Your Complete Guide to a Successful and Secure Retirement

Larry E. Swedroe, Kevin Grogan

• Publisher: Harriman House
• Year: 2021
• eBook ISBN: 9780857198389
• Edition: 2
• Topic: Crescita personale
• Subtopic: Finanza a livello personale

Fully revised and updated second edition. This is your one-stop, definitive resource as you prepare for a secure and comfortable retirement.Investment and personal finance experts Larry Swedroe and Kevin Grogan present uniquely comprehensive coverage of every important aspect you need to think about as you approach retirement, including: Social Security, Medicare, investment planning strategy, portfolio maintenance, preparing your heirs, retirement issues faced by women, the threat of elder financial abuse, going beyond financials to think about your happiness, and much more.These topics are explained with the help of specialists in each subject. And everything is based on the "science of investing" – evidenced with studies from peer-reviewed journals.Overall, this adds up to a complete retirement guide, packed with the latest and best knowledge. Don't enter your retirement without it.

Chapter 1: Retirement Planning Beyond the Financials

Retirement is one of life’s significant transitions. Virtually everything changes. During your career, you merely need to show up each day to be exposed to many of the things that make up a fulfilling life. Your work gives you a sense of purpose. You are nurtured by the relationships you have with colleagues. You are energized by the self-esteem you achieve because you are good at what you do and others recognize it. You attain a level of financial security from a regular paycheck. You are comforted by the predictable structure of your days, weeks, and years. You are intellectually stimulated by ever-changing circumstances.

One day, all of that is yours. Then, because of a decision by your boss, or “the organization”, or by personal choice, you retire. The day after your retirement party, all that your career provided is gone. You must find your life’s meaning and basis of self-esteem elsewhere. You realize few collegial relationships are really lasting friendships. The security of a regular paycheck must come from other sources. You need to find a way to rebuild a daily, weekly, and yearly structure and to replace the intellectual stimulation that so readily came from your work. Despite being excited about your new phase of life, if you are like most others, you also approach retirement with a healthy dose of anxiety. You may be unaware of the challenges you may face, and you may not be prepared to identify and take advantage of the opportunities that will come your way.

Unless you replace what your career provided, understand and address the challenges, and recognize the opportunities, you and those close to you may not live the retirement you have worked so hard to deserve. Fewer than half of retirees enjoy their first year. Many experience symptoms of depression. The segment of society with the fastest growing divorce rate is couples over 55, reflecting the difficulty of having to live together in new life circumstances.

It is not the intent of sharing all of this to suggest that your retirement will be a disaster. In fact, your retirement can be, and should be, fulfilling, satisfying, and successful. Rather, the intent of making you aware of what you could be facing is to begin a conversation about what you can be doing, starting now, to make your retirement what you want it to be.

As is the case with most endeavors, the best way to prepare for the transition, stave off the challenges, and identify and take advantage of the opportunities, is to develop a written retirement life plan before you retire, practice that plan while you are still working, and have the relevant crucial retirement planning conversations with those closest to you. We will address practicing retirement and crucial conversations later in the chapter. For now, let’s get started on your retirement life planning.

As mentioned in the Introduction, a failure to plan is a plan to fail. And despite most people having extensive planning experience at work (such as business strategies, lesson plans, and customer meetings) and at home (such as vacations, home improvements, and entertaining), most tend not to plan for retirement. Of those who do plan, most focus solely on the financial aspects. While doing so is critical—and we will spend the bulk of this book helping you create your financial plan—it is far from sufficient. In this chapter, we will build a framework upon which you can develop your retirement life plan—beyond the financials.

Importantly, doing so will also enable you to create an even more meaningful financial plan. Your financial advisor will tell you that he or she would prefer you to say, “Here is what I plan to do in retirement. Let’s work together to build a financial plan that supports my life plan.” A less-preferred statement goes something like, “I’m planning to retire. Make sure I do not run out of money.” The reasons, therefore, to have a written retirement life plan are to have a smooth and quick transition into retirement by replacing those important life components that your career provides, to increase the odds you live the retirement you deserve, to have a more robust financial plan, and to enable you to practice retirement while still working.

Why should it be a written plan? If you write your plan, you increase the odds that it will be well thought through and that you will actually live the plan. In addition, you will create something you can show to others, like family and friends, and your advisor, so that they can align it with your financial plan.

A Retirement Vision

You have worked hard to earn a fulfilling retirement, and your investment of time and energy to develop your written plan will enable you to make the rest of your life the best of your life. Consider this vision of retirement.

Envision a time in your life when you have the freedom to choose what to do, when to do it, and with whom you want to do it. It is a time in your life when you are full of energy and contented at the same time. Your life is full of close relationships with family and friends; you are contributing your time and resources to helping others; your days, weeks, months, and years are filled with activities that you love, that help you grow, and that are just plain fun. You awaken each day with a sense of purpose and a positive attitude. You have the resources and general well-being to live the life that makes you happy and can foresee living it well into your future. You take advantage of new-found opportunities and you deal well with life’s inevitable setbacks, because you are resilient and have a plan that helps guide you through them.

Is that the retirement you would like to create and live?

Your Retirement Life Plan

In their book, Your Retirement Quest, which we highly recommend, Alan Spector and Keith Lawrence identify what they refer to as the “10 key elements of a fulfilling retirement.” These components are the building blocks of your retirement life plan. We will review each key element, and as we do, consider two things:

1. How are you positioned to transition into retirement for each key element? Candidly assess which of these statements apply:
   • I have never thought about this key element before, or I have considered it but haven’t really done anything about it.
   • I have positive aspects of this key element in my life, but I certainly have room for improvement.
   • This key element is already a fulfilling part of my life.
2. What would you need to begin doing, or perhaps stop doing, to make each key element a more fulfilling part of your life, especially as you transition into and through retirement?

Once we’ve reviewed all of the key elements, we will discuss some simple tools you can use to develop your written plan.

Key Element—Life Purpose

Many of us characterize our identity by the role we play: teacher, executive, doctor, engineer, pastor… When you retire and that role ends, how do you establish your new identity? What is your purpose in life?

There are a number of online approaches to help you craft your life purpose or life mission statement. And you can be guided by your answers to the following questions: 1) Envision a time when your 15-year-old grandchild asks you, “What has your life been about?” You could answer, “I was an attorney,” but, I am not one any longer. What would you answer that grandchild in language he or she would understand? 2) If you had complete freedom and were told you had a year to live, what would you do with your remaining time and, importantly, why? Create a purpose statement that is meaningful to you and then align your activities to be consistent with that purpose. We discuss this further in the next chapter in the Life Discovery section.

Key Element—Passions

Just as it is important to identify your life purpose and align your activities to it, it is important to identify your passions and pursue them. What are your passions?

What do you love to do? What excites you to look forward to, learn more about, tell others about? What are you doing that makes you lose track of time? What makes you want to jump out of bed in the morning and get started? What are you good at?

If you are still struggling to identify your passions, try asking yourse...

Table of contents

• Contents
• Acknowledgments
• Preface
• Foreword by Wade D. Pfau
• Introduction
• Chapter 1: Retirement Planning Beyond the Financials
• Chapter 2: Discovery: Life and Financial
• Chapter 3: Asset Allocation
• Chapter 4: The Investment Policy Statement and the Care and Maintenance of the Portfolio
• Chapter 5: Monte Carlo Simulations
• Chapter 6: Investment Strategy Part I: Implementing the Investment Plan
• Chapter 7: Investment Strategy Part II: Reducing the Risk of Black Swans
• Chapter 8: IRA and Retirement/Profit Sharing Plans
• Chapter 9: Health Savings Accounts
• Chapter 10: The Asset Location Decision
• Chapter 11: Spend Down Strategies
• Chapter 12: Social Security
• Chapter 13: Medicare
• Chapter 14: Longevity Risk: The Role of Annuities
• Chapter 15: The Role of Insurance: The Management of Risk
• Chapter 16: Reverse Mortgages
• Chapter 17: Women’s Unique Retirement Issues
• Chapter 18: Estate Planning
• Chapter 19: Preparing Your Heirs
• Chapter 20: The Threat of Elder Financial Abuse
• Conclusion
• Appendices
• Appendix A: LifeMap
• Appendix B: Sample Family Mission Statement
• Appendix C: The Mathematics of Asset Location
• Appendix D: Should Investors Prefer Dividend-Paying Stocks?
• Appendix E: Should You Hire a Financial Advisor?
• Appendix F: Implementation: Recommended Mutual Funds and ETFs
• Appendix G: Types of Irrevocable Trusts
• Appendix H: Recommended Reading
• Data Sources
• Publishing details