10 STEPS TO RETIRE HAPPY!
By: Michael Aun, President, NAIFA- Central Florida
If you are already retired, you either have my congratulations or sincerest condolences on your circumstances. If you have not, here are the “Cliff Notes” version of what to do… or wish you had done.
Step one – plan. The three most important aspects of retirement are income, income and income… GUARANTEED INCOME! You must have enough guaranteed income from Social Security, pensions, annuities and other guaranteed income that will increase over time to cover inflation.
Step two – Social Security options. There are over 1,500 ways for a couple to take Social Security. Bottom line, the longer you wait the more you will get. The key is to study SSI before choosing exactly how and when you should take yours.
Step three – “hybrid retirement.” Consider working part or full time after you have “retired.” A “hybrid retirement” could allow you to defer invading your Social Security and taxable 401-K’s, 403-B’s or other retirement vehicles like IRA’s. Perhaps consider converting your IRA to a Roth Ira.
Step four – inflation. The buying power of $10,000 at 4% inflation in ten years will be half that. Are you prepared for that kind of assault on your income?
Step five – guaranteed retirement income. Guarantees are only available with vehicles like annuities. Annuities get a bad name, but they are the only vehicle that can guarantee you a lifetime income you cannot outlive. Many even provide similar guarantees to beneficiaries.
Though annuities get trashed, what do you think social security is based on? What do you think pensions are based on? What do you think guaranteed-income lifetime payouts are built on? Exceptions: avoid variable annuities or fee-based products.
Every other vehicle can be lost, stolen or could disappear to poor choices. The double-talkers out there in the investment world call it “dollar cost averaging.” I prefer to refer to it as “dollar cost ravaging and savaging.”
Step six – long term care. Take this risk off the table with an advanced plan of attack. The good news is we are living longer… the bad news is we are living longer. Thanks to medical science, many of us are literally outliving our assets.
Ask 100 people on the streets and all 100 will tell you they do not want to go to a nursing home. Then, what you need is a plan for someone to care for you in your home.
If you have the assets, you can self-insure. If you do not, Medicaid (welfare) is going to make you spend almost every other penny you have before it kicks in. Take long term care risks off the table if you can.
Step number seven – home equity. When Medicaid forces you to liquidate your assets, you may have to sell your home. Depending on the market, it may be a great or a poor time to sell.
You have alternatives. You can take a home loan if you are mortgage-free as many seniors are. Or, you can consider a Reverse Mortgage where you possess and occupy your home and you can pay off the Reverse Mortgage along the way or when you move out of your home. Plan now! For many seniors, the equity in their home is all they have left.
Step number eight – do not give kids money while you are alive. You may need it yourself. The last thing your kids want (and more importantly their spouses) is a parent or in-law who comes the visit and but must stay. If you want to leave your kids money, use income-tax-free life insurance that enriches them with literally pennies on the dollar.
Step number nine – timing! You have your “go-go” years, where you accumulate your savings and wealth. Then follows your “slow-go” years, where you enjoy some of the fruits of your labor until your health begins to fail you. Finally, we all end up in the “no-go” years. Do not let the clock run out on you!
Step number ten – your demise. Plan, plan, plan. There are three beneficiaries to your estate- family, charity and government. Choose wisely!
Michael Aun, FIC, LUTCF, CSP, CPAE Speaker Hall of Fame is a syndicated columnist. His column, “Behind the Mike” appears in 1500 weekly periodicals is 41 countries. Past columns can be found at http://www.aunline.com/blog.