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3-2-1 Retirement Newsletter (12-19-2019) Thumbnail

3-2-1 Retirement Newsletter (12-19-2019)

3 insights, 2 findings, 1 action (December 19, 2019)

5-minute read

Happy Thursday. I hope your week is going well.

Let me spice things up by sharing these three ideas, two quotes, and one question for the week...



I. Social Security, home equity, and retirement

According to data from the U.S. Census Bureau, Social Security and home equity comprise the largest percentage of retirement assets for the average couple. This data makes it clear that making smart decisions about when to claim Social Security and how to access home equity are more important than decisions about how to invest and distribute investments.

II. Traits of retirement success

Much of retirement success is left up to factors out of our control, such as expenses, inflation, market returns, and taxes. However, new research indicates other factors within our control play a large part in how we feel about retirement success.

  • flexibility and openness to new ideas (even if you choose not to act on them)

  • thinking of new ideas regarding activities and challenges for yourself

  • being active in decision making

  • staying optimistic

  • life-long learning

III. When should you retire?

This question is not easily answered. There are many factors to consider besides reaching a certain age or having enough savings.  While a detailed process can't be presented here (and yes, there is a process), here are a series of financial and non-financial key decision points you will want to consider. Your answers are only as good as your questions. So use this framework as a guide to begin thinking through the answer to the question of when you should retire.

Estimate future expenses
Consider life expectancy and risks
Determine anticipated income
Determine the availability of health insurance
Evaluate types of retirement plans and features
Examine the impact of various Social Security claiming age options
Assess the impact of debt
Appraise the likelihood of employment terminating suddenly and prematurely
Analyze the financial status of investments
Assess prospects for continued work
Assess income style
Consider willingness to compromise goals
Evaluate early retirement incentives
Examine whether there will be caregiving responsibilities
Assess legacy needs
Examine the potential for joint retirement


I. 3 moves to make if you’re in your 60s with no retirement savings

It's certainly not the best situation. But if you make an effort, you don’t have to resign yourself to a less-than-golden retirement. Here are a few moves that may save you from a cash-strapped existence during your golden years. 1) Reduce expenses, 2) work longer, 3) work part-time in retirement, and 4) use home equity to refinance out of mortgage payments or create a stream of income.

II. What to do if you cannot afford to save for retirement

Saving for retirement is difficult, and it can get overwhelming at times. But that shouldn’t distract you from making an effort.  If you find it difficult to build your retirement nest egg, you may consider these savings tips.

  1. Start SMALL and start NOW  Conventional wisdom suggests saving at least 10% of annual income, but that may not be realistic. Saving something is better than not saving. Start with a smaller amount, such as 1-2%, and increase as additional becomes available.

  2. Save extra money Most of us receive a tax refund, pay increases, and extra paychecks over the year. Save these as they become available.

  3. Trim the budget You can cut out the small expenses like cable, subscription services, dining out, etc., or make one-time large cuts like downsizing the home and car,  getting a roommate to help with rent/mortgage, or scaling back annual travel plans. 

  4. Consider a side hustle Working another job is a fantastic way to save more for retirement. And the best part is that it won’t cost you anything more than your effort and time.

  5. Reduce taxes  Taxes are your largest lifetime expense. Less tax paid to Uncle Sam means more savings for retirement. First, take advantage of any deductions and credits to lower the tax owed. Second, consider increasing the number of W-4 allowances to decrease the amount withheld while increasing the paycheck amount. The increased amount can be saved.

Source: https://www.fool.com/retirement/2019/12/12/what-to-do-if-you-cant-afford-to-save-for-retireme.aspx

Source: https://www.fool.com/retirement/2019/12/12/3-things-to-do-if-youre-in-your-60s-with-no-retire.aspx


I. One task you must complete to successfully transition into retirement

Well-established research indicates 15 developmental tasks need to be completed while still working to transition into retirement. 

We’ll look at one of these tasks for our action item this week and reveal a new one each week.

The completion of these tasks does not suggest a person should retire. However, failing to complete the tasks will put a successful transition into retirement at risk.

This week’s task is related to work: You must look into alternate or part-time work opportunities in retirement.

Why this is important:

  • work is another source of income to supplement spending and savings

  • income from work can help bridge the gap from the start of retirement to the start of Social Security 

  • employee benefits such as health, disability, and life insurance are needed



Have a Question? Want to chat about it?

Get In Touch

Until next week,

Mark Sharp, CFP® EA 

Mark Sharp Retirement