6/11/2013 5:30 PM ET|
7 ways to ease retirement fears
Many Americans are worried that they will outlive their savings. Here are seven steps to ensure you've got enough money for retirement.
Transitioning from the accumulation to withdrawal phrase is tough for many retirees who have enjoyed seeing their net worth grow for decades. Some people worry excessively about running out of money. They may practice unnecessary frugality and miss the chance to enjoy what should be the most freeing time of their lives. Here's how to overcome the fear that you will outlive your retirement savings:
Get a single premium immediate annuity (SPIA). It's wise to be skeptical about any insurance products. But the guaranteed monthly income you get from an immediate annuity is the best way to reduce the fear of running out of money. By accepting that you will likely underperform a well-diversified investment portfolio and be unable to leave that portion of assets for your heirs, you are gaining the peace of mind that a monthly check will be delivered as long as the insurer stays in business.
Track your expenses and income to get a long-term trend. Gather a history of your expenses and compare it to the income your portfolio generates. This will help give you a good picture of how much money you need to pay for your expenses. Is your net worth really declining, as you fear, or are you just being too pessimistic?
Identify where you can cut if needed. By knowing your specific spending patterns, you can also come up with a plan to cut costs if market performance falls below your expectations. Remember that simple steps like cutting your cable TV bill can do wonders for your budget. Running out of money in retirement is actually rare for retirees who plan and track their spending, because most people start adjusting well before their stash depletes to zero.
Run different retirement calculators to see your chances of success. Many retirement calculators that are based on historical returns and inflation numbers will give you a good idea of where you stand. Some calculators will even allow you to calculate your chances of running out of money.
Consider waiting until 70 to receive Social Security. Another way to significantly increase the chances you won't run out of money in retirement is to delay collecting your Social Security checks. By waiting until you turn 70, you will receive much more per month. Sure, you might end up losing out because you die early. But if avoiding running out of money is your primary concern, having a higher check every month after you turn 70 is well worth the wait.
Realize that running out of money in retirement may not equal catastrophe. The reality of depleting your retirement nest egg may not be as disastrous as you think. The U.S. is still one of the better countries at taking care of its senior citizens. With Medicare, Medicaid, Social Security, and a progressive tax system, the government will lend more and more of a hand if your retirement income dwindles. Already, many of your fellow retirees are living solely on Social Security and still having a happy and comfortable retirement.
Recognize that retirement worries are normal. You aren't the first person to worry about running out of money, and you won't be the last. A moderate amount of fear is actually good since it will help prevent excessive spending. It can be helpful to worry about money as long as the fear isn't preventing you from enjoying a well-deserved retirement.
Retiring should be about being free from the daily grind. Do what you can to free yourself from money worries.
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"Already, many of your fellow retirees are living solely on Social Security and still having a happy and comfortable retirement".
I don't think I can accurately state what a ridiculous statement this is or how really out of touch with reality this article is.
Retirement calculators are great. All you need to know accurately is:
1) How long will I live?
2) How will my health be?
3) How much will SS be cut in the coming years?
4) How much will Medicare be cut in the coming years?
5) What will the real inflation rate be over my retirement?
6) What will the rate of return be on my investments?
See, if you know all that, it is easy. Then again, if you know all that, you are obviously prescient and have made millions in the market and horse racing over the years, so retiirement isn't a worry anyway.
More BS from MSN. Yeah, right, "Work to 70 and wait to collect SS."
This means YOU work till you drop dead and don't ever collect a penny of the money you put in while Obama and the dumbocrat socialists spend billions/trillions to secure future generations of 'voters' with UNEARNED entitlements - like Octomom!
SS is a Ponzi scheme, no doubt, but to tell the people who actually worked, earned a living and PAID into the system to wait is utter, unadulterated nonsense.
An annuity? One of the worst things you could invest in - period. Use any no load index funds.
Anyone who expected SS and the gubmint to pick up the tab for their lifestyle after retirement is foolish. You have to save a minimum of 5-10% of your net/take home pay, like I did. Oh, I did without a lot of things while doing it, but now I'm free - before age 60 - even though life (a severe injury) threw me a curve ball, too!
Stop drinking the koolaid. Be responsible for your own future. You CAN do it.
HAHA. I love it. another incredibly irrelevant article about retirement. Although, I have to say, there are a few articles for "the rest of us" these days. Used to be you couldn't read anything written for folks who had saved something under a million dollars by the time they retired.
I know several people personally who live on social security alone or on SS and a small 401k or pension, and they are indeed enjoying a comfortable retirement (and they still have their cable TV). They don't go on expensive vacations, they don't buy jewelry or lots of cars... oh wait.. these folks didn't live like that when they were working either.
I think the investment types who write these articles enjoy the fear mongering and enjoy trying to get the rest of us to believe the sky will fall if we don't listen to their advice and save/invest in the untrustworthy market machine that already wiped out trillions in wealth for the average guy. I am never going back there again because I work too hard for my money to throw it into that black hole.
I am doing quite fine saving and putting my cash into conservative, safe places. I don't earn a lot of return but I don't have to watch my hard earned money evaporate either.
a. Getting an annuity (stupid idea)
b. Postponing Retirement (Who wants to?)
c. Postponing collection of Social Security Benefits (Really?)
d. Withdrawing smaller percentage amounts (and not enjoy life?)
e. Getting a part-time job (why not stay at the current full time then?)
Tracking expenses and cutting costs are key components that I support. All the above are purely non-sense. It's usually easy to suggest when you are not on that same situation.
Just about the time I think I have heard all of the stupid advise "MSN Money" has to offer, they write a new article.
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If you worry about money after the streetlights come on, these actions may help you rest easier.