Top THREE Retirement Tips For People Who ALREADY KNOW They will NOT have $1Million Saved Up by the time they retire
Retirement planning is NOT just
about hitting a number, says
author and speaker, Susan Klopfer
By Susan Klopfer, MBA
Retirement blogger and author
It will happen to each and one of us eventually, even today’s teenie-bopping, cell phone-texting teenagers.
We will grow old and retire!
If stopping work and having fun really isinevitable, how can we get ready now, so that we can live this dream?
Save more, work longer, put off social security.
These are three pretty good ideas we are given on retirement blogs, or by Rotary and Lions Club speakers who once-a-year offer their best retirement planning speeches.
We politely nod our heads when we hear this, of course, and then go home and get really, REALLY scared.
So s-c-a-r-e-d that we do something silly – like putting off retirement for good or starting plans to find a job moving rock piles or greeting people at you-know-where.
Are you possibly ready for some lesser-known tips that are worth knowing?
If so, here is a look at 3 tips that retirement planners and advisers are telling us we should consider (I just learned that people do better with lists of 3 than 147 items):
1. Stop paying so much attention to HOW much…
Isn’t it rather silly to spend time worrying about saving enough? Especially when “enough” is an impossible dream?
You and I both know that most of us will never hit that $1million mark we hear so much about on television and from financial planners.
My spouse and I gave up on that idea years ago, when the stock market did its number. You are probably close to us, in this respect, than to Donald Trump!
One economics professor, Wade Pfau at the National Graduate Institute for Public Policies in Japan (and a frequent blogger on retirement), says there is no specific wealth number that will allow anyone to retire. Instead, he suggests, think about income stream, instead.
In other words, tart asking yourself how much income will you need to support your planned retirement? After you decide on a budget.
(We have decided to limit our required income stream by moving to another country, where cost of living is 50 to 70 percent lower. We have planned a budget that fits our anticipated income stream—and it works for us.)
2. Try thinking tax-efficient income.
David Blanchett, a research consultant at Morningstar Investment Management, says that dividends, for instance, can be far more tax-efficient than bonds from an after-tax income perspective if they are qualified—that is, taxed at a maximum rate 15% vs. 35% for ordinary income.
Blanchett adds changing your withdrawal strategy to a “happiness” perspective, and ignore required minimum distributions rules. He says that common tax wisdom suggests drawing from taxable accounts first, then a Traditional IRA, and finally from a Roth IRA.
“I think this makes sense and can definitely increase the available income, but it’s also important to have some ‘tax diversification’ with respect to withdrawal moneys,” Blanchett says.
3. Control your fears.
Plenty of spouses go through life not talking retirement fears (and sex), says financial planner, Andrea Bulen.
Do you or your spouse have fears about retirement that you haven’t discussed?
If so, start talking about them before it’s too late, she advises.
Robert Powell, editor of Retirement Weekly, published by MarketWatch, has put together a larger list of “10 Overlooked Retirement Tips,” that follow this reasoning.
You can peek at his list here –
Now, go call the rock pile people, and tell them you are not going to be home for their phone call afterall.