Comprehensive guide packed with financial wisdom relevant for today's turbulent times.

How to guarantee a secure retirement? This is a question we see come across our desk a lot today from baby boomers concerned that they are going to come up short in their golden years.

It’s a genuine concern and while some may say they didn’t plan for retirement when they should have, the reality is that most have taken a hit over the past five years because of the ailing housing market, bond markets and low interest on their savings.

This is the opinion of two retirement experts on an interview at kasa.com. While talking about how bad it is might not answer questions such as how to have a secure retirement, the solutions to how to live secure in retirement are not easy to find. But they are there.

So what are they?

Well, we always advocate talking to a retirement planning expert or someone who has experience in financial planning rather than simply talking gloom and doom. Looking for solutions is better than giving up completely.

It’s often touted you need about 70-80% of your current income to have the same standard of living in retirement. How much do you need to save to get to that level? Remember, the closer you are the harder it becomes to tuck away the amount of money to guarantee the level of retirement income you need to live comfortably.

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How far away from reaching your retirement goals are you? Were you on target before the financial problems started? Have you found a strategy to get things back on track? Can you share them with us?

The problem we fear is that many boomers have simply accepted their lot assuming it’s too close to retirement to do anything about getting their savings back on a rising earning curve. As we mentioned before on this site and as many experts will advise…”it’s never too late”.

If you have set a retirement day and fear you are not going to make it income-wise, then delay it for the time being. This makes sense because you will still be earning while breathing life back into your savings. Also consider delaying taking Social Security before it matures.

These are just two suggestions for now but for real strategies, seeking the help of a competent retirement planning expert makes good sense. The last thing you need to be doing is “burying your head in the sand”. There are solutions.

To retire or not to retire?

So, should you delay retiring? Should you postpone your retirement? You know, this may have been considered a strange thing to do even two decades ago but the reality is, the retirement landscape has changed and delaying retirement is now high on the list of many baby boomers.

Is it on your list?

One thing we want to make clear is that while many would like to retire early, there are just as many who either can’t or would simply prefer to keep working in some capacity to feel useful. That last point is important. But many simply aren’t ready to retire according to a report recently at reuters.com.

Here’s a few reasons in the report why today’s baby boomer is looking at delaying retirement day:

- they are healthy and want to remain active
- many have been slammed by the financial crisis
- home values have plummeted
- many say they don’t have enough to live comfortably

Ideally, workers should start thinking about that decision well before they’re actually eligible for retirement. Starting a couple of decades early might seem extreme, but it isn’t. Planning ahead gives you time to save more, switch careers, and make the best decisions about healthcare and Social Security. Here are a few ways to plan:

In Your 40s: This is a great time to prepare for an eventual career change, especially if you want to switch fields or turn a hobby into income. Try a writing class, work on a master’s degree in social work or computer programming or take advantage of tuition reimbursement programs offered by many large employers. Research that career that you never had and start laying the groundwork now.

Meanwhile, keep saving. Even if you’re spending more of your cash paying college tuition right now than saving for retirement, try to sock away as much as possible in your 401(k) plan. The sooner you start saving, the more time those assets have to grow — and the more financial freedom you’ll have to chase a second career that might be less lucrative than the one you are in now…..

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Meanwhile, an interview at KVOA News 4 late last year featuring retirement expert Gale Morgan says that you should go through a multiple step process before making a decision when to retire. Delaying your retirement may not be necessary.

Issues such as health are important. She says you need to figure out how you want to spend your time and how long are you likely to live in retirement. Once you have crunched the numbers, then you can plan for retirement day and when it should be.

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So what can you take away from today’s question…should you consider delaying your retirement? The bottom line is, before making the decision look at the where, what and how before you make a decision on the when. Hope that makes sense.

Arizona has three of the top five sunniest places to retire on the list. picture Wikipedia.

So, where to retire where the sun shines in the USA? Sunny places to retire are usually high on the wish list of many people approaching their retirement age especially those who live in cold to freezing climates.

In the USA, there are some excellent choices for people to make and in the end, it’s really up to you where you want to head to. Do you like an area where desert is abundant or do you prefer to be near the water.

A report we saved from money.usnews.com has made the job easier if you are looking for sunny places to retire in. What’s the sunniest place to retire? Well, the report says it’s Yuma, Arizona which has been described as the sunniest city in the USA. Believe it or not, the sun shines more than ninety per cent of the time. Could you handle that?

Here are the top 5 of the sunniest areas to retire in the US:

- Yuma, Arizona
- Redding, California
- Las Vegas, Nevada
- Phoenix, Arizona
- Tuscon, Arizona

As you can see, areas where there is plenty of desert country rank high and that’s no surprise. Check out the complete list.

Once you’re no longer tied to a job, you are free to spend the coldest winter months in a balmier climate, or you could permanently move to a place with better weather. Imagine a retirement lifestyle that doesn’t involve shoveling snow, defrosting your car, or paying massive heating bills.

Yuma, Ariz., is the sunniest city in the United States, with the sun shining an average of 90 percent of the time, according to the National Climatic Data Center. This desert city also has the distinction of being the least humid and having fewer days of precipitation than any other U.S. city.

Close behind is Redding, Calif., where the sun shines an average of 88 percent of the time. Donna White, 71, a children’s librarian, moved to Redding from Ridgecrest, Calif., when she retired in 2005. She hikes every day, year-round, and especially enjoys the Sacramento River Trail, which overlooks California’s largest river. “You can watch the change of the seasons here,” she says. “We also have a river and green trees, grass, and flowers.”…..

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Now obviously, many people will look at the places mentioned and think that they need to be around water. There is a misconception that sunny and beaches go hand in hand and this is not the case on many occasions.

For example, our top pick for retirement is Florida’s Pan Handle which is in the north of the state. But while the weather is great there are plenty of days where thunderstorms threaten and the weather is overcast. But you don’t mind this because the temperature is mild to warm. And this is common in sub to full tropical areas.

So, of the sunniest areas to retire mentioned in the report, are there any you like? Are you already living in one of the places mentioned? If so, what not let our readers know what it’s like to live there. Here’s a chance to promote your city/town.

Finally, it’s one thing to want to live in a sunny place but don’t get carried away and before you make a decision, always check how expensive it might be and whether you can afford it.

Have you started planning for your retirement yet?

So, what age should you start planning for retirement? The simple answer is as soon as possible. It doesn’t really matter whether you are just out of school, in your middle age or late in life, now is always the best time to start retirement planning.

Yes, that is a somewhat cliched response but think about this, if you hear it so often then don’t you think there has to be some truth to it?

Retirement planning expert Julia Valentine says there are three building blocks you need to understand when it comes to planning for retirement. They are:

- the psychology of planning for your retirement
- financial literacy or financial mastery
- the tools that we can utilize to reach our retirement goals

She makes an excellent observation during her interview at wtvr.com and something we’ve been promoting here at TheSmartRetiree.com. It’s simply looking into your future and seeing where you will be at and most times people who do this, turn out to be very good savers. The reason is that it’s described as a visual reminder of what you can look like in the future but put more simply, it creates a sense of urgency in your thinking.

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So, what’s the take away from this report? It’s simply to start saving for retirement early. By putting it off, you are costing yourself money and making it harder to reach your retirement end goal.

Now if you are in your middle age and thinking it’s too late to start then know it’s not. As we mentioned earlier, now is always the best time to start planning for your retirement. Talk to a financial planner and let some urgency enter your thinking. It is the platform that can springboard your plan for retirement.

This is why we like retirement calculators. They have the ability to get that sense of urgency started because they can project your future retirement earnings and bring a little reality to your situation. We have a list of retirement calculators you can use by clicking here.

A personal guide to maintaining your health, managing your money, and living well.

Your biggest cost in retirement is likely to be looking after your health. For many people, by the time they get to retirement their health will have deteriorated to a point of no return and health care costs will be their biggest expense. What is the danger of this? Well, in a nutshell, all those years of saving hard for retirement may evaporate into the cost of maintaining what little health you have left.

We don’t want to be alarmists but when a reader asked us what will be the biggest cost in retirement we responded without hesitation that it will be your health care costs.

So what can you do? Well, how about looking at your body and asking yourself that by the time you reach retirement age, will it be the physical vehicle that can carry you through your golden years without having to spend a fortune on fighting whatever ailments are likely to afflict it?

An article at cnbc.com hit home the importance of having a healthy lifestyle as part of your retirement plan. Many people will be consumed with making sure they are up to scratch in making sure they are financially able to get through retirement. The article emphasizes the importance of health and what a major role it will play in this.

Being overweight is one issue that faces many folks and doing something about it should be a priority. Here are some of the major points in the article about how to get healthy for retirement:

- lose weight…it can’t be put any plainer than that
- create a regular exercise routine
- get rid of bad habits such as smoking
- look at the food you are eating and structure a healthy diet
- consider taking supplemental nutrition

A cynic would suggest that many of those quixotic New Year’s resolutions will ultimately go the way of bipartisan compromise in Washington – a great idea that never comes to pass. Smart investors should think otherwise. By all accounts, a renewed commitment to one’s health is a sound financial decision.

Healthcare costs are a key ingredient of everyone’s financial plan, as a healthy couple at age 65 in 2018 will need $511,000 for health care. Should either spouse develop a long-term illness, years of savings will evaporate into decades of struggle. The Consumer Price Index may be 3.4%, but the cost for healthcare is rising at a much faster pace.

To illustrate the tremendous strain health care has on families, 20 percent of bankruptcies last year were the result of medical bills. And while it’s reasonable to assume that insurance would prevent such demise, 75 percent of people pushed into bankruptcy because of medical costs already had insurance when they became ill.

Moreover, the government is projected to run enormous budget deficits, as retired baby boomers and the most vulnerable amongst us will incur burdensome medical expenses in the not too distant future. Unfortunately, two-thirds of people over 65 will need long-term care during their lifetime and Medicare contributes virtually nothing for services provided…..

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Have you been wondering what your biggest cost in retirement is going to be? Did the statistics about medical costs and bankruptcies shock you? Have you already started a plan to get healthy for retirement?

Nutrition and exercise are two huge aspects of getting healthy. Being healthy on the inside should be your main aim. Making sure your body gets the full amount of minerals and antioxidants each day is vital. We don’t want to turn this into a nutritional dominated post but seeing an expert in this field would be a smart move. When taking nutritional supplements, think optimum amounts.

Bottom line is, don’t let your retirement become a major drain on your finances because of health reasons.

Retirement wisdom that you won't get from your financial advisor.

So, how much do you need to save for a secure retirement? How much money will you need in retirement to live comfortably? Well, as we’ve mentioned many times on this site the general number is between 70-80% of your current income.

But the real question might be…can you save too much for retirement?

The obvious answer is no but the truth is, it seems many retirees are simply socking too much away and might be better off enjoying their money a little more before they “hang up the work clothes”. Yes, many of you are probably saying that there seems to be a contradiction here but a report we ran across at reuters.com asks the same question…are you saving too much for retirement?

Retirement planning almost always starts with one number: A guesstimate of the percentage of pre-retirement income you’re expected to need after you retire. That’s called the “replacement rate” and is often pegged by industry experts at around 80 percent of a household’s earnings.

For example, a recent paper from the Center for Retirement Research at Boston College titled “How much to save for a secure retirement,” relies on that 80 percent figure. “Households with earnings of $50,000 and over needed about 80 percent of pre-retirement earnings to maintain the same level of consumption,” writes Alicia Munnell, author of the study.

She goes on to say that high earners need to save extremely high percentages of their income — as much as 77 percent for the 45-year-old just starting to save for retirement at age 62 — to produce that 80 percent.

The concept underlying Munnell’s paper, and a lot of other retirement planning advice, is that you can figure out how much you need to save once you have a number for that 80 percent replacement rate…..

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So, what do you think? Has this post brought home the fact you could be saving too much? The article certainly makes some good points about having to spend less the older you get. But we always work on the principle that too much is never enough when it comes to saving and we are not recommending you pull back on your saving rate.

Instead, you need to consult a financial planner to look over your current saving plan and maybe do a little adjusting.

Meanwhile, we still haven’t really answered the question to how much you need for a secure retirement? A report at crr.bc.edu looks at this issue and we are not afraid to call it an issue because it really is challenging for people in today’s volatile economy to figure out what they will need in retirement to see them through.

One of the major challenges facing Americans today is how to prepare for a secure retirement.  While market ups and downs are unpredictable, people do have control over work and saving decisions that can significantly improve their retirement prospects.

This brief uses a simple model to estimate what percent of earnings an individual must save to ensure a financially secure retirement depending on he starts saving, he retires, and how he invests his retirement savings…..

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In a search just today, we saw what we could describe as a sea of contradictions on what to save, whether we save too much or too little and how long we are expected to live. No wonder people are confused. How about you? Are you pretty happy with the path you’re on to retirement?

You can build wealth without taking great risks; Risk Less And Prosper can show you how!

So, how do you keep your retirement nest egg safe? Just how do you keep your retirement savings safe in a volatile economy? Many will quickly tell you that diversification is the key to making sure your nest egg doesn’t crash and burn and that might be good advice. But that strategy may need re-thinking.

A Boston University management professor says in an interview we came across at mint.com that while diversification is important, what may be more important is to make sure you have a strong safety net so you can do some things considered a little more risky but which will yield you greater returns in a shorter period of time.

That’s interesting but for many, taking risks with their investments right now and especially late in life and close to retirement may be the last thing they want to do.

Safety over diversification.

MintLife: You said you have an idea for how advisors can make money even if they’re putting people into TIPS and I-bonds. What’s your idea?

Bodie: It’s a different paradigm. The different paradigm is basically laid out in our book. And that is: stop talking about diversify and diversify and diversify. Yes, diversification is important as an investment principle. But the first principle of investing should be: lay down your safety net. Just like a trapeze artist, if you’ve got a very strong safety net, you can actually do some more adventurous, risky things up on the high wire or on the trapeze.

So it’s really a very different paradigm that says, get away from this notion of “60/40 and diversify across all asset classes.” And start thinking of: how high and how strong do you want your safety net to be? Get that in place, and then there are lots of ways that you can go for the high wire, and maybe get rich, or at least achieve a higher standard of living. But without that safety, I for one would not be willing to do it.

MintLife: That’s a tough conversation, especially now, because for a lot of middle-class people, that safety net is going to be a substantial percentage of their savings. At current yields, you’ve got this conversation where people are saying, on the one hand, okay, I can insure my basic needs in retirement by earning 0% real, or over here, I’ve got these seductive risky assets that historically have earned 6 or 7% real. That’s a huge gap. It puts me in a tough place mentally and behaviorally. Is there anything you or I can tell people to make them feel better about this situation?…..

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So, how to keep your retirement nest egg safe? Where are you at in relation to retirement? Are you getting close to retirement day? Would you consider taking a little extra risk to get some “fat” back into your retirement nest egg?

The truth is, that when you are just a few years away taking unnecessary risk might be folly. At least talk to someone with a good track record in the financial planning world that can steer you in the right direction. The last thing you want to do if you are worried that the nest egg you have may not be enough is to go for “double or nothing”.

Think about the phased retirement which was recommended in the report. One thing that is happening is that their is a talent drain happening in industry especially for people with experience so look at your expertise and see how you can leverage that over a period of time instead of retiring cold. That’s definitely something to think about and we’ll be covering this more in future reports.

But for now, talk to an expert who has your best interests at heart; get a recommendation from family and friends; people you trust if you are a little wary of trying to pick someone out of the “Yellow Pages”.

Are you a stay at home mom without a retirement plan?

We got a question recently regarding retirement planning ideas for stay at home women. Do stay at home moms need a retirement plan? Do people who work from home need a retirement plan? The answer is yes. In fact, even if you are a man who is in a similar position and reading this then pay particular attention. This is for you too.

Retirement planning is not just for people who work nine to five. Women in particular lag behind men when it comes to a creating a retirement plan. A report at learnvest.com says the one thing you should never ignore is a plan for retirement.

But where do you start? This will be the main reason many just don’t get started. Well, the article says the first step needs to be making room in your budget. And no, you don’t need a huge budget to start. The key is being consistent and regular with your saving habit. The second step is to answer several important questions. For example:

- How much should you invest?
- How much can you invest?
- What plans can you actually invest in?
- Should you go for a non-traditional or traditional retirement account? Should you go for both?

As a stay-at-home mom, there are certain aspects of office culture that you’re probably used to forgoing. The water cooler gossip, for example, or the 3 p.m. birthday cake breaks.

The one thing you should never forgo, however, is planning for retirement. Just because a company isn’t matching a 401(k) contribution for you doesn’t mean there aren’t a lot of other options out there.

Whether or not you work, it’s vital that you secure not just your children’s and spouse’s future, but your own as well.

The first step to setting up retirement savings as a stay-at-home mom will probably be making some room in your budget. Head to the My Money Center to find out how you can better reallocate your spending folders. Keep the following questions in mind before you do so:…..

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Many women tell us that they get caught up with being the caregiver in the family and while they think about the need to have a retirement plan, they keep putting it off. This article should at least give you a starting point to get something going.

How about you? Have you started a retirement plan yet? How difficult was it? What type of help did you seek? Do you mind sharing some tips with us and our readers on what you did to get a plan off the ground and earning towards your retirement? We’d really appreciate your input.

Are you overwhelmed by all the advice on retirement planning available today?

Many people ask us where to get retirement planning advice? Sensible question and it occurred to us that with so much information out there, especially online, there would be a type of overwhelm feeling among many people. So we generally send them to one of our favorite sites for information on retirement and that’s dol.gov.

That’s right! Don’t underestimate the power and simplicity of the retirement planning advice given here.

There’s that word simplicity again. For people just starting to search for information or folks confused about what initial steps to take we suggest you get some sort of grounding first and learn a little about planning for retirement. Fort example, some of the facts many are not aware of include:

- less than half of Americans have figured out how much money to save for retirement
- almost two out of ten private industry workers with access to defined contribution plans didn’t participate
- you will need between 70-9- per cent of your current income to maintain a similar standard of living in your retirement
- the average person now is expected to spend more than twenty years in retirement

1. Start saving, keep saving, and stick to your goals

If you are already saving, whether for retirement or another goal, keep going! You know that saving is a rewarding habit. If you’re not saving, it’s time to get started. Start small if you have to and try to increase the amount you save each month. The sooner you start saving, the more time your money has to grow (see the chart below). Make saving for retirement a priority. Devise a plan, stick to it, and set goals. Remember, it’s never too early or too late to start saving.

2. Know your retirement needs

Retirement is expensive. Experts estimate that you will need about 70 percent of your preretirement income – lower earners, 90 percent or more – to maintain your standard of living when you stop working. Take charge of your financial future. The key to a secure retirement is to plan ahead. Start by requesting Savings Fitness: A Guide to Your Financial Future and, for those near retirement, Taking the Mystery Out of Retirement Planning.

3. Contribute to your employer’s retirement savings plan

If your employer offers a retirement savings plan, such as a 401(k) plan, sign up and contribute all you can. Your taxes will be lower, your company may kick in more, and automatic deductions make it easy. Over time, compound interest and tax deferrals make a big difference in the amount you will accumulate. Find out about your plan. For example, how much would you need to contribute to get the full employer contribution and how long would you need to stay in the plan to get that money…..

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So what’s the point of learning this stuff before you actually talk to a retirement planning expert? Well, one of the reasons is that choosing a financial planner depends a lot on picking someone who actually has your best interests at heart and is not just after the regular fee. That’s important.

We also say it’s a little like buying a car; show the salesperson that you are knowledgeable in the topic without trying to tell them how to do their business and they will treat you with respect. Again, that’s important.

So how far down the retirement planning track are you? Have you got a plan in motion yet? Did you find the information in this post useful? We understand the amount of information on retirement that is getting hurled at you each day can be overwhelming so keep it simple, learn what you can and just get something “on the board” as far as a plan where you are putting savings into is concerned.

Beware the mistakes you could be making with your retirement planning.

It’s never too late to start planning for retirement and we’ll be talking about this more in our next post but it consistently ranks up there with the main retirement planning mistakes people make. That is, conceding defeat and thinking because they are just a few years away from retirement day that it’s too late to do anything about it.

Well, the truth is, the best time to start planning for retirement is now. A report at thestar.com gets right to the point when talking about the common retirement planning mistakes people make; it doesn’t mince words and for a fleeting second we thought about holding this back. But this is advice you need to see.

The author lists 10 mistakes to avoid and the common theme we were able to get from it is that there needs to be a happy medium between aggressive and non-agressive planning.

Here are some of the mistakes you need to avoid with retirement planning:

- Leaving your nest egg completely in the control of a financial planner without checking in on it regularly
- Relying wholly and solely on your pension plan
- Investing far too aggressively or the reverse
- Investing in one area only with diversifying
- Investing for retirement without going in with a game plan

“There are no second chances with retirement, you cannot buy that time back,” says Tony Mahabir, a financial advisor with the Canfin Financial Group.

That is the problem with 20-20 hindsight and retirement planning: It is too late to correct financial mistakes. So, here’s a list of errors, made by others, so you can take steps now to course-correct:

1. Abdicating responsibility for your retirement funds to a financial advisor, financial planner, a superstar fund manager, or other professional.

“No one should care about your retirement nest egg more than you,” says Victor Medina-Leal, a financial advisor with Raymond James.

2. Not saving for retirement when you have a company pension. Many pension plans were established when the worker-to-pensioner ratios were 10:2. Today, those ratios are more like 2:1.

Remember that many pension plans, including OMERS and Teachers, are in deficit position. CPP has a $70-billion shortfall. People who are counting 100 per cent on their pensions alone for a comfortable retirement might be in for an unpleasant surprise.

3. Investing too aggressively, or too conservatively.

“Investing is simple, but difficult to execute. You need a coherent framework of analysis,” says Medina-Leal, quoting Warren Buffett’s methodology.

“I help my clients avoid mistakes. Focus, discipline, and a few simple rules. Save systematically. Diversify. Keep your emotions out of it. Don’t chase returns. Don’t pay too much in fees,” says Medina-Leal…..

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Is there one mistake that you should concentrate on avoiding over any other? Well, the biggest mistake in our opinion is not doing anything. We always advocate that you need to get something started because it puts you in the game so to speak.

The bottom line and take away probably is…get in the game, don’t get too complacent and diversify your investments. Have you recognized any of the mistakes listed? How are you planning to correct them or can you correct them?