It’s wonderful to live a long and healthy life. But it would be best if you spent your retirement years enjoying yourself rather than fretting about whether or not your money will last. Here are seven strategies to help you overcome your phobias.

1. Reduce your spending

That should be obvious, right? However, it is something to be aware of. If you had a budget before retiring, stick to it now. You’ll have to make adjustments to account for fluctuations in income and expenses (ideally, you’ll be spending less on clothing, fuel, and other work-related expenses). It’s not too late to create a budget if you’ve never done so before. Consider your monthly income and how you want to spend it, as well as whether you’ll need to tap into savings.

2. Opt for a long-term care insurance policy

Nursing home bills wipe out many people’s life savings. One method to avoid this is to buy long-term care insurance when you’re in your 40s or 50s when the premiums are lower. This covers costs not covered by health insurance, Medicare, or Medicaid. This insurance will help preserve your assets if you end up in a nursing home, and with 60% of people over the age of 65 requiring long-term care services at some point in their lives, it’s a good investment.

3. Pay off your debts

It’s better to avoid taking on debt in retirement, but this isn’t always possible. Try to reduce credit card debt first. Negotiate with creditors or hire professionals to get rid of debts in one go. Check out the debt relief laws, read the fine print section of the debt settlement agreements, save money, and pay the negotiated amount. You will be debt-free soon.

4. Don’t take out too much or too soon

Early withdrawals from retirement funds might have negative implications. Early withdrawal penalties may apply, and you may even lose tax benefits.

The IRS penalty for taking money out of a 401(k) early is 10% plus your income tax rate on the amount taken out. Keep in mind that the money is there to help you retire. So resist the urge to withdraw money from those accounts before reaching your retirement age.

The same can be said for withdrawing too much money after retirement. The 4 percent rule, which states that you should withdraw 4% of your retirement funds each year, is a good starting point (adjusted for inflation). The concept is that you may demand at least a 4% return on your investments, ensuring that you will not run out of money throughout your 30-year retirement.

That figure, though, is not set in stone. If you have a bigger nest egg, some experts recommend a little higher withdrawal rate of 4.5 percent to 5% — but not more than 5%. Others suggest a withdrawal rate of 3 to 3.5 percent.

5. Continue to make money

You may have taken a break from your full-time job of 40 years or more, but that doesn’t mean you have to leave the workforce entirely. Consider looking for stress-free part-time employment that allows you to maintain your hobbies, friends, and family. In addition to earning some money, that job will keep your mind sharp. Selling items you no longer need is another way to make retirement money.

6. Time your Social Security benefits correctly

It may be tempting to file for Social Security when you turn 62, but this can be a blunder unless you have a compelling reason to believe you will die soon. Early Social Security benefits can result in a permanent reduction of up to a third of monthly income. You get an 8% increase every year you wait from full retirement age to age 70 before receiving benefits.

7. Buy annuities

Certain types of annuities, though frequently misunderstood, are a fantastic strategy to assure you don’t run out of money. However, it would help if you exercise caution. There are several different types of annuities, and they are all complicated. Annuities may demand substantial upfront payment, and you should invest no more than 30 to 40 percent of your assets in them. An annuity can give lifetime payments in exchange for that payout. While it may appear to be the ideal solution for someone in need of money, there are some disadvantages. Payments may not keep pace with inflation, and fees might be substantial.

Conclusion

Don’t forget to put your money to work. Compound interest can help you save a lot of money. The sooner you start investing, much like saving, the more your money can grow.

Make sure you’re saving in a 401(k) plan provided by your employer or an IRA. If your 401(k) plan offers matching contributions, make sure you’re contributing enough to obtain the full employer match.

Lyle Solomon has extensive legal experience as well as in-depth knowledge and experience in consumer finance and writing. He has been a member of the California State Bar since 2003. He graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, in 1998, and currently works for the Oak View Law Group in California as a Principal Attorney.

Here’s how it works.

If you take out any money from your IRA, 401(k), SEP IRA or other qualified plans before age 59½, normally you’ll be hit with a 10% tax penalty. However, the penalty goes away if you take “substantially equal periodic payments” (SEPP, also called the 72(t) exception) or qualify for another more limited exception.  Once established, the payments must continue for five years or until you turn 59½, whichever is longer.

Previously, withdrawals using one of the most generous SEPP methods, fixed amortization, were based on your life expectancy plus a low rate of interest (most recently 2.07%-2.09%, depending on payment frequency) that changed monthly.  Since this rate was a moving target, it made planning difficult.

In January, the IRS set the base interest rate as “any interest rate that is not more than 5%.”  That means you can take out more money penalty-free and have predictability. 

Fixed annuity for guaranteed income

You’ll need a strategy that will produce steady income during the years you’re required to take payments.  Dividend-paying stocks and bonds are a possibility, but the income will vary and you may have to dig into your principal when markets are down.

A fixed-rate annuity, however, can provide guaranteed interest income and access to principal, subject to the annuity policy provisions. Underwritten by life insurers, it provides a set rate of interest for a defined term — much like a bank certificate of deposit.  But fixed annuities usually pay much higher rates than CDs of the same term and offer more penalty-free liquidity. 

Here’s a scenario.  Bob, 50 years old, decides to retire early.  He has a total of $1.6 million in his IRA and 401(k) plans.  He wants to withdraw $50,000 a year.

He sets aside $1 million for his fixed amortization SEPP program.  From that $1 million, he could take substantially equal periodic payments of up to $60,312 a year — the maximum he could take, based on his life expectancy and the 5% base interest rate used in the IRS-defined formula.  However, because that amount exceeds his income needs and he’d have less principal left after 10 years, Bob opts for a more cautious lower amount.  

He buys a $1 million 10-year fixed annuity from a company rated an “A” by AM Best that pays a 3.5% annual interest rate. Though the annuity yields less than $50,000 a year of interest, he’ll receive $50,000 each year because the IRA annuity he chooses allows for penalty-free withdrawals of up to 10% of the account value annually. It thus easily accommodates the $50,000 annual payments that Bob chooses to take at the beginning of each contract year.

How numbers work for Bob

• $1 million in a fixed IRA annuity earning 3.5% interest for 10 years
• $50,000 annual withdrawal payments
• $803,499 of principal remains in annuity after 10 years

Over 10 years Bob will receive $500,000 from his IRA annuity, free of any IRS tax penalties, and still have the majority of his principal left because the interest earnings will cover most of the payments. 

There are some caveats.  While Bob avoids penalties for early withdrawals, he does pay ordinary income tax on $50,000 a year. 

Furthermore, the $803,499 remaining in the annuity will be worth substantially less after 10 years of even moderate inflation.  However, the $600,000 he left untouched should have increased substantially in value and outstripped inflation if invested mostly in equities or an indexed annuity, unless there was a rare, prolonged stock market slump.

Assuring annuity safety

Unlike bank CDs, fixed-rate annuities are not FDIC-insured.  However, life insurers are closely regulated for solvency by state insurance departments.  Furthermore, state guaranty associations protect annuity owners up to a certain limit in the very unlikely event of the insurer becoming insolvent. 

No state association provides $1 million in coverage, so Bob should either split his money among multiple annuity companies (which isn’t a problem) and/or go with only a highly rated insurer or insurers.   

Remember, if you do take early IRA withdrawals, you will end up with much less money in your retirement accounts than if you’d waited until the normal retirement age. So, before committing, make sure you’ll still have enough money for a long retirement.

Different types of annuities also can help guarantee that you won’t run out of money no matter how long you live. 

Ken Nuss is the founder and CEO of AnnuityAdvantage, a leading online provider of fixed-rate, fixed-indexed, and lifetime income annuities. Ken is a nationally recognized annuity expert and widely published author. A free rate comparison service with interest rates from dozens of insurers is available at https://www.annuityadvantage.com  or by calling (800) 239-0356.

You can get income from dividend-paying stocks, bank accounts, bonds and bond funds, and several different types of annuities.

Each has pros and cons. Stocks that pay high dividends can yield a good amount of income but are volatile. You can lose money, and if you’re retired, you may not be able to wait until the market recovers. 

Guaranteed deposits like bank CDs and fixed-rate annuities may pay less, but both the interest income and principal are assured.

Most retirees use a portfolio of products and strategies. By mixing and matching appropriately, you can produce income, counteract inflation and provide some liquidity that you might need for anything from medical expenses to a great vacation or giving money to kids or grandchildren. 

The right mix is highly individual. Retirees with pensions that cover the bulk of their monthly expenses may be able to take more risk with their money.  Others who don’t have that cushion and can’t afford to lose anything look to guaranteed strategies.

How Fixed-Rate Annuities Work

One type of guaranteed product is the fixed– annuity.  A very popular option today is the multi-year guaranteed annuity or MYGA. Underwritten by a life insurance company, it acts much like a bank certificate of deposit (CD). You deposit a lump sum, called a single premium.  You then receive a set interest rate for a set period. 

Unlike bank deposits, fixed annuities are not FDIC-insured. However, there is a form of insurance provided by state guaranty associations in case the insurer becomes insolvent. Coverage varies by state. 

Annuity interest is tax-deferred until withdrawn. If you receive income from an annuity before age 59½, you’ll normally be hit with a 10% IRS penalty in addition to ordinary state and federal income tax.  

Fixed annuity features vary.  If you’ll be relying on an annuity for income, make sure that the product you’re considering allows either monthly or annual interest withdrawals, depending on your needs and preferences.

While these products often allow withdrawals of up to 10% annually, they do levy penalties for taking excessive withdrawals before the guarantee period is over. 

Laddering Fixed-Rate Annuities

A big advantage of fixed-rate annuities is that they usually pay higher rates than other fixed-rate instruments such as CDs and investment-grade bonds.  As with CDs and bonds, you’ll get a higher interest rate if you’re willing to tie up your money for a longer period.

But is it worth it? On the one hand “going long” will produce more current income. Some people are comfortable with that. 

On the other, going short gives you flexibility. If interest rates improve in the interim, you’ll be able to get a better rate once the guarantee period is over.

So, what makes the most sense?  For people with enough money to spread among different annuities, I suggest laddering guarantee terms. Because no one knows for sure which direction interest rates are headed in the future, laddering makes the most sense. It gives you both good current income and future flexibility.

What’s the best laddering strategy? It depends on what the interest rate curve looks like at the time you’re creating the annuity ladder.  If the curve is flattish, going mostly short would make sense.  If it’s steep, you might want to commit more to longer terms.

Today, I recommend laddering annuities from three to five years.

Here’s why. 

First, there is a significant interest-rate bump when comparing two- and three-year terms. For example, currently (January 2022), you can earn 2.00% on a two-year annuity from an insurer rated A- for financial strength by A.M. Best.   

With a three-year MYGA, you can earn 2.50% from that same A- rated company. That’s 25% more interest.  Unless you’ll need all that money two years from now, it’s probably worth going for an additional year. 

Three years from now, you’ll be able to roll the proceeds tax-free, via a 1035 exchange, into any other annuity that looks most attractive then.  Maybe rates will be higher.

While a four-year annuity is an option too, five years is a sweet spot.  Even if you’re willing to tie up your money longer, you won’t get much more interest with a seven- or ten-year contract right now.

For instance, if you’re willing to go with a B++ rated company, you can get 3.15% on a five-year contract with limited liquidity.  You’d get only a bit more, 3.20%, with the same insurer’s seven-year annuity.

If you prefer an A- rated company, you can earn 2.85% on a five-year annuity and 3.00% for seven years with that company.

Fixed Annuities for IRAs

Besides being useful for nonqualified savings, fixed annuities also work well for IRAs.  And the same laddering approach works.

Between the ages of 59 ½ and 72, you may take taxable interest withdrawals from a traditional IRA annuity or you can let the interest compound and defer taxes.  At 72, you must begin taking required minimum distributions (RMDs). 

If you’re already taking RMDs or soon will be, look for an annuity that lets you take out your RMDs without penalty. Many issuers have that feature. 

If you have all of your IRA in equities or even long-term bonds, you may be forced to make an untimely withdrawal when the stock or bond market is down. Whether you choose a three- or five-year or other term annuity, you’ll be assured that you’ll have the guaranteed withdrawals to pay your RMD.

Annuity expert Ken Nuss is the founder and CEO of AnnuityAdvantage, a leading online provider of fixed-rate, fixed-indexed, and income annuities. He launched the AnnuityAdvantage website in 1999 to help people looking for their best options in principal-protected annuities. He writes on regularly on retirement income and annuities.  A free quote comparison service with interest rates from dozens of insurers is available at https://www.annuityadvantage.com  or by calling (800) 239-0356.

That uncertainty – magnified by the financial effects of COVID-19 – is one reason why it’s important to always keep the distant future in mind when planning and to consider all options that address those potential needs.

Too often, people are siloed in their view of their financial plan rather than focusing on the big picture. Sometimes, it’s because they believe in a pitch that one magic product or investment is going to save their retirement.

The pandemic causes some people to look for fast solutions, but there is no magic wand that you can wave and save your financial plan. The “magic” that is going to help you is to put multiple products and multiple strategies together in an integrated way that is unique to you.

Those either starting or reevaluating a financial plan should consider these points:

• Avoid cookie-cutter solutions.

  Because every person’s circumstances are different, a one-size-fits-all approach in financial planning doesn’t make sense for the future retiree. Whether it’s a mutual fund, insurance policy, annuity, a stock option, 401(k), or something else, the truth is that banking entirely on a single product or type of investment is setting you up for financial failure.

There are always popular products being pushed, but cookie-cutter solutions don’t take into account that every client has different financial pressures. Single products are often focused tightly on rate of return, but they don’t look at everything that’s happening in a person’s life or at erosion principles, which are actually taking away more wealth than is being accumulated in many cases.

• Know how to minimize market volatility.

  Having measurable goals and a realistic view are important to success with a financial strategy. And part of that strategy includes understanding and minimizing the impact of market volatility on your money. One way to make a sense of it all is to know the difference between average rate of return, sequence of returns, and actual return. Average rate of return is over the life of an investment. Sequence of returns is the order in which your investments provide you with a return. Actual return is the actual amount of money gained or lost during a quarter or year compared to the initial value of an investment.

• Don’t get caught up in chasing returns.

  Financial success does not come from chasing returns or selecting a magic product or asset class. It comes from having a balanced plan, and then stress-testing that plan for weak areas to see how taxes, feeds, inflation, medical expenses, market volatility, college expenses and other variables can impact wealth potential. People who chase returns typically buy an asset class, or they buy a fund based on its past performance. If it doesn’t do well, they sell it, and they buy the next hot-performing fund. That’s how they fall into the trap that keeps eroding their wealth.

To be successful with your retirement plan, you need to keep an open mind, understand your uniqueness, and not follow the crowd in terms of what are the right solutions for you.

John L. Smallwood CFP®  is a senior wealth advisor (www.johnlsmallwood.com) and president of Smallwood Wealth Management and affiliated companies, providing investment consulting and financial plan design for corporate executives, entrepreneurs, and professionals. He is the author of It’s Your Wealth – Keep It: The Definitive Guide To Growing, Protecting, Enjoying, and Passing On Your Wealth, and a previous book, Five Ways Your Wealth is Under Attack.

Fortunately, aging does come with at least one financial perk – senior discounts that  restaurants, grocery stores, retail stores, airlines, car rental companies, hotels and other businesses offer to their older clientele. These discounts give older Americans a break on prices for everything from a gym membership to a fast-food meal to a movie ticket.

You would think all seniors and their families would be all over these opportunities.  But, surprisingly, many people don’t take advantage. In some cases, that could be because it doesn’t occur to ask whether a discount is available. In other cases, people just have a hard time thinking of themselves as seniors.

But you need to be aware – and  you should always ask. In scouring for discounts, here are a few other things to keep in mind:

Don’t assume you’re too young.

How old do you need to be? It varies. That’s one reason it’s always good to ask. You could already be eligible for a discount at a business and not realize it. For example, AARP membership starts at 50 and comes with numerous discounts built into the membership. Chili’s restaurants offer a 10 percent senior discount to those 55 and older. At the other end of the scale, Taco Bell will give you a free beverage, but not until you are at least 65.

Sometimes when you go matters.

Some discounts happen on a particular day of the week. Just as an example, some Captain D’s restaurants offer a “Happy Wednesday” discount where once a week seniors can choose from among eight meals at a reduced price. No one expects you to schedule your entire life around discounts, but for some individual things – such as a night at the movies or dinner out or even a shopping trip to a retail store – it’s worth knowing that going a day earlier or a day later might make a difference.

Occasionally, you don’t even have to be a senior.

Plenty of opportunities exist to save money whether you’re advancing in years or not. Many stores offer store “memberships” that come with a discount with each purchase. Also, the American Automobile Association is another organization whose members enjoy a number of discounts in much the same way AARP members do.

Individually, some discounts might amount to just a dollar or two. But as you take advantage of more of them, those savings grow. When you’re on a fixed income – or just want to get the most out of every dollar you have – the difference over time can be significant.

Chris Orestis, known as the “Retirement Genius,” is President of LifeCare Xchange and a nationally recognized healthcare expert and senior advocate. He has 25 years experience in the insurance and long-term care industries, and is credited with pioneering the Long-Term Care Life Settlement over a decade ago. Known as a political insider, Orestis is a former Washington, D.C., lobbyist who has worked in both the White House and for the Senate Majority Leader on Capitol Hill. Orestis is author of the books Help on the Way and A Survival Guide to Aging, and has been speaking for over a decade across the country about senior finance and the secrets to aging with physical and financial health. He is a frequent columnist for Broker World, ThinkAdvisor, IRIS, and NewsMax Finance, has been a featured guest on over 50 radio programs, and has appeared in The New York Times, The Wall Street Journal, CNBC, NBC News, Fox News, USA Today, Kiplinger’s, Investor’s Business Daily, PBS, and numerous other media outlets.

While early retirement might sound appealing, it can be a struggle for those who don’t have sufficient income to pay their bills. That is why if you are weighing the pros and cons of early retirement, you need to get a good handle on your potential sources of income.

You may find you lack what you need – an especially unnerving conclusion if early retirement isn’t really a choice.

But don’t despair just yet. It’s also possible you have more income options than you realize. Those can be broken down into the categories of bridge income, fixed income, guaranteed income, and speculative income.

Let’s take a look at each to see whether they fit into your situation – and possibly your early retirement plans.

• Bridge income.  

  To support yourself in early retirement, you may need to tap into your assets sooner than planned – essentially bridging the gap until your other expected retirement income sources kick in. Fortunately there are ways to do that without incurring penalties for early withdrawal. For example, if you retire before you’re eligible for Social Security and Medicare, you can withdraw money from your traditional IRA before age 59½ without paying the 10 percent penalty. That’s because of something called the 72(t) provision. Similarly, the Rule of 55 allows you to withdraw money from your 401(k) or 403(b) without penalty if you are between ages 55 and 59½  and have been fired, laid off, or quit your job. (This applies only to the retirement plan sponsored by your most recent employer, not an older plan from a previous employer. Also, while you avoid penalties with these strategies, you still have to pay taxes on those withdrawals.)

• Fixed income.

  One example of fixed income is real estate rentals. Certainly, there are downsides to being a landlord, but those who manage it right and carefully screen tenants may find this can provide a reliable income. Owning rental properties can come with tax advantages. Beyond that, the property’s value typically appreciates in a strong market, making it a potential long-term investment. If need be, you can sell it later in life to pay for such expenses as health or long-term care costs. If you don’t like the idea of handling upkeep and dealing with tenants yourself, you could hire a property management company, but that of course adds to your expenses. Another situation to be aware of is that during COVID-19 some states put a temporary ban on evictions for tenants who meet certain criteria, which could make it hard to collect on rent in those situations.

• Guaranteed income.

  It’s important in retirement to have some income that arrives each month, regardless of what’s happening in the market. The most common source of guaranteed retirement income is Social Security. For those considering early retirement, it’s worth knowing you can begin drawing Social Security as early as age 62. But there’s a caveat. If you claim the benefit before you reach full retirement age (between 66 to 67 for most people), your monthly benefit is reduced and that reduction is for life. Another source of retirement income some people still have is a pension. If you have one, determine whether it provides a reduced benefit (or any benefit at all) to your spouse after you die. If not, you may want to weigh whether to take a lump-sum payment rather than your regular payout, if that choice is offered. Finally, an annuity – either fixed or indexed – can provide you with a monthly check as well. Some annuities do come with fees and various rules and limitations, and you also want to research the claims-paying ability of the insurance carriers being considered. So study them carefully before making a decision.  A properly licensed financial professional can help you figure out what’s best for you and your circumstances as you make that decision.

• Speculative income.

  One of the risks of retiring early is that you are even likelier than the average person to outlive your savings. That means you may want to keep at least a portion of your money in the market so it can grow. Yes, that does mean you could experience market volatility, but it’s worth remembering that historically, after significant market drops, the market has strong recoveries. Still, you and your financial professional should take steps to minimize your risk exposure.

Finally, it’s worth noting that with retirement comes extra time, and how you use that time could make a difference in your financial situation. Maybe you could take on a part-time job to pull in extra cash. Perhaps a favorite hobby could turn into a money-making venture.

Or possibly you just need to be cautious about becoming bored and filling that extra time with too many vacation trips or shopping sprees, spending money you really can’t afford to spend.

Even with careful planning, early retirement can still be difficult for some people. If that’s the case with you, you may need to adjust your lifestyle accordingly.

Regardless, though, it’s important in retirement – early or otherwise – to have an assortment of income sources. Many times the best retirement plans combine three of the aforementioned strategies if not all four. With the right amount of diversity in your portfolio, you may be able to live well in early retirement now, while still growing a nest egg that will see you through your later years.

Alan Becker is president and CEO of Retirement Solutions Group (www.rsgusa.net)  and author of Return on Investment or Reliability of Income? The True Meaning of ROI in Retirement. He is an Investment Adviser Representative, has passed the Series 65 securities exam, and is insurance licensed in multiple states, including Kansas and Missouri. Becker also hosts two radio shows. He is a U.S. Navy Veteran and is involved with veteran-related charity endeavors.

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Retirement Solutions Group are not affiliated companies. Investing involves risk, including the potential loss of principal. Any references to protection benefits, safety, security, or lifetime income generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions. Retirement Solutions Group is not affiliated with the U.S. government or any governmental agency. A PR firm was paid to assist with media placement. 822660 2/21

A survey by the Pew Research Center found that 36% of Americans who save regularly are saving less because of the pandemic, and one-third said they’ve had to dip into their retirement savings to pay bills.

This is unsettling news, but as we gratefully flip the calendar to 2021, there is good news. Vaccines for COVID-19 bring hope for a return to a more stable world. The economy has shown signs of recovering. While much economic uncertainty remains in the months ahead, there are some important things you can do in the new year to help your retirement savings:

• Customize your budget for life

Adjust your budget and remember to pay yourself first. At a minimum, be sure to have three things within your budget: how much you’re taking in after taxes, how much you’re spending, and how much you’re saving.

If you’re not sure where your money is going, track spending using a spreadsheet or an online budgeting app for 60 days. Determine how much money you need to cover your fixed monthly expenses and how much you’d like to put away for other goals such as retirement. The rule of thumb is to save 10–15% of pre-tax income, including any match from an employer, starting in your 20s for retirement. If you delay, add about 10% for every decade you delay saving for retirement. Remember to re-evaluate your emergency funds and make sure to have four to six months’ worth of essential living expenses set aside in a savings vehicle.

• Manage your debt

For most people, some level of debt is a practical necessity; however, problems arise when debt becomes the master, not the other way around. To stay in charge, keep your total debt load manageable. Don’t confuse what you can borrow with what you should borrow.

Keep the monthly costs of owning a home (principal, interest, taxes and insurance) below 28% of your pre-tax income and your total monthly debt below 36% of your pre-tax income. Eliminate high-cost, non-deductible consumer debt and avoid borrowing to purchase depreciating assets. Try to pay off credit card debt and consider consolidating your debt in a low-rate home equity loan or line of credit (HELOC).

• Optimize your portfolio

We all share the goal of achieving better investment results. Research, however, shows timing of markets is difficult and can be counter-productive. Create a written plan that will help you stay disciplined in all kinds of markets. Focus first and foremost on your overall investment mix.

After committing to a savings plan, how you invest is your next important decision. Have a targeted asset allocation — that is, the overall mix of stocks, bonds and cash in your portfolio — that you’re comfortable with, even in a down market. Make sure it’s still in sync with your long-term objectives, risk tolerance and time horizon.

Diversification can help reduce risk and can be a critical factor in helping you reach your goals, but make sure to consider taxes. Place relatively tax-efficient investments, like ETFs and municipal bonds, in taxable accounts, and put relatively tax-inefficient investments, like mutual funds and real estate investment trusts (REITs), in tax-advantaged accounts. Tax-advantaged accounts include retirement accounts, such as a traditional or Roth individual retirement account (IRA). If you trade frequently, do so in tax-advantaged accounts to help reduce your tax bill.

• Protect your estate

An estate plan may seem like something only for the wealthy, but there are simple steps everyone should take, especially after a year we just went through. Without proper beneficiary designations, a will and other basic steps, the fate of your estate or minor children may be decided by attorneys, probate courts and tax agencies. Make sure to review your beneficiaries, especially for retirement accounts, annuities and life insurance.

The beneficiary designation is your first line of defense. Therefore, keep information on beneficiaries up-to-date to ensure the proceeds of life insurance policies and retirement accounts are consistent with your wishes, your will and other documents. Update or prepare your will, and remember that a will isn’t just about transferring assets. It can provide for your dependents’ support and care, and help you avoid the costs and delays associated with dying without one (intestate). When writing a will, we recommend working with an experienced lawyer or estate planning attorney. Keep in mind, your beneficiary designation trumps what’s written in a will so be sure all your wishes are aligned.

If your estate is large and complex and you want to spell out how your estate should be used in detail, consider a revocable living trust. The cost for a revocable living trust is typically more expensive. Therefore, it is highly recommended to talk with a qualified estate planning attorney to see which estate plan makes the most sense for you.

Next, have in place durable powers of attorney for health care or patient advocate assignments. In these documents, appoint trusted and competent individuals to make decisions on your behalf if you become incapacitated. Make sure they understand your medical wishes. Lastly, take care of important estate documents. Make sure a trusted and competent family member or close friend knows the location of your important estate documents. You may even want to consider uploading your estate documents in a digital format for easier access.

Remember you don’t have to do everything at once. There’s a lot you can do to improve your financial health. Take one step at a time and constantly make small improvements throughout 2021.

Albert Lalonde, a financial planner and investment advisor representative, is the founder of Kaizen Financial Group (www.kaizenfinancialgroup.com).  Lalonde, a fiduciary, was inspired to enter the financial industry after watching his parents navigate their own retirement with no one to properly advise them. He has passed the Series 65 securities exam and holds an insurance and health license. Lalonde graduated from Montana State University, from which he earned two Bachelor of Arts degrees.

One of the top stressors, many studies have shown, is having enough money saved for retirement. But people can lessen their worry by learning more of the basics – and it’s not as hard as some might think.

Knowing the basics of a field of endeavor can lessen one’s confusion and stress when attempting to make progress in that field. Unfortunately, in the field of finance there are a very high number of theories and methods that are purported to be “basics” but are not. They are in some cases true but not of high importance and in other cases outrightly false.

I have found in working with clients, families, business owners and professionals that there is likely to be a reluctance to advertise one’s lack of knowledge in some financial and investment areas. There is a reluctance to admit that one would prefer a grade school approach rather than a graduate degree approach, when in fact such an approach is exactly what is needed.

Here are my five tips for saving for retirement:

• Take advantage of your employer-sponsored plan.

  Use it to the fullest extent you can. Besides the automatic nature of the 401(k) plan and its pre-tax contribution, there is the bonus of many companies matching that employee contribution. Don’t miss out on such extra free money for your retirement.

• Differentiate “long-term” from “short-term.”

  Many people get these mixed up and sometimes put long-term savings into short-term investments. Long-term is most likely a stock market type of investment, which someone can afford to fluctuate over time but hopefully will have a higher return later. Short-term is a CD or bond fund; they have a lower earnings rate but there are fewer worries about losing original principal.

• Properly allocate long-term savings. Sometimes accounts are invested in only one category, such as ‘large growth. Leaving out proper allocation of funds can make for a bumpier ride in the future on account values. There can be on the order of about five different allocations likely, and being sure to choose accordingly can lead to better diversification, better efficiency in investing, and smoother growth of savings over the long term.

• Don’t get caught up with too much attention on fees.

  I suggest looking  for the overall net return, not the lowest fee or expense. With the same return expected, of course lower expense charges would be preferable to higher expense charges. It is very important to understand, however, that one would be better off with a fund with a 12% return and a 2% expense charge netting 10% return than one would with a fund with a 10% return and a 1% expense charge netting 9% return.

• Cover for inflation by putting your long-term investments into equities.

  Putting long-term investments into bonds or fixed types of investments may not keep up with inflation for the long-term, If there was no such thing as inflation, then retirement planning would be much simpler.

You have only to review the many conflicting opinions, statements, and advice to recognize that much must be false, simply because there are so many whose opinions conflict with so many others in this area. The idea of basics cannot be accented enough.

Bob Kaye CFS®, CLU® (www.bobkaye.net) is a personal wealth manager, owner of Retirement Planning Associates, and the author of How to Avoid Not Having Enough Money to Live On After Retirement: Making Smarter and Simpler Decisions for Stress-free Retirement. He has been a financial advisor for professionals for 25 years and is a fully-licensed investment advisor representative in mutual funds, stocks, bonds, insurance, and annuities. He is also qualified as a Certified Funds Specialist®, a designation held by only about 1% of those licensed to work with mutual funds. He is certified additionally as a Chartered Life Underwriter®. Kaye was the recipient of the President’s Volunteer Service Award in a Capitol Hill ceremony in Washington, D.C., for his volunteer activities concerning human rights. 

These  words of wisdom came from my father, a depression era baby who was very pragmatic. He constantly tried to guide me to protect myself in what he called a “dog-eat-dog” jungle out there. Certainly, seniors need to be very aware and cautious of “get rich quick” schemes and the proliferation of people and organizations actually preying on seniors.

Seniors face many financial risks. Running out of money is probably every senior’s greatest fear. Another is not being able to enjoy the golden years in a manner that is affordable and enjoyable. Being proactive and doing some careful budgeting and planning in advance is critical. As the old adage goes, “an ounce of prevention is worth a pound of cure.”

What can you do now?

In the budgeting process, be aware of what your prospective annual costs are and estimate your life expectancy. Match your planning needs to accommodate your unique retirement goals (hobbies, travel, family, fitness, etc.) It’s also important to start building up a financial “war chest” now to meet your budgeted needs.

Some ideas to expand your financial “war chest” include:

• Delay Social Security until age 70 to maximize payout (if possible.)

• Delay taking retirement account distribution to 70.5 years.
• Consider moves to lower tax states like Florida.
• Consult with a tax expert to make sure you are getting maximum benefits.
• Plan for a part time job after retirement to augment retirement funds. Almost 22% of Americans 65 and older expected to have a part-time or full-time job by 2026.
• Balance your needs with taxes, death, legacy goals.
• Manage your debt.
• Consider life insurance as an asset class which can diversify your portfolio and provide tax-free growth and protect against market volatility.
• Explore the value of your life insurance policy as it may be a source of hidden cash

Thousands of individuals have life insurance policies they are not aware of and billions of dollars in life insurance benefits stemming from long neglected or unknown life-insurance policies are everywhere. Too few understand they may be able to cash out with a  “life settlement,” or sale of an existing life insurance policy to a third party. Use this Life Value Calculator to estimate how much your life insurance policy will be worth when you sell it.

Let’s say you get lucky selling your policy. How best to utilize what may be a windfall profit:

We all know the adage, ”It is better to give than to receive,” These simple words have a very profound impact. Why is giving so important and something that should be incorporated into your daily life? The reasons are many, and there are so many books available that measure the actual bodily and mental benefits that giving provides the giver. One study demonstrated that for every $100 worth of charity the donor gave, it resulted in additional income of almost $400 specifically related to that giving. This financial benefit pales in comparison to the mental and spiritual health benefits that researchers have discovered.

 Countless studies have been done by psychologists, social psychologists, and others to buttress this claim. How can we find ways to give creatively with assets that may be going to waste?  Here is a great idea…

If you have a favorite cause or organization you would like to help (and have an existing insurance policy you don’t feel you want or need anymore), consider selling that policy and gifting the cash to that cause or organization. Not only does the charity get an immediate benefit of cash, there are no appraisal fees, and there is an immediate tax deduction for the donor. A win/win all the way around!

My dad always instilled in me the win/win philosophy.  It has been very meaningful for me to incorporate that into my daily life and generating “found money” that everyone enjoys, and then giving back some portion or all of it exemplifies this philosophy and also fights the taxman, another cherished goal of my dad’s.

David Kottler is a national speaker, author, and entrepreneur who combines his legal and business experience to help his Americans fulfill their life mission both philanthropically and financially. Also known as “The Insurance Dr.” Kottler draws on his 24 years of financial planning experience to create game-changing results for his clients through his innovative “True Value”TM life insurance review process. Over the past few years, he has generated over $30 million dollars in cash and tax benefits for his clients. Kottler is the author of two books. His latest book, The Best Kept Money Secret in Your Insurance Policy, was written to empower his clients and other financial professionals to get the most out of their life insurance policies in their portfolios. David explains how to use life settlements, financed life insurance, and his expert analytical review process to find and protect hidden value in life insurance policies.   

• Website:  https://lifeinsurancedr.com/
• Linked IN: https://www.linkedin.com/in/david-kottler-1665b745/
• YouTube: https://www.youtube.com/channel/UC4GBKlSrIYb2SbKb4eZERXA

In most investment ads, there’s a disclaimer that says something to the effect of, “past performance is not indicative of future results.” While past performance isn’t necessarily a predictor of investment returns, people are pretty predictable. Without substantial intervention, how we have behaved in the past, is a pretty clear indication of how we might behave in the future.

To that end, it’s important to realize that while we have not faced anything quite like the COVID-19 virus before, we have faced health concerns, market volatility and isolation – albeit not at the same time. Everyone has experience that they can lean on to get through the components of this crisis. You can use that experience to view our current situation as an opportunity to learn four key lessons about retirement.

1. You have to have a plan.

Baseball great Yogi Berra once said, “If you don’t know where you’re going, you might end up someplace else.” People who created a financial plan before the COVID-19 pandemic should have more confidence today than those who did not. Unless your goals change, your plan likely should not. When the current medical uncertainty ends, you will likely have a very clear picture of your priorities – which is essential for planning for the later years of your working life. You may also find out they are very different than you thought they would be.

2. You need a to create a schedule.

As important as planning your finances are, it’s only one piece of the puzzle. Just like many people who’ve been working from home, many new retirees struggle with what to do during their days. One way you can maintain your sanity is by developing a new schedule that works for your new situation. What things would you want to make sure to continue? Create time blocks for your priorities to make sure that the things that are important to you, still get done. Creating an overall schedule for the days and weeks can prevent you from feeling like Bill Murray’s character in the movie, “Groundhog Day,” who relives the same day over and over again. I know more than one person who, when working from home, has wondered, “What day is it again?”

3. You need to have a purpose.

During their working lives, many Americans find their purpose and identity in their work. The recent work-from-home period has caused many people to re-evaluate the importance they place on their work identity. When they exit the workforce, many retirees are forced to do a similar evaluation. The most emotionally successful retirees have a greater purpose or passion that guides their activities. Whether it’s teaching younger professionals, volunteering to help one of their favorite causes or helping to raise grandchildren, everyone needs a reason to get out and stay active. Not only will it help us physically but remaining active has been proven to have mental and spiritual benefits as well.

4. You need a community.

One of the most difficult things about the COVID-19 virus has been the shelter-in-place orders and required social distancing. People are wired to be in community – we are simply better together. This year the number of active users of Zoom, a video conferencing tool, has increased by roughly 20 times! Many of us could talk on the phone, but there’s just something about actually seeing people that helps us feel more connected. When we can’t have that connection, we miss it. Having a robust network that to stay plugged into is essential during retirement too. In fact, maintaining a healthy community can help prevent the onset of depression in retirement (which is more common than you’d think).

There are many ways to “test drive” retirement, but we rarely get a chance to actually see what parts of retirement might feel and look like while we’re actually still working. In fact, for many of us, this might be a once-in-a-lifetime opportunity. Don’t let it go to waste.

This slowdown is not happening to you, it’s happening for you. If you’re intentional about it, you can use the current inconvenience to alter the course of your retirement plan and to develop a lifestyle that you can look forward to, rather than one that you fear.

Chip Munn is a senior wealth advisor and CEO of Signature Wealth Strategies. He is the author of author of The Retirement Remix: A Modern Solution to an Old School Problem, and host of The Retirement Remix and Maximum Advisor podcasts. For more information, please visit, www.chipmunn.com and connect with him on Twitter, @chip_munn.