New surveys reflect Americans’ uncertainty about their retirement accounts and the timing of their retirement because of the serious economic events that have wiped out two trillion dollars in savings from stock investments and 401(k) funds.
A survey conducted by Harris Interactive in Marach 2008 revealed that four out of 10 Americans believe the current economic situation will force them to delay retirement up to 10 years later than planned. Some believe that retirement will not be an option at all.
Now, an increasing number of “retirement advise” books are coming off the printing presses to help people deal with these economic issues. One of the most recent books in print is author Bill Losey’s “Retire In A Weekend!”
People ask him “should I still be putting money into my retirement account and if so, what’s the best way to do it?”
Losey, a financial advisor who’s also CNBC’s resident retirement planning expert, believes the answer is a big YES!
He’s also offered some simple rules to follow that can ensure retirees stay on track to a secure future.
No. 1 The 100% Rule: You may have heard that once you retire you’ll be able to live on 70-80 percent of your pre-retirement income.
However, considering medical costs are rising and life spans are increasing, I’d rather plan that you’re likely to need 100% of your pre-retirement income in retirement just to be on the safe side, he writes.
No. 2 The 2/3 Rule: The typical Social Security payment provides one-third of a retiree’s income needs, according to the U.S. Social Security Administration. That means that two-thirds of your post-retirement income must come from sources other than Social Security.
No. 3 The 13 Times Rule: If you’d like to receive guaranteed income payments for life from an annuity, you will need to invest about 13 times the annual income you want to have in retirement into the annuity.
For example, if you want $25,000 a year in lifetime income payments, you’ll need $325,000. Generating $25,000 in lifetime income per year without an annuity would require approximately $500,000 in capital.
No. 4 The 110 Rule: Since it’s likely you’ll live a long life you may need to keep a higher percentage of your assets in equity investments. Consider subtracting your current age from 110. The result could be considered a starting point for your equity allocation.
For example, if you are 65 consider allocating 45 percent of your portfolio to equity investments (110-65 = 45) and allocate 55 percent to fixed income investments. Bill’s Bottom-line: There are multiple factors that are taken into account for each individual’s situation.
Use these rules as a starting point in your planning and consider working with a professional advisor to gain better clarity, he said.
Losey’s book, of course, has much more detail. He also publishes Retirement Intelligence, a free weekly awardwinning newsletter. He can be reached online at www.MyRetirementSuccess. com.
A sampling of the types of recent books available on retirement include these:
Your Complete Retirement Planning Roadmap, by Ed Slott Slott, a recognized retirement planning adviser, now offers expert advice on weathering the perfect storm of financial instability that looms on the horizon, offering “clear step-by-step directions through the highways and byways of IRAs, 401(k)s, 403(b)s, and other major accounts.
Kiplinger’s “Retire Worry-Free,” by the editors of Kiplinger’s Personal Finance Magazine, presents advice in a clear, straightforward manner, explaining, for instance, how to calculate how much you will need, how much you can count on from Social Security and pensions, and, finally, how to fill the gap.
Live it Up Without Outliving Your Money, by Paul Merriman is billed as a “plain-talking book that gives readers simple strategies to add between $1,000 and $10,000 to their monthly income in retirement, and without taking any of the risks of the past.”
This reliable resource is designed to motivate readers to take the first steps to change their financial situation and presents multiple strategies for withdrawing money during retirement as well as exposing the marketing tricks perpetrated by some financial institutions.
The book also includes added focus on newer issues such as ETFs, REITs, estate planning, IRA withdrawals, and updated allocation strategies, according to its promoters.
“Retirement Planning for the Utterly Confused, by Paul Petillo is presumably a level or two above the popular “Dummies” series of self-help books. This one is designed to help those who are simply confused, which may well be all of us in today’s shifting economic times.
Social security, IRAs, and 401(k)s are just the tip of the iceberg when it comes to planning for retirement, he writes. Then he points out a common thread in these economic times: as people are living longer, it’s more vital than ever to come up with a long-term investment plan.
“Retirement Planning for the Utterly Confused” shows how to choose the strategies and vehicles for saving and investing that suit your needs, and makes difficult processes easy to comprehend.
“Star t Late, Finish Rich,” by David Bachis another title certain to find a wide audience. It’s the seventh book of hisFinish Rich series, with two million copies in prin. It’s aimed at older readers who have neglected their savings.
One reviewer wrote that the books “reads like an infomercial script, brassily positive and unrelentingly motivational,” so it may have some entertaining value at the very least.
Anyone can finish rich, writes Bach, if they are willing to “spend less, save more, and make more.” Fortunately, most of the book is related to presenting tactics and strategies for accomplishing those three tasks. He reportedly provides an ample share of ideas as well as solid advice in an entertaining format.
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