Managing your financial life is not just about money.

Archives for Planning For the Future

Sequence Risk & Emergency Reserves in Retirement

This is the eleventh article in a series.  In this piece I will answer questions 24 and 25 of 32 questions that you must answer before choosing to retire What do I do about “sequence risk”? There are some things you can’t control in retirement, and “sequence risk” is one of the biggies!  Say that you assumed a 4% per year return from your retirement nest egg to make retirement work.  If you earn 8% per year for the first five years of retirement, you are a happy person and probably contemplating spending more in retirement.  If you average a
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How Big Does My Nest Egg Have To Be To Last For My Lifetime?

This is article number ten in a series. In this piece I will answer questions 21, 22 and 23 of 32 questions you must answer before deciding when to retire, How much income, before and after taxes, will I need from my nest egg? The answer is a process that is just simple math. Take the total guaranteed before tax income in retirement (usually social security and/or a pension) and have your tax preparer do a hypothetical tax return for you for your first full year of retirement.  What is left after federal and state taxes is what you have
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What Expenses Don’t I Know About in Retirement?

This is the ninth article in a series on retirement.  In this piece I will answer questions 17, 18, 19 and 20 of 32 questions everyone must answer before deciding on retirement. What expenses don’t I know about in retirement? I have talked about estimated retirement expenses in question 13.  However, there are some things that require repeating and more explanation. Many folks under-estimate the amount of money that will lavish upon kids and grandkids. If you don’t have grandchildren, you have no clue what is coming and how much it will change your life (and your checkbook).  Talk to
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Healthcare Expenses, Nursing Home Costs, & Adult Children Who Are Still Dependent On You.

This is the eighth article in the series on retirement.  I will address questions 14, 15 and 16 of 32 questions that you must answer before deciding to retire. What do I do about healthcare expenses? What you do is make a really good guess about what they are going to be in retirement and hope that you are correct.  The good news is that just about everyone who turns 65 will qualify for Medicare.  And Medicare is inexpensive.  The bad news is that Medicare does not cover everything, and you will need a supplemental insurance policy to cover the
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What Will My Expenses Be In Retirement?

This is the seventh article in this series on retirement.  I will deal with questions 11, 12, and 13 of 32 questions that you must be able to answer before you retire. What is my income now? You need to know your net, spendable income now when planning for retirement.  Grab a copy of your most recent Federal tax return.  Write down your total gross income on a piece of paper.  Then put the following numbers below your income.  Find your total tax due the IRS.  Next go to your Massachusetts tax return and find your total Massachusetts tax due. 
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Savings vs Paying Debt

By Alyssa McNamara Reed, CFP® I often get the question “what’s more important- paying down debt or saving?” The answer is, of course, different for everyone, but here is some generic advice. If you have high interest rate debt (by that I mostly mean credit card debt), absolutely pay that off before you start saving. Paying 20% interest on a debt (that is not tax-deductible to boot) is an enormous waste of money. I suppose it goes without saying, but once you’re past that debt, don’t rely on cards again unless you can pay them off immediately. The caveat to
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Using (or not!) Home Equity in Retirement

This is the sixth article in the series. In this piece I will answer questions 9 and 10 of 32 very important questions people need to answer before retiring. Do I plan to use equity in my home for retirement? This is a tricky and delicate question.  In our practice, when developing a retirement scenario for a client, we start with the assumption that you will not use the equity in the home for retirement needs.  That is another way of saying that hopefully you can leave the house to the kids.  Lots of times, that scenario does not work. 
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Maintaining Property in Retirement

This is the fifth article in the series. In this piece I will answer questions 7 and 8 of 32 very important questions people need to answer before retiring. If I am living in my retirement home, how much do I have to spend to get it ready for retirement? If you are going to be living in your existing home forever, then you want it to be just right. That will cost money, and probably more than you are thinking. Updating kitchens and bathrooms come to mind. A first floor bedroom is probably a good idea.  The yard, the
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How long will I live?

This is the fourth article in the series. In this piece I will answer questions 5 and 6 of 32 very important questions people need to answer before retiring. How long will I live? Crafting a retirement plan would be a whole lot easier if you knew the answer to this question.  The answer depends upon your age, your health, your genes, your socio-economic status, luck, and probably a few other factors that I can’t think of right now. The answer is who knows? But, when it comes to retirement planning, you have to make a guess. The Social Security
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Do I chose to work part-time in retirement?

This is article number three in a series on retirement. In this article I answer questions 3 and 4 of 32 questions you need to answer before you retire. I have no idea how many articles will follow this one, but eventually I will address all 32 questions. Do I choose to work part-time in retirement? No, this is not a dumb question.  More and more folks I work with choose to work some for the first few years of retirement.  Some just need to keep active, and those part time earnings get used for fun things, or kids and
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