Wise Decisions with Retirement in Mind | Planning Insights

Anne Hussman |

When it comes to retirement planning, it isn't merely a matter of stock market performance or investment selection that makes the difference. Th ere are certain dos and don’ts that tend to encourage retirement happiness and comfort.

Retire financially literate. Some retirees don’t know how much they don’t know. They end their careers with inadequate financial knowledge, and yet feel that they can plan retirement on their own. They mistake retirement income planning for the whole of retirement planning, and gloss over longevity risk, risks to their estate, and potential health care expenses. Th e more you know, the more your retirement readiness improves.

Retire debt-free, or close to debt-free. Who wants to retire with 10 years of mortgage payments ahead or a couple of car loans to pay off ? Even if your retirement savings are substantial, what will big debts do to your retirement morale and the possibilities on your retirement horizon? On that note, refrain from loaning money to family members and friends who seem quite capable of standing on their own two feet.

Retire with purpose. Th ere’s a difference between retiring and quitting. Some people can’t wait to quit their jobs at 62 or 65. If only they could escape and just relax and do nothing for a few years – wouldn't that be a nice reward? Relaxation can lead to inertia, however – and inertia can lead to restlessness, even depression.

Retire with a dream. Retirees who know what they want to do, and go out and do it, are contributing to their mental health and possibly their physical health.

Retire knowing that you’ll have to assume some risk. Growth investing is increasingly seen as a necessity for retirees who want to keep ahead of inflation.

According to data and research compiled by the Social Security Administration, the average 65- year-old man will live to be 84 and the average 65- year-old woman will live to be 86. So that’s a 20- year retirement. Th e SSA also notes that roughly a quarter of today’s 65-year-olds will live past 90, and about 10% of them will live beyond age 95.

1 If these seniors rely only on conservative investments for the balance of their lives, they may end up with reduced retirement income potential, and in turn a reduced standard of living. If an investment is yielding 2%, it will take about 36 years to double your money. Yes, interest rates are rising – but inflation should rise with them.

2 Retire healthy. Smoking, drinking, overeating, a dearth of physical activity can take a toll on your capacity to live fully and enjoy retirement. It is never “too late” to quit smoking, quit drinking or slim down.

Retire in a community where you feel at home. It could be where you live now. It could be a place hundreds or thousands of miles away where the scenery and people are uplifting. It could be where your children live. Look for ways to connect with people who share your experiences, interests and passions, and who encourage you and welcome you. Th is social interaction is one of the great intangible retirement benefits.

The is material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affi liates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note - investing involves risk, and past performance is no guarantee of future results. Th e publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. Th is information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. Th is is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

1 - ssa.gov/planners/lifeexpectancy.htm [2/6/14]
2 - investopedia.com/terms/r/ruleof72.asp [2/6/14]