Retirement fears are gripping many New Yorkers these days — but not Bobby Lee.
At 62, Lee, who retired two years ago from a career as a clinical laboratory technologist and lives in Gramercy Park, is reaping the benefits of years of frugal living and wise investing.
Lee, who is single and has no children, keeps his spending to a minimum, shunning a car in favor of a bike. He does without a TV and has a cheap prepaid cell phone plan that costs him $8 a month.
A saver since before he attended college, Lee built up a solid nest egg by purchasing a broad array of dividend-paying stocks and reinvesting his dividends.
Having accumulated enough money to live comfortably in retirement, he doesn’t focus much on the stock market’s ups and downs. “I am above water,” he said. “I am comfortable.”
Lee knows he is a rarity these days, but his story underscores the value of disciplined planning. Though times are tough, especially for seniors approaching their golden years, there are still ways to improve your chances of a solid retirement.
“There are certain fundamentals people should focus on,” said Bill Losey, a certified financial planner and author of “Retire in a Weekend! The Baby Boomer’s Guide to Making Work Optional.” “Tune out the gloom and doom and focus on the things you can control.”
Of course, it’s no easy task. High unemployment, a stagnant stock market, and paltry returns on CDs and savings accounts have raised the prospects that many will outlive their savings.
More than one-half of workers polled nationally by the Employee Benefits Research Institute said they have less than $25,000 in savings and investments for their golden years.
Fears are running especially high in the city: In part because of the high cost of living here, New York ranked near the bottom in a just-released survey from Ameriprise Financial that measured consumers’ feelings about their ability to retire comfortably.
Marie-Danielle Samuel, 72, of Washington Heights, is concerned about the future viability of Social Security.
“Social Security accounts for half of my income,” said Samuel, co-founder of an educational nonprofit organization called Yachay Wasi. “If something were to happen, it would drastically affect my standard of living.”
But it would be a mistake to hide under the covers or make rash decisions. We asked the experts to provide their retirement tips for uncertain times:
Delay Social Security. When you choose to start collecting Social Security has a direct impact on how much you’ll get in monthly benefits.
“The longer you wait, the bigger your payout,” said Jean Setzfand, vice president of financial security at AARP.
Think about it this way: a widow or widower whose spouse claimed Social Security at full retirement age or older will get 100% of their benefits. A widow or widower whose spouse claimed benefits early will get 71% to 99%.
Use the Social Security calculator at aarp.org/readyforretirement to figure out the best time to start collecting.
Consider working longer. Staying on the job until age 80 is becoming the new normal.
Nearly three quarters of respondents to a recent survey by Wells Fargo said they plan to work in retirement.
About 39% said they need to and 35% said they want to. One quarter said they actually will need to work until at least age 80, because they do not have enough in savings.
Start saving as early as you can and put it on autopilot. “You need to have money withdrawn directly from your paycheck,” Losey said. “Start saving today, even if it’s $1 per pay period.”
While financial planners often recommend an annual savings rate of 10% to 15%, for many that is not achievable. Instead, every time you get a raise, take some of it and ramp up your savings rate, Losey suggested.
The key is to start early. A 25-year-year-old with a goal of saving $1 million by age 65, would have to sock away $4,681 a year, assuming his money grew at an annual rate of 7%.
But if he waited until he was 45 years old, he would have to save $22,797 a year.
Do the math. “Start to think about income in retirement. How much is needed? What will the sources be?,” said Gail Linn, a certified financial planner with MetLife in Midtown. “At the same time, think of essential expenses: food, shelter, utilities, etc.”
If you see a shortfall, think about how you will bridge the gap. “Take inventory, figure out your goals and trim back on expenses,” said Anthony Pio Costa, a financial adviser with Ameriprise Financial in Fairfield, N.J. “You might want to refinance your home.”
Think long term about investments . But don’t get emotional. It’s easy to get glum about the stock market, with stocks having gone nowhere over the last year and over the last decade.
But judging from history, over the longer haul, stocks are still your workhorse: The 20-year annual average return for the S&P has been close to 7%.
“We have just gone through one of the worst decades since the Depression. However, for investors, great returns were had over the past 20 years,” said Scott Brewster, president of Brewster Financial Planning in Park Slope.
Stay diversified . As you get older, reduce exposure to stocks and tilt more toward bonds.
For clients nearing retirement age, Losey recommends having what he calls a safe money bucket — two to five years worth of expected income needs in retirement.
“It will provide you with a tremendous amount of comfort,” he said.
Consider ways of creating guaranteed income in retirement . Not many people can count on getting a pension these days. But there are ways to achieve guarantees by purchasing an annuity.
Linn recommends adding some guaranteed products to your portfolio, such as a fixed annuity and/or a variable annuity with some income guarantees, often called living benefits.
“The latter can provide an opportunity to participate in market gains when the market goes up, derive some income, and have some downside protection when the market goes down,” she said.
Source: http://articles.nydailynews.com/2011-11-22/news/30431044_1_retirement-planning-retirement-fears-full-retirement-age
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| Retiree Marie-Danielle Samuel, 72, of Washington Heights, worries about… |
At 62, Lee, who retired two years ago from a career as a clinical laboratory technologist and lives in Gramercy Park, is reaping the benefits of years of frugal living and wise investing.
Lee, who is single and has no children, keeps his spending to a minimum, shunning a car in favor of a bike. He does without a TV and has a cheap prepaid cell phone plan that costs him $8 a month.
A saver since before he attended college, Lee built up a solid nest egg by purchasing a broad array of dividend-paying stocks and reinvesting his dividends.
Having accumulated enough money to live comfortably in retirement, he doesn’t focus much on the stock market’s ups and downs. “I am above water,” he said. “I am comfortable.”
Lee knows he is a rarity these days, but his story underscores the value of disciplined planning. Though times are tough, especially for seniors approaching their golden years, there are still ways to improve your chances of a solid retirement.
“There are certain fundamentals people should focus on,” said Bill Losey, a certified financial planner and author of “Retire in a Weekend! The Baby Boomer’s Guide to Making Work Optional.” “Tune out the gloom and doom and focus on the things you can control.”
Of course, it’s no easy task. High unemployment, a stagnant stock market, and paltry returns on CDs and savings accounts have raised the prospects that many will outlive their savings.
More than one-half of workers polled nationally by the Employee Benefits Research Institute said they have less than $25,000 in savings and investments for their golden years.
Fears are running especially high in the city: In part because of the high cost of living here, New York ranked near the bottom in a just-released survey from Ameriprise Financial that measured consumers’ feelings about their ability to retire comfortably.
Marie-Danielle Samuel, 72, of Washington Heights, is concerned about the future viability of Social Security.
“Social Security accounts for half of my income,” said Samuel, co-founder of an educational nonprofit organization called Yachay Wasi. “If something were to happen, it would drastically affect my standard of living.”
But it would be a mistake to hide under the covers or make rash decisions. We asked the experts to provide their retirement tips for uncertain times:
Delay Social Security. When you choose to start collecting Social Security has a direct impact on how much you’ll get in monthly benefits.
“The longer you wait, the bigger your payout,” said Jean Setzfand, vice president of financial security at AARP.
Think about it this way: a widow or widower whose spouse claimed Social Security at full retirement age or older will get 100% of their benefits. A widow or widower whose spouse claimed benefits early will get 71% to 99%.
Use the Social Security calculator at aarp.org/readyforretirement to figure out the best time to start collecting.
Consider working longer. Staying on the job until age 80 is becoming the new normal.
Nearly three quarters of respondents to a recent survey by Wells Fargo said they plan to work in retirement.
About 39% said they need to and 35% said they want to. One quarter said they actually will need to work until at least age 80, because they do not have enough in savings.
Start saving as early as you can and put it on autopilot. “You need to have money withdrawn directly from your paycheck,” Losey said. “Start saving today, even if it’s $1 per pay period.”
While financial planners often recommend an annual savings rate of 10% to 15%, for many that is not achievable. Instead, every time you get a raise, take some of it and ramp up your savings rate, Losey suggested.
The key is to start early. A 25-year-year-old with a goal of saving $1 million by age 65, would have to sock away $4,681 a year, assuming his money grew at an annual rate of 7%.
But if he waited until he was 45 years old, he would have to save $22,797 a year.
Do the math. “Start to think about income in retirement. How much is needed? What will the sources be?,” said Gail Linn, a certified financial planner with MetLife in Midtown. “At the same time, think of essential expenses: food, shelter, utilities, etc.”
If you see a shortfall, think about how you will bridge the gap. “Take inventory, figure out your goals and trim back on expenses,” said Anthony Pio Costa, a financial adviser with Ameriprise Financial in Fairfield, N.J. “You might want to refinance your home.”
Think long term about investments . But don’t get emotional. It’s easy to get glum about the stock market, with stocks having gone nowhere over the last year and over the last decade.
But judging from history, over the longer haul, stocks are still your workhorse: The 20-year annual average return for the S&P has been close to 7%.
“We have just gone through one of the worst decades since the Depression. However, for investors, great returns were had over the past 20 years,” said Scott Brewster, president of Brewster Financial Planning in Park Slope.
Stay diversified . As you get older, reduce exposure to stocks and tilt more toward bonds.
For clients nearing retirement age, Losey recommends having what he calls a safe money bucket — two to five years worth of expected income needs in retirement.
“It will provide you with a tremendous amount of comfort,” he said.
Consider ways of creating guaranteed income in retirement . Not many people can count on getting a pension these days. But there are ways to achieve guarantees by purchasing an annuity.
Linn recommends adding some guaranteed products to your portfolio, such as a fixed annuity and/or a variable annuity with some income guarantees, often called living benefits.
“The latter can provide an opportunity to participate in market gains when the market goes up, derive some income, and have some downside protection when the market goes down,” she said.
Source: http://articles.nydailynews.com/2011-11-22/news/30431044_1_retirement-planning-retirement-fears-full-retirement-age
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