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Notes From the Fieldby Martin Weil

Archive for the ‘Retirement’ Category

June 15, 2015

A Client of Mine Just Announced He Is Retiring

It’s OK To Live A Little In Retirement is the first thing I sent him. Fortunately, he and his wife have been great savers and are in a position to enjoy the fruits of their labors. This can often be harder than you would expect as chronic savers can sometimes find it hard to shift gears and relax the purse strings on discretionary spending.

October 13, 2014

Retirement Solution Found, in The Netherlands

“The rest of the world sort of laughs at the United States — how can a great country like the United States get so many things wrong?” said Keith Ambachtsheer, a Dutch pension specialist

From the NY Times’ “No Smoke, No Mirrors” on the excellent Dutch pension system. At the end of the article is an interesting debate that is growing in the Netherlands, pitting younger workers who want growth from their pension assets vs. the retired who want safety. Not unlike mufti-generational family trusts, writ large

May 21, 2013

An Appealing New Retirement Paradigm?

Given that we are living longer than ever and that many of us will not be able to afford a post-career of 30 years without additional earned income (and what would we do with all that free time anyway – more than 10,000 days…), how about taking a year off every 5 years or so while you are still young enough to do the really interesting stuff?  NPR tells this fascinating story of Winston Chen, who at age 40, took a year off to live with his family on a remote Norwegian Island.

chen

Of course, the story avoids addressing the practical matter of career disruption that would disrupt the lifetime earnings potential for most of us. For now it would seem. this intriguing model is restricted to tenured professors and a few others. But as the realities of our having to work many years longer, perhaps social norms around work will progress to permit this sort of mid-career sabbatical for the typical worker.

March 16, 2013

“401Ks Are A Disaster”

Many, many, years ago, a colleague who happens to be an actuary complained to me at every opportunity about what the emerging change from pensions (defined benefit and social security) to retirement schemes like 401ks was going to mean for the future of retirement savings. “No good will come of this,” was the essential message. He groused that individuals would make poor investment choices, save insufficiently and only discover the resulting shortfalls when it was too late. Of course, this was the mid-1990s. Stock markets were routinely going up 20-30% per year and individual retirement accounts were soaring. Richard’s was a lonely voice indeed. Since then of course, we have had the Dot-Com collapse and the 2008 financial crisis, which combined to bring us the infamous phrase “201K.”

Duncan Black (aka the political commentator Atrios) writes in a USA Today editorial with the above title:

The 401(k) experiment has been a disaster, a disaster which threatens to doom millions to economic misery during the later years of their lives. Proposals to improve our system of private retirement savings — even good ones — will offer little to no help for the baby boomers who are currently nearing retirement, and are also unlikely to be of sufficient help for current younger workers….

Black’s op-ed is just one more voice adding to the chorus of concerns that baby-boomers, and even worse, those who follow, are facing a very much less financially secure future than that of their parents’ generation. In hindsight, this is just one further manifestation of the persistent over-spending (under-saving) we as a nation indulged in from 1980-2008. In this morning-after our twenty-plus year party, the bills are just starting to come due. And I do not see these fiscal imbalances being easily resolved or without considerable pain. The vitriolic political fights that are our steady diet are simply a factional debate over how to apportion the burden of these accumulated obligations.

Richard, it was 1995 and you were so right.

 

 

September 20, 2012

Living to 100

One of the biggest challenge for a financial planner is “longevity risk.” Simply put, we generally do not know how long we will live. The typical response of most individuals when told they could easily live into their 90s, “Oh, I won’t live that long.”  But the truth is more and more of us are living that long and this possibility can have a major impact on the financial choices one makes earlier in life. For those readers who may be underestimating their potential for longevity, I recommend taking this 10-minute quiz at Living To 100. (Note: I recommend using a dummy or rarely-used email address for the required sign-up as the site will send a fair amount of age related email solicitation.)

July 27, 2012

A Short Primer on Overseas Retirement

This Marketwatch article provides a quick overview of the issues that will affect a US citizen who retires overseas, and it provides links to useful resources. A good place to start for anyone considering this move.

October 20, 2011

Social Security recipients to get a 3.6% raise in 2012

After two years of zero cost of living increases, the Social Security Administration will give recipients a 3.6% increase in their benefits starting January 2012.

June 3, 2011

Optimizing your Social Security benefits

I attended a terrific presentation on Social Security benefits – earned, spousal, survivor (and divorced spousal and survivor) – by Elaine Floyd of Horsesmouth at the FPA conference in San Francisco this week. This was the first of several similar presentations I have sat through that has presented all the many complexities of Social Security in a comprehensible manner. The focus was “when to take benefits,” a question many of my clients who are approaching, or are in, their 60s are asking. I am planning a full write-up of what I learned in my July client letter, but here are a few key points:

Do not take benefits early. Taking benefits before what is termed “full retirement age” (FRA), is rarely, if ever, advisable. Many people ask whether they should start at age 62 and I strongly recommend against this option except in cases of extreme financial hardship. FRA is currently 66 for those born 1943 or later, rising to 67 for those born after 1959.
Defer the higher wage earner’s benefits start until age 70 in order to maximize lifetime benefits for a couple. This is particularly advantageous when there is a younger spouse.
Take spousal benefits at FRA. One member of a couple should take spousal benefits once they both reach full retirement age. I will outline  a technique for allowing the primary benefits for both spouses to continue to increase until age 70, even after filing, in my July letter.

Floyd has made Social Security benefits the focus of her consulting work. She said in her presentation that expects a legislated “fix” to Social Security in the coming years, one that will certainly include somewhat later eligibility, and that this will allay the expected financial shortfall in the program.  Gen Xers, take heart!

April 7, 2011

Social Security suspends mailed statements

This according to planner Harold Evensky. Estimates of your Social Security benefits can still be had at the SSA’s online calculator site. Mailed statements apparently will resume in 2012 but only for those over the age of 60.

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