Quinn - How to make your money last: the indispensable retirement guide

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ALSO BY JANE BRYANT QUINN

Making the Most of Your Money NOW: The Classic Bestseller Completely Revised for the New Economy

Making the Most of Your Money

Smart and Simple Financial Strategies for Busy People

Everyones Money Book

This publication contains the opinions and ideas of its author. It is sold with the understanding that neither the author nor the publisher is engaged in rendering legal, tax, investment, insurance, financial, accounting, or other professional advice or services. If the reader requires such advice or services, a competent professional should be consulted. Relevant laws vary from state to state. The strategies outlined in this book may not be suitable for every individual, and are not guaranteed or warranted to produce any particular results.

No warranty is made with respect to the accuracy or completeness of the information contained herein, and both the author and the publisher specifically disclaim any responsibility for any liability, loss or risk, personal or otherwise, which is incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this book.

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First Simon & Schuster hardcover edition January 2016

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Interior design by Lewelin Polanco

Jacket design by Ren Julius Reyes

Library of Congress Cataloging-in-Publication Data

Quinn, Jane Bryant.

How to make your money last: the indispensable retirement guide / Jane Bryant Quinn.

pages cm

1. Retirement incomePlanning. 2. RetireesFinance, Personal. 3. Investments. 4. Finance, Personal. I. Title.

HG179.Q562 2015

332.024'014dc23

2015007344

ISBN 978-1-4767-4376-9

ISBN 978-1-4767-4378-xs3 (ebook)

To all my grandchildrenthe next generation coming up

Hallee, Elias, Dana, Jesse, Tyler, Maisy, Hudson, Kai, and Riley

I started this book because my head was popping with questions about the life phase we call retirement. After decades of working, were finally freebut free to do what? A whole generation is reinventing itself as it moves away from the role of earner toward the new status of engaged and interested citizen, retired.

As we gradually find our footing, were also trying to find a way of paying for it. None of us knows how many years we have ahead20? 30? More? Last year, my family celebrated my mothers 100th birthday. (Shes sharp and happy, thank you for asking!)

Centenarians are rare but our lengthening life expectancies continue to surprise us all. On average, youll reach your mid- to late-80s. The 90-plus population has tripled over the past three decades. We have every reason to worry that our money will run out before we do. Many of us are staying on the job well past traditional retirement age, not just because we like the work but because we need our salaries, too.

The way you look at your finances changes as you move from preretirement to your postretirement years. While youre still working, you focus on accumulating a satisfactory pile. You might have a dollar target in mind. More likely, youre saving whatever you can, aiming every year for more. Youre paying down debt (I hope) and focusing on investments that can make your money grow.

That flips when you enter retirements door. Suddenly, you have to take the money youve saved and turn it into a reliable income for life. How large will that income be?

In a perfect world, youll work on this question well before you leave your job. The answer will tell you when (and whether) you can afford to quit. In this imperfect world, however, you might be pushed into retirement unexpectedly. Youll need to figure out, pronto, how to manage with what you already have. Modest spenders can live on Social Security and, if theyre lucky, a pension, dividends, and interest. You might pick up some extra income from a temporary or part-time job.

Often, however, thats not enough to pay the bills. Youll have to supplement your income with regular withdrawals from your savings and investments. These withdrawals amount to homemade paychecks, landing in your bank account just the way your working paychecks did. If youre married, the paychecks have to cover the cost of two life spans as well as any emergency need for cash. What kind of standard of living can you afford? Will you have to keep working? And how do you stretch your savings to make the money last?

When I started asking those questions for myself, I looked around for information. There isnt much. I found books and websites on how to invest but practically nothing on how to prudently parcel your money out. If you take too little from savings, youre depriving yourself of some of the comforts that you worked for. If you take too much, youll go broke.

I did find plenty of bad advice from financial firms and their salespeople (a.k.a. advisers, financial consultants, and brokerage firm vice presidents). I was shocked when I looked at the menu of so-called safe and guaranteed investments were being offered. Theyre loaded with hidden costs and risks. Maybe the firms are unscrupulous, maybe just careless. Either way, people like uswith savings that we need to both hoard and spendare walking around with targets on our backs. Were where the money is and, believe me, theyre coming for it, or trying to.

Fortunately, important and objective research is currently being done on ways of creating reliable incomes for life. Ive spoken to the key players and gathered their findings here. What surprised mereally surprised meis how simple a retirement income plan can be. So simple that you can manage the investments and withdrawals yourself. If youd rather not, I found several new sources of high-level help at rock-bottom costs. You dont have to pay big commissions and fees to get good advice.

I also learned a lot by talking with practically everyone I met about the retirement decisions theyre making for themselves. Often, they were leaving money on the table because they hadnt heard about their alternatives. Social Security topped this list. I found people taking it at age 62not because they had to but because it was there. They had no idea how much their monthly benefit would increase if they waited a few years to collect. If youre married and each of you has a Social Security account, you can combine your benefits or adjust your claiming dates to collect even more.