into their retirement fund for the first time in two decades.
Bob Collie and Don Ezra
have published the book The Retirement Plan Solution: The Reinvention of
Defined Contribution. In examining the defined contribution system, the
authors argue that not only are there inefficiencies in the current system
during the accumulation phase – such as wasteful investment management practices
– but there are also inefficiencies in the spending phase after retirement,
which will require more attention in the future.
According to a
Golden Gateway Financial Survey, half of all seniors' net worth has decreased by
10 to 30 percent. |
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