, Newburyport, MA


October 4, 2011

The graying of retirement pictures

The latest malaise in the markets has led to the detrimental shortsightedness of prospective retirees. Stated less politely, many in their 50s and 60s are doing stupid things financially right now. They are allowing near-term market behavior to influence how they manage their financial futures long-term.

There are many small steps they are taking now that will trip them up later.

Here are a few small steps that should improve the retirement picture for those now in their 50s or 60s.

If you are married, talk frankly and clearly with your spouse about how prepared you want to be when the time comes that neither of you is working. If you cannot agree on a clear financial path forward, then get help. Clarity of vision will reduce a lot of angst, but this is a difficult first step, especially if you are apprehensive about seeking qualified help.

If you are not married, you still need clarity of vision and should not hesitate to seek professional counsel.

Next step: Avoid making irrevocable decisions. The two most common irrevocable retirement decisions made prematurely and sometimes hastily are starting Social Security benefits sooner than absolutely necessary and getting sold on the tinsel of annuities. These are two decisions that cannot easily be reversed. Enter into each of them cautiously.

The ideal time to initiate Social Security benefits is at age 70, unless you are in poor health. The ideal time, if ever, to enter into an annuity contract is if your Social Security benefit is insufficient to cover your essential, non-discretionary retirement expenses.

The worst time to enter into an annuity contract is out of fear of market volatility and with a sense an annuity will preserve the value of your savings. If you want pure preservation, then keep your money in the bank.

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