It's a valid concern. One of every 4 people turning 65 today can
expect to live past their 90th birthday, and 1 in 10 will live past
95, according to the Social Security Administration.
For a married
couple, there's a 58 percent chance that one of them will live to
With 10,000 boomers turning 65 every day, it's something on the
minds of more than a fourth of Americans.
"I went into this business because I hated seeing people who'd
followed the rules — saved money in a 401(k), put their kids through
college, gave to charity — get to retirement and find they didn't
have enough to sustain them for more than a few years," says Andrew
McNair, founder and CEO of
SWAN Capital and author of "Don't be Penny Wise & Dollar
"It's not enough to have a certain amount of money in your
portfolio," McNair says. "You want to have a guaranteed check coming
in, in addition to your investments."
Whether you're years from retirement or planning for it now,
McNair says these three New Year's resolutions will be the best you
Many people assume their expenses will decline once
they retire. They forget that they're going to have a lot more
free time to do what they love, McNair says. "What are your
dreams? Will you want to travel? Take up a new hobby? Meet
friends for golf two or three times a week? Those likely are
going to be expenses you don't have now," he says. Also, once
you retire, things don't magically last forever. The rug in the
dining room, the fridge in the kitchen — eventually they'll need
to be replaced or repaired. Also, as you age, medical expenses
either appear or increase. Sit down and think about what your
ideal retirement looks like, and presume that it will be for at
least 30 years. Make a list and take a guess at what those
activities cost — even if your retirement is years away. How
much money will you need coming in each month or year?
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Resolve to get most of your investments out of tax-deferred
plans. If you're working for a company that provides a match
for 401(k) contributions, by all means, contribute up to the
maximum match. "That's free money — you'd be crazy not to take
advantage," McNair says. But anything beyond that should be
invested in something that's more tax-efficient: Roth IRA,
municipal bonds, life insurance or real estate. No one expects
taxes will go down — they'll be going up. Uncle Sam already has
a lien on your IRA or 401(k). Don't let his lien, the taxes
you'll owe, continue to grow. Go ahead and pay now, and your
future retired self will be glad you did.
financial security for retirement is having a guaranteed income
that increases with inflation, McNair says. "You want to plan
for an income that meets or exceeds your annual income now, so
if you'll be getting $1,000 a month from Social Security at age
62 and your current income is $4,000 a month, you need to have a
plan to guarantee $3,000 a month to cover that gap." Annuities
and life insurance are the only investments that provide a
guaranteed income you cannot outlive, so consider them for at
least part of your portfolio. "You don't want them to make up
100 percent of your portfolio, but they should provide the
foundation," McNair says.
Resolve to have a portfolio that
generates a steady or guaranteed paycheck.
It's important to start thinking now about where you want to be
in retirement and what combination of investments will ensure you
have the lifestyle you want for as long as you live, he says.
"At 65, you don't want to be making risky investments because
you're panicking about not having enough money," he says.
Andrew McNair is founder and CEO of SWAN Capital, specializing in
wealth management and retirement income. After earning a degree in
business administration and finance, and with two books on his
financial strategies already published, McNair launched SWAN later
that year. At 22, he was hosting a radio show, "What Your Money
Would Say," that provides financial guidance to retirees. McNair is
also the founder and CEO of the Veteran Benefit Project, which works
with veterans and their families at no charge to ensure they receive
all of the benefits they deserve.
[Text from file received from
News and Experts]