Technology Rosy retirement assumptions invite rude financial awakening

18:41  09 august  2018
18:41  09 august  2018 Source:

People retire early for 2 reasons, and it's not about money

  People retire early for 2 reasons, and it's not about money Early retirement isn't about the money, say several early retirees. For many, the value of life during early retirement is priceless — the happiness it brings doesn't depend on the dollar.Brandon of the blog Mad Fientist, who retired at age 34, previously told Business Insider he wishes he knew how "unimportant and insignificant" money would be after retiring early.

January 17, 2018 Jerry Ripperger, VP of Consulting, the Principal Financial Group, Principal Securities Registered Representative. Avoid a rude awakening in retirement . On December 31st I was in Cancun, Mexico where the high temperature that day was 82 degrees.

Sure, you can set early retirement as a goal, but a combination of the current state of financial markets and plain old life is most likely going to make retirement by age 60 impossible. (Yes, we're making a lot of assumptions here, but the point still stands that retiring at 60 would be hard to do.

Working longer can boost the odds of a secure retirement: That is an article of faith in retirement planning circles these days.

But many people do not wind up working as long as they expect or hope. And baking in too much optimism about career longevity to your retirement plan can take a heavy toll.

A new research report by Morningstar warns that assumptions about working longer actually can work against you -- by considerable margins, in some cases -- if retirement comes sooner and savings fall short.

“What people are doing is picking unrealistic ages,” said David Blanchett, head of retirement research at Morningstar and author of the report. “You might say that you want to work until 67, but a lot of things can go wrong.”

Former Calgary Flames captain Jarome Iginla all smiles on retirement day

  Former Calgary Flames captain Jarome Iginla all smiles on retirement day Former Calgary Flames captain Jarome Iginla all smiles on retirement dayCALGARY—As former Calgary Flames captain Jarome Iginla announced his retirement Monday at the Saddledome, some of his teammates showed up to keep him grounded.

Sadly, what looked like being a dream retirement becomes a rude awaking to financial reality. Needless to say, retirement can be a rude - awakening as you learn to adapt in survival mode. The message is clear

Financial Dictionary. COMMON If you have had a rude awakening , you have been forced to realize the unpleasant truth about something. Such details as have emerged about the new economic package suggest that these citizens are indeed in for a rude awakening .

Most formal retirement plans are built around a specific retirement age. But health problems, job loss or just plain burnout often produce a different outcome. Blanchett found that for anyone planning to retire after age 61, the chances of meeting your income and standard-of-living goals can fall sharply if you do not work at least to that age.

“In other words, if your plan predicts a 90 percent chance of meeting your goals if you work until your late sixties, you might really only have a 60 percent chance of meeting that goal,” he said in an interview.

There has been a general trend toward working longer in recent years. Labor participation rates have jumped substantially among men and women in their 60s and early 70s. Thirty-nine percent of men age 65 to 69 were working in 2017, compared with 27 percent in 1990, according to an analysis by the Urban Institute of U.S. Census Bureau data. Among  women, the comparable participation rate jumped to 29 percent from 17 percent.

3 Canadian Stocks to Buy Now for a Comfortable Retirement

  3 Canadian Stocks to Buy Now for a Comfortable Retirement The Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is one of the best stocks you can buy for your RRSP or RRIF. Which others are a buy?Holding a good selection of stocks in your investment portfolio is highly recommended for first-time investors. Stocks can appreciate in value (if you pick the right ones), adding long-term income and financial peace of mind.

Subscribe to our podcast on YouTube or iTunes for more retirement and financial planning tips. Give Secure Retirement Strategies a round of applause. From a quick cheer to a standing ovation, clap to show how much you enjoyed this story.

A quarterly report on the trends and ideas that advisers who serve retirement plan sponsors and participants care about. In 2018, these one-day workshops, designed specifically for female financial advisers, will be held in Chicago, Boston, Denver and San Francisco.

Data on claiming of Social Security benefits also points toward delayed retirement. As recently as 2004, half of all men and 55 percent of women filed at age 62. But in 2016, just 32 percent of men and 37 percent of women were filing at 62. The share of men filing at their full retirement age - 66 - also jumped from 11.5 percent in 2004 to 17.9 percent in 2016. For women it rose from 7.5 percent to 12.6 percent.


But when it comes to individuals, numerous surveys point to the unpredictability of actual retirement dates. Blanchett reviewed one of the best available data sets - the University of Michigan Health and Retirement Study (HRS). This is an especially useful data set because it tracks a specific group of households over time, allowing a comparison of when people predicted they would retire - and when they actually did.

The HRS data suggests that planned and actual retirement ages align at 61, Blanchett reports. That is, people who plan to retire earlier than that age tend to retire later, and those who plan to retire after 61 retire earlier than expected. Each planned retirement year (earlier or later) results in a half-year difference in actual retirement age. For example, people who plan to retire at age 69 likely will retire at 65.

How much money should you have left when you die?

  How much money should you have left when you die? How much money should you have left when you die? While not the most appealing topic to consider, it's a vital aspect of a retirement plan, along with how much to save prior to retirement and how much to budget once you've stopped working. "It's really important because people don't know how much money they can spend," said Fred Vettese, author of Retirement Income for Life, and a partner at Morneau Shepell Inc. in Toronto."No one really knows. Some people might say, 'Oh, I'll spend four per cent of my money on an annual basis.' Others might say they'll spend interest only.

42-Day Retirement Plan. The Rude Awakening is your best source for the up-to-the-minute market commentary. Every day weekday morning, the Rude is there to guide you toward the most profitable, powerful trends on the market.

Advanced investment strategy for wealth building and retirement . Free resources include financial calculators, and money coaching to achieve your goals

Blanchett searched the HRS data for other predictors of whether people will achieve their intended retirement age, such as gender or how frequently they exercise. “Some were worthwhile, but only on the margin,” he said. “By far, the most important predictor was the expected age, and how far it varied from 61.”

Blanchett also looked at the probability of retirement plan success for people who make it to their planned retirement ages against those who do not. That was done using Monte Carlo analysis, which uses algorithms to serve up a range of possible outcomes.

If you work with a financial adviser, your plan likely revolves around a specific retirement age assumption. Blanchett’s findings suggest that you have a conversation about "what if?" scenarios - run some alternatives examining the impact of an earlier date. If you are a do-it-yourselfer, most online planning tools can help you make alternate projections.

But Blanchett’s key finding is that people need to save more, to protect against overly optimistic assumptions of a delayed retirement. How much more you should be saving depends on how long you hope to work and your expected annual rate of withdrawal. For example, if you aim to work to age 69 and withdraw 4 percent annually, the amount of money you are saving now should be ratcheted up by 80 percent.

With $2.89-million net worth, this B.C. couple should be wealthy — but they have a cash flow problem

  With $2.89-million net worth, this B.C. couple should be wealthy — but they have a cash flow problem Solutions include opening TFSAs and cutting back spending on $417 a month for hobbies and golf, $350 for restaurants and $333 for house cleaningSolution: Use cash to pay down line of credit then use hefty GIC and savings accounts for TFSAs

Here are four dangerous assumptions people often make when planning their retirement and financial future Dangerous Assumption #2: The stock and bond markets will be just fine and remain rosy . Just by making assumptions 3 and 4, you could be in for a rude awakening when you retire !

The battle over who is going to head up the Consumer Financial Protection Bureau following the retirement of its first director, Richard Cordray, appears to be another victory for Trump, who seems to be winning a lot lately.

Is that realistic, considering the retirement saving shortfall most workers already face? “The average saving rate is 3 percent now, and many people could double that,” he said. “I know some people won’t do that, but this data should at least get people thinking about making a plan - you need to be conservative and realistic about your goals.”

But the risks of a working-longer plan also point to the importance of Social Security for most retirement plans - the program is designed to help people cope with risks such as premature loss of work and income. Workers can file for benefits as early as age 62, but for some workers facing an earlier-than-expected retirement, it will make sense to delay claiming benefits even if it means using savings to meet living expenses. This offers one of the best routes to higher retirement income, since benefit amounts are increased 8 percent for every 12 months of delay.

“Social Security is the best source of retirement income we have - period,” Blanchett said. “And the best thing you can do is delay filing for benefits - you can’t beat the payout from delayed retirement credits.”

Here's how much you have to save per paycheck to be a millionaire by 67 .
If you start saving in your 20s, it may be less than you think.To show you just how attainable the dream of becoming a millionaire could be, personal finance site NerdWallet created a chart showing the percentage of each biweekly paycheck you'd need to set aside to have $1 million saved by the time you're 67. As you'll see below, you may not have to set aside as much as you think — if you start early, that is, since compound interest can cause your wealth to snowball over time.

—   Share news in the SOC. Networks

Topical videos:

This is interesting!