•   
  •   
  •   

Technology Rosy retirement assumptions invite rude financial awakening

18:41  09 august  2018
18:41  09 august  2018 Source:   reuters.com

What a bear market means for retirement savings

  What a bear market means for retirement savings After being brutalized by the 2008 stock market crash, many people fear a replay could destroy their retirement nest egg.Joseph Gallagher was starting to think about retiring from his construction job in 2008 when the bear market “beat me up pretty badly,” he said.

January 17, 2018 Jerry Ripperger, VP of Consulting, the Principal Financial Group, Principal Securities Registered Representative. Avoid a rude awakening in retirement . On December 31st I was in Cancun, Mexico where the high temperature that day was 82 degrees.

Sure, you can set early retirement as a goal, but a combination of the current state of financial markets and plain old life is most likely going to make retirement by age 60 impossible. (Yes, we're making a lot of assumptions here, but the point still stands that retiring at 60 would be hard to do.

Working longer can boost the odds of a secure retirement: That is an article of faith in retirement planning circles these days.

But many people do not wind up working as long as they expect or hope. And baking in too much optimism about career longevity to your retirement plan can take a heavy toll.

A new research report by Morningstar warns that assumptions about working longer actually can work against you -- by considerable margins, in some cases -- if retirement comes sooner and savings fall short.

“What people are doing is picking unrealistic ages,” said David Blanchett, head of retirement research at Morningstar and author of the report. “You might say that you want to work until 67, but a lot of things can go wrong.”

Canadiens invite Despres to training camp on pro tryout offer

  Canadiens invite Despres to training camp on pro tryout offer The Montreal Canadiens have invited veteran defenseman Simon Despres to training camp on a professional tryout, the team announced Thursday. The 26-year-old spent last season with the KHL's Bratislava Slovan, netting four goals and seven assists in 44 games. He last appeared in the NHL in 2016-17 with the Anaheim Ducks but was limited to just one game due to concussion symptoms. The Ducks bought out the final three years of Despres' contract inThe 26-year-old spent last season with the KHL's Bratislava Slovan, netting four goals and seven assists in 44 games. He last appeared in the NHL in 2016-17 with the Anaheim Ducks but was limited to just one game due to concussion symptoms.

Sadly, what looked like being a dream retirement becomes a rude awaking to financial reality. Needless to say, retirement can be a rude - awakening as you learn to adapt in survival mode. The message is clear

Financial Dictionary. COMMON If you have had a rude awakening , you have been forced to realize the unpleasant truth about something. Such details as have emerged about the new economic package suggest that these citizens are indeed in for a rude awakening .

Most formal retirement plans are built around a specific retirement age. But health problems, job loss or just plain burnout often produce a different outcome. Blanchett found that for anyone planning to retire after age 61, the chances of meeting your income and standard-of-living goals can fall sharply if you do not work at least to that age.

“In other words, if your plan predicts a 90 percent chance of meeting your goals if you work until your late sixties, you might really only have a 60 percent chance of meeting that goal,” he said in an interview.

There has been a general trend toward working longer in recent years. Labor participation rates have jumped substantially among men and women in their 60s and early 70s. Thirty-nine percent of men age 65 to 69 were working in 2017, compared with 27 percent in 1990, according to an analysis by the Urban Institute of U.S. Census Bureau data. Among  women, the comparable participation rate jumped to 29 percent from 17 percent.

Should you leave your kids money? This expert says not to

  Should you leave your kids money? This expert says not to Kids can get student loans, but you can't get retirement loans.Tom Hegna says there is a better way to give your children an inheritance than leaving them money: Use life insurance. Hegna is an author, speaker and retirement expert. As a former first vice president at New York Life, retired lieutenant colonel and economist, Hegna has delivered over 5,000 seminars on his signature “Paychecks and Playchecks” retirement approach, helping seniors retire the “optimal” way. He has condensed a large chunk of his considerable knowledge into four books.

Subscribe to our podcast on YouTube or iTunes for more retirement and financial planning tips. Give Secure Retirement Strategies a round of applause. From a quick cheer to a standing ovation, clap to show how much you enjoyed this story.

A quarterly report on the trends and ideas that advisers who serve retirement plan sponsors and participants care about. In 2018, these one-day workshops, designed specifically for female financial advisers, will be held in Chicago, Boston, Denver and San Francisco.

Data on claiming of Social Security benefits also points toward delayed retirement. As recently as 2004, half of all men and 55 percent of women filed at age 62. But in 2016, just 32 percent of men and 37 percent of women were filing at 62. The share of men filing at their full retirement age - 66 - also jumped from 11.5 percent in 2004 to 17.9 percent in 2016. For women it rose from 7.5 percent to 12.6 percent.

ALTERNATE SCENARIOS NEEDED

But when it comes to individuals, numerous surveys point to the unpredictability of actual retirement dates. Blanchett reviewed one of the best available data sets - the University of Michigan Health and Retirement Study (HRS). This is an especially useful data set because it tracks a specific group of households over time, allowing a comparison of when people predicted they would retire - and when they actually did.

The HRS data suggests that planned and actual retirement ages align at 61, Blanchett reports. That is, people who plan to retire earlier than that age tend to retire later, and those who plan to retire after 61 retire earlier than expected. Each planned retirement year (earlier or later) results in a half-year difference in actual retirement age. For example, people who plan to retire at age 69 likely will retire at 65.

This is the No. 1 thing Americans save money for

  This is the No. 1 thing Americans save money for This is the No. 1 thing Americans save money forLoad Error

42-Day Retirement Plan. The Rude Awakening is your best source for the up-to-the-minute market commentary. Every day weekday morning, the Rude is there to guide you toward the most profitable, powerful trends on the market.

Advanced investment strategy for wealth building and retirement . Free resources include financial calculators, and money coaching to achieve your goals

Blanchett searched the HRS data for other predictors of whether people will achieve their intended retirement age, such as gender or how frequently they exercise. “Some were worthwhile, but only on the margin,” he said. “By far, the most important predictor was the expected age, and how far it varied from 61.”

Blanchett also looked at the probability of retirement plan success for people who make it to their planned retirement ages against those who do not. That was done using Monte Carlo analysis, which uses algorithms to serve up a range of possible outcomes.

If you work with a financial adviser, your plan likely revolves around a specific retirement age assumption. Blanchett’s findings suggest that you have a conversation about "what if?" scenarios - run some alternatives examining the impact of an earlier date. If you are a do-it-yourselfer, most online planning tools can help you make alternate projections.

But Blanchett’s key finding is that people need to save more, to protect against overly optimistic assumptions of a delayed retirement. How much more you should be saving depends on how long you hope to work and your expected annual rate of withdrawal. For example, if you aim to work to age 69 and withdraw 4 percent annually, the amount of money you are saving now should be ratcheted up by 80 percent.

People retire early for 2 reasons, and it's not about money

  People retire early for 2 reasons, and it's not about money Early retirement isn't about the money, say several early retirees. For many, the value of life during early retirement is priceless — the happiness it brings doesn't depend on the dollar.Brandon of the blog Mad Fientist, who retired at age 34, previously told Business Insider he wishes he knew how "unimportant and insignificant" money would be after retiring early.

Here are four dangerous assumptions people often make when planning their retirement and financial future Dangerous Assumption #2: The stock and bond markets will be just fine and remain rosy . Just by making assumptions 3 and 4, you could be in for a rude awakening when you retire !

The battle over who is going to head up the Consumer Financial Protection Bureau following the retirement of its first director, Richard Cordray, appears to be another victory for Trump, who seems to be winning a lot lately.

Is that realistic, considering the retirement saving shortfall most workers already face? “The average saving rate is 3 percent now, and many people could double that,” he said. “I know some people won’t do that, but this data should at least get people thinking about making a plan - you need to be conservative and realistic about your goals.”

But the risks of a working-longer plan also point to the importance of Social Security for most retirement plans - the program is designed to help people cope with risks such as premature loss of work and income. Workers can file for benefits as early as age 62, but for some workers facing an earlier-than-expected retirement, it will make sense to delay claiming benefits even if it means using savings to meet living expenses. This offers one of the best routes to higher retirement income, since benefit amounts are increased 8 percent for every 12 months of delay.

“Social Security is the best source of retirement income we have - period,” Blanchett said. “And the best thing you can do is delay filing for benefits - you can’t beat the payout from delayed retirement credits.”

Do you really need an RRSP to retire? .
Riza is worried about retiring without an RRSP. But do you even need one?—Riza

—   Share news in the SOC. Networks

Topical videos:

This is interesting!