Retirement is Not a Guess!

A great article by Smart Money (via yahoo.com) on retirement. Yes, there are many uncertainties; Yet you have more control over your future than you think. As we say, you can't predict, but you can Plan….

Summary:

Want to hear some good news about retirement? You have more control over your future than you think.

So much about retirement planning today is marked by doubt: We don't know whether our savings will see us through old age. We don't know what might happen to Social Security and Medicare. We don't know whether we'll be able to continue to work for as long as we wish to (or need to). And so we fret — a lot. In its most recent "retirement confidence" survey, the Washington, D.C.-based Employee Benefit Research Institute found that 27 percent of workers are "not at all confident" about having sufficient funds to live comfortably in later life — the highest level of gloom in the study's 21-year history.

At their worst, such anxieties can leave people paralyzed.  It's easy to focus on threats they can't control. And that's the point. If you're caught up in issues that are out of your hands — interest rates, changes in government programs, the markets — you're more likely to overlook those parts of retirement planning where you do have control.

So, "pop quiz": How many of the following steps — for which you're the boss — have you taken?

Setting a budget. It's among the most important steps in planning for later life, but less than half of workers have put pencil to paper, according to the Employee Benefit Research Institute. Why are budgets so critical? Projecting expenses and income can help you pin down your "number," the amount of money you need to save for retirement. You could be pleasantly surprised

Reducing debt. Between 2000 and 2008, the average debt for households headed by a person age 55-plus almost doubled to $66,000, according to Strategic Business Insights, a research firm in Menlo Park, Calif. Again, here's where would-be retirees can take the reins. Marsha and Chris Blair, 63 and 65, both educators, were saddled with a monthly mortgage of $5,300 on their house just south of San Francisco. Knowing they wanted to travel in retirement, they recently sold it (admittedly, not an easy feat in some markets these days) and moved to a $142,500 home in Yountville, Calif. Their new monthly payment for the land lease, insurance, taxes and cable: under $800. "You have no idea how freeing that is," Marsha says. "The first thing my husband says every time we enter the house is, 'Home, sweet unmortgaged home.'"

Creating a Plan. If nothing else, the recent financial meltdown underscores the need for investments that throw off income, regardless of what's happening in the markets. If you're fortunate enough to have an employer pension, great. If not, there's no excuse for failing to buy and hold products — stocks, bond funds — that generate cash.

Managing taxes. No, you can't control tax rates, but you can practice "tax diversification," says Randall, of Financial Enlightenment. You & your advisor should actively manage your taxes throughout the year.

Planning for long-term care. Yes, this is a tough one. But it's also an area where failing to act could prove devastating. Among your options: self-insuring, if you can set aside sufficient funds. Long-term-care insurance, is another possibility. While it could be a case of picking your poison, just choosing means you've taken control.

I know: The invariable response is, "But I don't have time." Please. It never fails to amaze me how people will spend weeks planning a visit to Disneyland with the grandchildren but won't take a few hours to assemble a retirement budget that could easily last 30 years. Believe me: You can find time. Take control of what you can control — and take the anxiety out of your retirement planning.

(Click HERE for full article)