Our good friend Amos Goodall, a nationally-known elder law attorney in State College, Pennsylvania, wrote our newsletter for this week. Amos explains a particularly confusing and complicated issue.
The Social Security retirement program basically gives back, with some small interest, funds you and your employer have deposited into the system during your working career. There are several strategies which can increase your overall rate of return from the Social Security Administration. Recent changes to the law eliminate two of these, for folks who have not used them before April 29. One of the options ending is called “file and suspend”. The second is called “claim now; claim more later”. It is important to reiterate that the changes are not “grandfathered’, so claimants should consider whether to use these as soon as possible.
Social Security benefits are classically based on a wagearner’s history of compensation, using the highest thirty-five years of employment. The monthly benefit is based on the age of retirement factored into this average. A person who delays retirement until age 70 receives almost double the benefits of someone who files a claim early, at age 62. A chart showing the effect of delayed and early claims for retirement benefits may be found on the Social Security website.
Under current rules, if one member of a married couple has significantly higher earnings than the other, it is possible for the lower-earning of the two to get spousal benefits, which are set at up to half the higher wagearner’s amount. Thus, if on a particular couple’s earning’s record, one spouse had worked steadily in a profession and the other had interrupted her professional development to raise children, the spouse with higher earnings might qualify for $2,000/month benefits, while the other might be limited to $500, based on her earnings record. She may apply for spousal benefits and receive $1,000/month spousal benefits.
There are other situations where a claimant who has had little or no earnings may qualify for benefits based on someone else’s earning record; for example, persons who became disabled while children can qualify for benefits based on their parents’ earnings records. However, an element of these other benefits is that the parent has died or is drawing benefits himself or herself.
What if the higher wagearner is still working and wants to continue until age 70 to qualify for the higher benefit? Under current rules, a strategy called File and Suspend, the higher wagearner of a married couple can file a retirement claim at age 66 and then suspend the benefit. He or she will not be drawing social security, and delayed retirement credits will continue to accrue. Under current rules, if the higher wagearner’s claim has been suspended, the lower wagearner can still file a claim for spousal benefits.
Beginning April 29, if a couple has not already used this strategy, the right to do so will be lost. Under the new rules, with some limited exceptions, spouses and dependents cannot claim benefits if the primary worker has suspended his or her benefit.
One exception allows divorced spouses (who have not remarried) to file claims on their former spouse’s earnings record. Even if the former spouse suspends, the unremarried, divorced former spouse can still move forward with a claim for spousal benefits. This requires the couple to have been married at least ten years before the divorce.
A second strategy, called Claim Now; Claim More Later is also affected by the change. Under this strategy, if a spouse files only for spousal benefits, he or she may continue to work and obtain delayed retirement credits on his or her own earnings record. Then, at age 70, he can retire and obtain enhanced benefits due to a late retirement age. Under the changes effective April 29th, a claim filed is deemed to be requesting both spousal and direct benefits, so as to prevent this strategy.
Social Security benefits are complicated, and there are various retirement strategies available. This article covers only the general situation discussed, and there are other factors which may apply. If you think the old rules might apply, it is important to take action while you still can. Seek qualified professional advice as soon as possible, to beat the April 29 deadline.
Amos Goodall is a partner in the law firm of Goodall & Yurchak. He practices elder law and special needs planning; you can read more about Amos and his firm at the Goodall & Yurchak website, which contains links to a number of articles and resources you might find useful. Thanks, Amos!
You’ve probably read and/or heard about concerns that Americans do not save enough money to get through their retirement. A recent report from the Employee Benefit Research Institute shows just how stark the situation is — by focusing on the actual savings held by people who died over a two-year period (2010-2012).
The Employee Benefit Research Institute (EBRI) is a non-partisan professional group, headquartered in Washington, D.C. Its members include a range of retirement-related companies and organizations. It is perhaps most famous for its annual “Retirement Confidence Survey,” which attempts to capsulize the level of confidence American workers have in their retirement situation (spoiler alert: about half of workers are “very confident” or “somewhat confident” that they have enough savings to be comfortable in retirement).
The new study, though, takes a different look at retirement savings. Rather than considering whether recent retirees and prospective retirees are confident about their savings, it looks at the savings remaining at the time of a retiree’s death. The results are unsettling. They are even more unsettling, in many regards, for younger retirees and those just approaching retirement.
According to the EBRI’s summary description of the research (in its April, 2015, “Notes”), almost one-quarter of those dying after age 85 left less than $10,000 in total assets — including the equity in their homes. Half of those had no assets at all. But among those who died between ages 50 and 65, the figures are much higher. About 45% of those younger decedents left assets of less than $10,000, and almost a third of that age group had no assets.
If you ignore home equity, the figures are even more stark. Almost 60% of those dying at ages 50-65 left non-home assets of less than $10,000, and about 43% of older decedents fit into that category.
The study also finds a large gap between married decedents and their unmarried counterparts. Both assets and family income were higher for married couples. Consider one example: for decedents dying between ages 50 and 65, what proportion died with non-home assets of less than $10,000? For those leaving a surviving spouse, 46% fit into that category of near-impoverishment. For single decedents in the same age group, over 75% left less than the $10,000 figure. And how did their older colleagues fare? Much better: about one-quarter of married decedents over age 85 left household assets of less than $10,000, while exactly half of single decedents in that age group left less than $10,000.
The study also addressed the importance of Social Security income for retirees in their last years of life. Across all of the categories, Social Security provided between half and three-quarters of all income — both for single individuals and married couples — at the time of death. Interestingly, that figure varies consistently by marital status (married couples have slightly lower percentages of their income from Social Security than their single counterparts in all age groups) but inconsistently by age. The oldest retirees actually were slightly less dependent on Social Security than their younger counterparts, with one exception: the lowest reliance on Social Security was among couples where one partner died between ages 65 and 74.
What were those income levels? Quite low. Here are some of the groupings, by age and marital status, with their average income:
Unmarried individuals dying after age 85 had average income of $25,086 at death. Married decedents had incomes much higher, at $50,125. In each case, the other members of their households (the single retirees might have had children or unmarried partners living with them, for instance) were within a few thousand dollars of the same figures.
Unmarried individuals dying at ages 75-84 had lower incomes than their slightly older counterparts, at $18,554. Married decedents had average income of $45,376 — much more than their single same-age counterparts, but about 10% less than their slightly older, married counterparts. Decedents in the 65-74 age group were almost indistinguishable from the 75-84 group.
Interestingly, single decedents aged 50-64 had the lowest average income of all (at $17,099), while their married counterparts had the highest income (at $61,100). That might be because some significant percentage of those recent- and near-retirees lived with spouses who were still actively working.
Generally speaking, the other household members living with decedents tended to have notably higher incomes at the younger ages, and equivalent or lower incomes than the decedents at older ages.
Altogether, the report is an interesting slice of retirement analysis. Its focus on how well things were working out (financially speaking) at the time of the average retiree’s death gives a more complete picture of America’s retirement health. And the numbers are fairly troubling — the bottom line is that between about a quarter and about a half of all retirement-age individuals die with few or no assets, and average incomes hover in the range of about $2,000/month or less.
Almost ten thousand Americans turned 65 today. Almost all of them will be eligible for Medicare coverage. Those who are new to Medicare will need to make some decisions about whether to sign up for Part B, what to do about Part D, whether to choose Medicare Advantage or “traditional” Medicare, and whether to purchase a “Medigap” policy. Generally speaking, today’s new 65-year-olds have a seven-month period to make their decisions — starting three months ago and running through this month and the next three months.
If you are in that group, you might wonder where you can go to find information about your options. There are a few reliable, unbiased options out there, but our favorite by far is your local Area Agency on Aging. If you live in Tucson, that would be the Pima Council on Aging. If you’re planning on turning 65 in the next few months, or if you just did and you haven’t done anything about it yet, get on the phone and call the PCOA right now. They’ll probably suggest that you sign up for their monthly New to Medicare Workshop, held once a month at the PCOA offices. Go.
When you sign up for Medicare, you have the option of skipping Part B coverage. Very, very few new Medicare beneficiaries should skip that coverage — even if you feel that you just don’t need it (or can’t afford it) now. Generally, the only people who should skip Part B are those who have current employer-provided health coverage (including active-duty members of the military). Covered by COBRA, Tricare or other private insurance? Get Part B coverage. What happens if you don’t? Later, when you do sign up for Part B (and you almost certainly will), the premiums will be high enough to essentially recapture your “missed” contributions. And don’t assume that your existing coverage qualifies to avoid the increased premiums in the future — check with your Area Agency on Aging, Medicare and/or your employer.
You get coverage for medications one of two ways: either you sign up for a “Part D” plan or drug coverage is part of your Medicare Advantage plan. Make sure you sign up for Part D one way or the other. As with Part B, failure to sign up now just means your premiums will be higher later. Don’t think you need (or can afford) Part D coverage? Consider AARP’s suggestion: sign up for the cheapest plan available in your community, primarily so that you don’t pay a penalty later when you do need medication coverage.
Don’t think you qualify for Medicare because you haven’t worked for 40 quarters? Get more information. You might want to sign up for Part B and Part D coverage now. You might be better off getting Medicare coverage even if you have to pay a premium (it might, for example, be cheaper and better than your current coverage). You might qualify under a spouse’s work history. Check it out.
Still working at 65? You still qualify for Medicare. It’s not tied to your work status, and the eligibility age hasn’t increased to 66, as Social Security already has — and Social Security’s retirement age is headed to 67. But not Medicare.
Are you already receiving Social Security benefits? If you are on Social Security Disability, your Medicare card will automatically arrive in the mail after you’ve had two years of SSDI benefits. If you’re receiving Social Security retirement benefits (because you signed up for Social Security between ages 62 and 65), your card will arrive automatically three months before your 65th birthday. When you get that card, you have seven months to sign up for Part A and Part B, choose your plan and select drug coverage.
Those are some of the basic rules (and things to watch out for). The program is complicated, though, and there is much uncovered here. There are special rules for people who are volunteering out of the country on their 65th birthday. There are new rules for same-sex spouses (expanding their coverage to match prior rules covering opposite-sex couples). There are issues of overlap between Affordable Care Act policies and Medicare. There are other benefits that help poor Medicare beneficiaries pay for their premiums, deductibles and co-payments. There is a high likelihood that one of the special rules has some effect on you, so get in touch with your Area Agency on Aging to find out more about your Medicare coverage.
For decades accountants, financial planners, lawyers and government workers have talked about Social Security and the “three-legged stool.” The metaphor had a simple attraction, especially when Social Security was a young program. The three legs? Social Security, private retirement programs and personal investments. You should have some of each, according to conventional wisdom.
The problem with the metaphor, of course, is that such a large portion of retirement-age Americans have just one leg, or maybe one strong leg and part of a second. According to the Social Security Administration, about half of retirees get more than half of their income from Social Security alone. In fact, Social Security makes up more than 90% of all income for about a quarter of elderly recipients.
According to this new view, Social Security can be seen as the broad base of the pyramid, with other sources of retirement income as higher levels. Actually, “income” may be the wrong word — better to think of retirement “resources.” The next tier of the Investment Company Institute’s pyramid, for example, is home ownership. And that analysis comes from an industry group interested primarily in encouraging individual investments in retirement accounts. The reality, though, is that ownership of the home is the second-most-common bedrock resource for retirees.
In addition, there seems to be a growing recognition on the part of near-retirees that they will need to build substantial resources for their impending retirements. Defined benefit retirement plans, once the mainstay of private pension arrangements, are shrinking as a percentage of available benefits. As a result, fewer and fewer retirees will be able to count on a pension-like retirement benefit, and more and more will come to rely on the contributions they have managed to make to their own Individual Retirement Accounts and 401(k) and 403(b) plans.
Still, the news about the private retirement plan level of the pyramid is not all bad. According to the Investment Company Institute analysis mentioned above, Americans have accumulated $20.9 trillion in assets earmarked for retirement (and that’s not counting Social Security). That investment has increased much faster than inflation or the number of potential retirees since 1975.
The private pension part of the retirement pyramid is broken out as two separate parts: employer-sponsored retirement plans (like defined-benefit plans, 401(k) and 403(b) plans) and individual plans (IRAs). The top level of the pyramid, narrow but important for those who have been able to build personal wealth, is described as “other assets.” One commentator suggests that perhaps we should include another level: part-time employment. That may sound cynical, but reflects the reality that many retirement-age adults will have to work at least part-time — a notion that was not contemplated in the original three-legged stool metaphor.
One other point about rethinking the metaphor: it inevitably leads to thinking about maximizing the Social Security level of the pyramid. And not just maximizing the individual retiree’s share, but consideration of how to maximize a married couple’s benefits when taken together. Today there is a cottage industry of websites and individual advisers reviewing retirement options and strategies for maximizing a couple’s (or an individual’s) Social Security benefits.
For the 10,000 Americans turning 62 each day, it is increasingly important to think about how to maximize Social Security (and total retirement resources), what tax consequences will flow from different strategies, and how to think about the difference between not working (“retirement”) and drawing benefits (“retirement”). It is a complicated and confusing area, but thoughtful planning (and information collection) can literally be rewarding.
Review by Javier Centonzio, Esq., Alexandria, Virginia
Book by: Doug Nordman
As I read The Military Guide to Financial Independence and Retirement, I found myself regretting not having read it before joining the Marine Corps at the age of eighteen. This book is a must read for anyone who is considering joining the military. However, if you are already in the military-whether you have been enlisted for two months or nineteen years-this book will provide you with useful insight and strategies to prepare for life after the military.
Many people who join the military, including myself, decide not to make a career of it. Aware of this fact, author Doug Nordman tailored the book to provide retirement advice for those who serve one enlistment along with those who decide to serve for twenty plus years.
Mr. Nordman, a military retiree himself, takes a practical approach to planning for retirement that readers who have military experience will appreciate. Similar to most military training manuals this book is user-friendly. For example, the introduction to the book starts by telling the reader why they should read the book, why planning for retirement is important, how the book can help them plan for retirement, and even explains how to read the book. The “how-to” portion of the introduction saves the reader time by pointing them to the chapters of the book that are relevant to them, based on their time in the military and type of service (e.g. active duty, reserve, national guard).
As you work through the chapters, you are provided with real life examples and free resources aimed at planning for retirement. The author makes it a point to dispel of many financial planning myths, while also providing real world advice to overcome the perceived pitfalls that brought about the fears and misconceptions associated with those myths.
One of the most helpful sections of the book comes towards the back cover where the reader is given a recommended reading list and a plethora of retirement-related resources to include: military specific retirement books, general retirement books, books on frugality, saving, investing, military retirement research papers and articles, and various websites along with online calculators and other tools.
My favorite part of the book was Chapter 8 which discussed what to expect the first two years after retirement. This section appealed to me because it gave the reader insight into the effects that retirement can have on one’s mind and emotional health. While much of the book is dedicated to explaining retirement programs, formulas used to determine pension payments, and other technical aspects related to retirement planning, the author does a great job advocating for a holistic approach to retirement.
Although geared towards the military community, the text does a great job of explaining the obstacles that all retirees face when planning for their retirement. The very first obstacles discussed are health care costs and inflation, which the author quickly points out are areas where military retirees have a major advantage. This advantage is due to their eligibility for health care insurance through TRICARE at a very affordable monthly premium, and a defined-benefit pension program that includes cost of living adjustments that account for inflation rates. This is yet another reason why I wish I would have read this book before I decided to leave the military prior to becoming eligible for retirement.
Whether you are now in the military, married to a service-member, former military, or know someone who is currently serving or considering the military, this book is a must read. The fact that the author donates all royalties from the sale of his book to military charities also makes buying this book for yourself or a loved one a no-brainer. As a veteran, I would like to thank Mr. Nordman not only for his service to our country, but also for his service to his fellow veterans by providing them the information needed to successfully plan their retirements and gain financial independence.
Review by Jessica Fisher, Esq., Carlisle, Pennsylvania
Book by: John E. Nelson and Richard N. Bolles
This book begins with a history of retirement and then transitions into what the authors call the “New Retirement.” This concept of the New Retirement is very interesting because it is not only about finances it is about your overall well-being which incorporates the following six different fields: social, psychological, biological, medical, financial, and geographical. I find this concept to be very different from what my older clients today think about retirement and I think it would be very difficult to get one of them to sit down and read this book about retirement. This book would not be suitable for an older person who may be on the edge of retirement; however, this book may be able to reach the younger generations who do not really know what to think about retirement or how to reach it. There are various exercises throughout the book that enable the reader to customize his or her own retirement and determine what is truly important to that person.
The book is useful in that it points out different aspects of retirement like how marketers force feed us one view of retirement and we do not think of other options, which I thought was very true. In addition, the book allows you to activate your three most important core values or guiding principles through two different questionnaires, one for females and one for males and other exercises throughout the book.
This book was too long for someone who does not have a lot of time and is trying to figure out their retirement in their spare time while working and doing other things. The authors could have gotten to the point much faster in many of the chapters and shortened the book and made it more relevant. This book is an easy read and introduces concepts that were easy to understand, but it did seem to be going in opposite directions at some points. Also, it seemed to go on tangents about different approaches to retirement historically, which may lose some people.
There is a nice summary and exercise at the end for how to start achieving your ideal retirement now by incorporating all of your core values. I really like this concept so that overall you can have a better sense of well-being instead of only focusing on how you can afford to retire you can also focus on all of the different interests you have and incorporating them now and then. Three approaches are provided for how you can bring your vision for retirement into your present. The first approach helps you complete you vision through pictures, words and feelings, but if that is not how you normally operate then you can try the second or third approach. The second approach focuses on the big picture, creativity and intuition. The third approach focuses on logic, linear thinking and details. The reader may use all of three of these approaches at various times in order to fulfill their ultimate goals but the ultimate conclusion the book wants you to walk away with is to incorporate all of these things into your life now.
Review by: Gerardo Olivarez, Jr., Esq., of Tampa, Florida
Book by: Mike Piper
I found this book to be one that I could easily give to a client. The author provided a basic background of retirement planning. The material is not overwhelming for the average reader. The subject of retirement planning focuses on retirement living expenses. This allows the reader to assess his/her current individual situation. By doing so, the reader is not frightened by complex terminology and complicated mathematical calculations. The author creates a reading environment that challenges the reader to think. Thinking about his/her own future lead to some very important questions.
The book is divided in three parts. The first is titled, “How Much Money Will I Need to Retire?”. The second is, “Retirement Portfolio Management”. And, finally the third is, “Tax Planning in Retirement”. The first part is quite simple. It looks at the basic question of how much money does the reader think he/she needs to retire. Although the question appears simple enough the answer is a bit more complicated. The reader needs to review their expenses in retirement. A basic rule is to look at all the expenses that one has for an entire year. This will capture once a year expenses such as property taxes. Once expenses are calculated they also need to be adjusted for inflation. The author uses individual examples to illustrate his points. This allows the casual reader to review real-world examples that might be very similar to his/her situation. The issue of Social Security, pensions, and other incomes are discussed as sources of income for a retiree. Now specific planning strategies are not discussed because it is beyond the scope of the book. Although, there are multiple references listed that can assist someone that wishes to find more information on strategies. The Chapters end with a synopsis of the learning points listed as bullets. This allows for the reader to reinforce what he/she just read.
Part Two of the book describes multiple savings vehicles such as 401Ks, IRAs, Index funds, ETF, active funds, stocks, and bonds. The advantages and disadvantages of using Index funds vs actively-managed funds are quite good. The reader is given the basics on what each one is and how they work. The focus is on the expense ratio of owning one or the other. I found the factors explained for rolling over an IRA to be helpful. A client will be asking more questions than there are answers in this book. This is good! A client will be able to seek out more information. This books sets up a blueprint to establish a plan. An individual plan will help everyone achieve their goals. The area of Asset Allocation is a valuable area because it helps the reader look at multiple sources of income bases on his/her timeline. The author describes three types of “buckets”. These buckets represent short-time or a “spending bucket”, mid-range or “intermediate bucket” and “long-term bucket”. The first is a spending bucket which can consist of money market accounts, saving accounts, etc. The need to have enough funds to cover a two year period of living expenses is critical. The intermediate bucket will have T-bills and short-term Treasury ETFs or Index Funds. This should be enough cash to cover a three year period of expenses. Finally, the rest of your portfolio should be allocated in stocks and bonds. The percentage ratio should be conservative to preserve wealth. This bucket should hold the bulk of your assets. As you use up your spending bucket you will use the assets in your other two buckets to replenish. This system will allow the retiree to move assets while minimizing the tax implications. Based on the size of the portfolio the author recommends a financial planner be consulted in establishing the individual buckets.
This brings me to Part Three. This area covers tax planning. A retiree will need to know how to maintain enough assets in his/her retirement portfolio while considering the tax implications. Again, the author is only providing an overview. Individual planning is recommended with the aid of a qualified tax planner. However, the book does a good job of explaining tax-shelter bonds and Treasury Inflation-Protected Securities (TIPS). It also discusses Foreign Tax Credits that may affect some retirees. All of this is informative and can provide a retiree a sound foundation to engage his/her financial advisor.
In closing, I found that this book does an effective job in setting the financial landscape to retiring. It by no means answers all of the specific questions that a particular retiree may have. This might not be appropriate for a more sophisticated client that has an established long-term plan with a sizeable estate. However this book does make it clear that everyone needs a plan to retire. A plan is just the first step, but it is by far the most important step to a successful future. I would recommend this book to anyone that is just starting to consider his/her retirement.
I was intrigued by this book for several reasons. First, it has actually been published in three prior editions, and as such I felt that it must have some worthwhile information. Secondly, the publisher of the same is The McGraw-Hill Companies, Inc. This publisher is a recognized house, as opposed to many of the other books that I considered that were published by the venerable publisher, “Self.”
Another reason for choosing How to Retire Happy, is that its author, Stan Hinden, has been “happily retired” for 23+ years from his position at the Washington Post where he was a financial columnist. I believe that this is a very important aspect, in that I expect that it would be well written – both grammatically and from a perspective of useful financial information and data. One simply cannot work for more than two decades at a stalwart publication like the Washington Post without having perfected the ability to write well, and in a manner that informs and entertains. Certainly, I would find out that both these criteria were easily met as the book was terribly informative, and quite engaging.
One additional reason that I chose this book to review is that there was a fine foreward published by one John C. Bogle, founder and former CEO of The Vanguard Group (of funds). As such, given that I have heard Mr. Bogle speak on numerous occasions, and respected his opinion, I have chosen this book to review for the course. The fact that Mr. Bogle’s first sentence in his foreword is one-word-long, also had me intrigued to read this book. The word/sentence I allude to is “Congratulations!” Again, based on my prior knowledge of John Bogle, and his renowned financial prowess and substantial successes, I was eager to begin my reading of How to Retire Happy.
In his Preface, Hinden states that his book “is the book I wish I had been able to read before [he] retired.” His reasons for stating this is that his monthly Social Security payment would have been greater, as would his pension and retirement savings account. And, he would have learned earlier on how to become successful in making his money last longer during his, and his wife’s retirement. In fact, this book began as a chronicling of his retirement that appeared periodically in the Post. Hinden, upon his retirement learns quickly that he was, to use his own words, “woefully unprepared” to adequately analyze the issues regarding retirement issues, let alone make the ultimate choices.
Hinden’s book is broken into twelve chapters – which he also refers to as 12 “key decisions” that have to be made by retirees. In each of these twelve, which I shall spend a little time on, the author explains the issues thoroughly; provides a host of “Do’s” and “Don’t’s”; and, uses his own life lessons as a road map for the reader to use as they make their own dozen choices regarding retirement. The author’s wife, by the way, was also had a successful career. Accomplished, in her own right, Hinden’s spouse brought with her pension and retirement funds. And, it turns out, Alzheimer’s disease, which places her in a facility – a play that was not part of their retirement playbook.
Decision 1 is entitled “Am I Ready to Retire?” Effectively, the author leads the reader down the path of a Fantasy Island retirement, with all the freedom and pleasure it would bring. Quickly though, Hinden brings the reader back to the realities of retirement in order to help them determine if they are, in fact, ready to retire.
Decision 2 is entitled “Can I afford to Retire?,” and presupposes that the prior decision (1) was answered affirmatively. Early on in this chapter, the key question is defined as whether or not one had enough income to satisfy one’s expenses. If you do, great. If not, one must figure out how to raise one’s income, or in the alternative, lower one’s expenses. Naturally, as one would expect from a financial columnist, Hinden explores issues such as taxes, compounding interest, and other financial planning aspects in this chapter.
Decision 3 is entitled “When Should I Apply for Social Security?” Again, this is a perfect section for a man whose career was spent writing about money, and issues surrounding the same. Hinden explains Social Security in a manner that is quite interesting – let me restate this – in am manner that makes it as interesting as one can do given the subject manner, and its related statutory requirements.
Decision 4 is entitled “How Should I Take My Pension Payments?” In this chapter the author focuses on both defined-benefit plans (employer-paid) and defined-contribution plans (employee/employer-paid). The decisions in this chapter relate to analyzing the pros and cons of how one makes the various elections that are tied to receipt funds under the multiple options available to those who have retirement/pension plans sponsored by their employer. To me, this particular chapter was the least relevant of all, as neither myself, my co-workers, or any of my family members have such employer-sponsored pension plans.
Decision 5 is entitled “What Should I Do with the Money in My Company Savings Plan?” Here, Hinden focuses on specifics related to his 401(k) plan, which he states made it easy for he and his wife to become investors. And as many investor’s before (and for those that have not read this book) them, Hinden discusses one of the mistakes that he made – costing him nearly one hundred thousand dollars – so that reader’s can learn from his costly (to say the least) misstep.
Decision 6 is entitled “When do I Have to Take Money out of My IRAs?” This chapter, one of the shortest and driest in his book discusses the rules associated with how one determines the appropriate withdrawals from retirement accounts. While not terribly entertaining, a requisite read for any retiree.
Decision 7 is entitled “How Should I Invest During Retirement?” Hinden opens this chapter with the revelation that only three years into his retirement, he is stunned when he realizes that his retirement savings would be used up within eight years. This lesson was worsened as this revelation was made while he was 72, and his wife 70 years of age. Hinden made the determination regarding his dwindling funds by using an online retirement calculator. Quickly the chapter focuses on how to increase income, while controlling expenses. Hinde issues Five Golden Rules: (i) You Must Learn to Invest; (ii)The Greater the Risk, The Greater the Reward; (iii) Never Try to Outguess the Market; (iv) Go for the Averages; and (v) Spread Your Risk.
Decision 8 is entitled “What Should I Do About Health Insurance?” Hinden has much to discuss in this chapter of the book, what with his wife’s development of Alzheimer’s disease, her breast cancer surgery and his pre-retirement quadruple heart bypass operation. And, discuss he does. Hinden dissects Medicare, and its very parts A, B, C & D, and makes it and other coverage alternatives (HMOs, PPOs, etc.) understandable to the common man. Detailed, yet not complex examples are provided for even further clarification to the reader.
Decision 9 is entitled “What Should I Do to Prepare for an Illness That Requires Long Term Care.” Earlier editions of this book had this chapter beginning with Hinden’s biggest fear – that of the deterioration of his, or his spouse’s, health. As stated earlier, Mrs. Hinden was diagnosed with Alzheimer’s in 2007, and her condition worsened relatively quickly. Quickly Hinden learns of the significant costs associated with dealing with debilitating illnesses. Fortunately, his wife Sara had purchase a long term care policy, and the author espouses the benefit of doing the same.
Decision 10 is entitled “Where Do I Want to Live After I Retire?” The author elicits thoughts of Fantasy Island as his opening remarks for this chapter. Quickly he moves into considerations regarding weather, cost of living and proximity to family members as all being the central determents of where one should live after retirement. Despite his determination and multi-week investigation into moving to Florida, Hinden decided it was best for him to stay put and not join the ranks of retirees in the Sunshine State.
Decision 11 is entitled “How Should I Arrange My Estate to Save on Taxes and Avoid Probate?” Trusts, wills, healthcare directives, and other estate planning issues are discussed in this chapter. It is clear that Hinden has a bias against probating estates. Estate exemptions between spouses are discussed, as are issues that could affect the remaining spouse including later marriages.
Decision 12 is entitled “How Can I Age Successfully?” In this chapter Hinden ties retirement to the last quarter of a sporting event, which he says is the most exciting. In Hinden’s world, retirement provides the opportunity to “add points on the scoreboard of your life.” At the latest printing of this book, the author is 85 years old, and still finding life and work enjoyable and rewarding. Hinden finishes off this chapter with the “Do’s and Don’ts of Growing Older. Some of the Don’ts include: (i) Don’t let anger rule your life; (ii) Don’t live in the past; (iii) Don’t become a grumpy old man; and, (iv) Don’t gripe about your birthdays . . . enjoy them. Do’s include: (i) Choosing a retirement activity (part-time job, hobby) that you really enjoy’ (ii) Do exercise regularly; (iii) Do maintain your physical and mental independence; and, (iv) Do keep your sense of humor.
Overall, I truly enjoyed How to Retire Happy, and I would very much recommend it for anyone who is within a few decades of retirement. This statement, I believe, says so much. It says that there is much to plan for one’s retirement years, and that if the planning is started early enough, one’s retirement from a financial, health and overall wellness perspective can be greatly enhanced. For those who start preparing in advance, to those who have just received their final paycheck and are about to begin their retirement journey, there is much to learn in Hinden’s book. The fact that he is 85 and still writing on the subject also says a lot.
Book by Roberta K. Taylor, RNCS, M.Ed., and Dorian Mintzer, M.S.W., Ph.D.
This is a book about how to communicate with your partner regarding the important choices surrounding retirement to allow you both to make decisions that suit your needs, talents, resources and dreams. Its purpose is helping the reader envision and create a retirement that is both practical and enjoyable. The first portion of this book reads more like a straight-up therapy book than a retirement guide, which can be helpful in introducing men and women to differing communications styles, but may leave some wondering whether they are reading the right book. This “therapy” feeling of the book is generally limited to the first twenty pages, however, and then the style transitions into one of extensive storytelling interwoven with advice, discussion pointers and homework (which the authors call “Funwork”). The authors are generous, albeit a bit repetitive, in giving the reader talking points, communications tips and exercises for both the individual and couples to complete.
The core of this book is the 10 Must-Have Conversations the authors present and which are designed to help the reader consider and face the main factors of retirement. The book’s overarching theme is the value of communications in determining the what, why, how, and when of one’s own retirement. This is presented through the heavy use of vignettes to illustrate their point that there is no “normal,” and the differences between individuals can be used to customize a retirement that is right for you and your loved ones. The stories presented throughout each chapter add entertainment and make the content relatable. After reading all ten of the Must-Have Conversations chapters, it seems that if you have thought it, watched it, or lived it yourself, there is a story that reflects something you know or have thought about regarding relationships and retirement. The authors also weigh in, giving illustrations from their own lives that directly or indirectly show how the Must-Have Conversations have come into play in their personal experiences.
The 10 Must-Have Discussions address:
When to retire
Finances and financing retirement
Changing roles at retirement and thereafter
Managing your time together, and apart
Health and wellness
Choosing where and how to live
Having and managing a social life
Giving back and leaving a legacy
The book presents very little substantive information on the technical aspects of retirement planning. There is practical advice given about finding a financial planner or retirement specialist, including a list of issues and questions that would help the reader find an appropriate advisor. The authors also give a basic estate planning checklist and provide some introductory advice about long-term care insurance. This information lends intellectual weight to the book without pretending to present comprehensive advice on these matters.
Each of the Conversation chapters wraps up with a communications reminder, two exercises (one to do alone and one for couple time) as well as “Funwork.” Each time, the authors cheerfully remind the reader to have a BLAST! getting started taking things through, which stands for:
Blaming gets in the way Listen without interrupting Agree to disagree and don’t make assumptions Set a safe space for discussion Take time to talk without distractions.
Following the exercises, the authors help the reader put the “puzzle pieces” together by presenting additional questions for which the reader is encouraged to write out discoveries on a basic worksheet page at the back of the book.
In moving through the Must-Have Conversations, the authors present interesting ideas that remind the reader to be open-minded about what retirement may look like. They discuss myriad ideas about continuing some form of work through reinventing oneself, finding an Encore Career, working part-time or volunteerism. They also discuss how to handle the inevitable transitions of starting retirement and how one’s vision of retirement may change as time goes on. There is additional reassuring and helpful advice on: How to consider caring for parents and children while you are retired; maintaining or coping with health issues of advancing age; considerations about sex and intimacy; and things to think about for leaving a legacy.
The book’s Afterword reaches out to the reader with its discussion of how to continue on a thoughtful path regarding retirement when the unplanned happens. This chapter touches on divorce, death and how to work around a partner who just does not want to talk about the issues. Again, the authors take a kind and “there is no normal” approach in presenting this information, highlighting the fact that life is unpredictable.
The book also provides a rich resource section, giving a list of related books and references for each separate chapter and Conversation they present. The authors even provide an additional long list of books the reader might consider. Many of the references include website inks and there are two separate web resource sections containing more suggested information. Lastly, if the reader is interested, there is a Reading Group Guide for Individuals or Couples with an 18- point set of questions to encourage group discussions about the book and retirement in general.
The Couple’s Retirement Puzzle by Roberta Taylor Dorian Mintzer is a somewhat long, but easy read, that focuses on communicating about retirement so the reader can make purposeful, caring, and reality-based decisions about retirement options.
Among the many reasons that I like this book, is that it’s a combination of estate planning (EP) information and retirement planning (RP) information. The Table of Contents, which contains the listing of the 19 Chapters in the book, provides a brief description of the contents of each chapter and tells the reader “Read this chapter if …” which directs the reader to a specific chapter if s/he has questioned about a particular aspect of EP or RP. For example, Chapter 7, which covers the preservation of retirement accounts, tells the reader “ … Read this chapter if you have your own retirement account or have inherited one …”
Chapter 7 focuses on maximizing the stretch-out, giving your spouse options, going Roth, if you can, being smart about inheritances, using retirement assets to benefit charity, and aiming for flexibility. As with all chapters in the book it is written for the lay person, but does not sacrifice the technicalities of the law, instead, (as I refer to it) converts complicated legal concepts into language that the lay person can understand.
Each chapter ends with a “To-Do List” focused on the subject matter contained in the chapter. The Chapter 7 list tells the reader that “ … An annual review of your retirement plan can help you spot estate-planning oversights as well as tax-saving opportunities …” and provides a list of issues to consider in reference to one’s overall retirement plan.
Other chapters in the book relating to retirement planning include (1) Understanding the Tax System (Read this chapter even if you think estate taxes won’t affect your heirs), (2) Be Smart About Life Insurance (Read this chapter whether or not you have life insurance), (3) Pay for Health Care and Education (Read this chapter if anyone you love could use help with these expenses, now or in the future), (4) Home Base: Factoring in Real Estate (Read this chapter if you own your primary residence or vacation home or might move to a different state), and (5) Given Now, Save Tax Later (Read this chapter if saving taxes is a high priority).
In addition, the book contains a Glossary of terms, which contain user-friendly definitions of complicated legal concepts, such as “annual exclusion,” “applicable exclusion,” “carryover basis,” “exhaustion rule,” and “gift tax exemption” to name only a few of the terms. It also contains a section about “Resources and Further Reading,” and includes information about finding a lawyer, books concerning EP and RP, newsletters and magazines, software, web sites, blogs, and pertinent IRS Publications.
I highly recommend this book to individuals who are considering or are working on their estate plan, or individuals with questions about various retirement planning tools, and or individuals who have questions about taxes. The book is what it advertises a practical, user-friendly, action-oriented guide. The one downside to the book (as I think may exist with most books available on the subject right now) is that it is dealing with the tax laws pre the 2013 changes.
Another interesting aspect of the book for lawyers, accountants, and financial advisers is a section in the back of the book “At Least 10 Ways to Use This Book.” It specifically states that “ … Professionals have relied on Estate Planning Smarts as a business development tool, giving it to clients and prospects. For this purpose, it can be personalized by adding a company logo to the cover and up to 16 pages of customized text …”