What you need to know about retirement
Christine Benz, the director of personal finance and retirement planning for Morningstar, has written an excellent book that I highly recommend. The book, How to Retire: 20 Lessons for a Happy, Successful and Wealthy Retirement, is based on interviews with leading experts in all phases of retirement.
What makes Benz’s book different from most retirement planning guides is that she doesn’t focus only on the financial aspects of retirement. She interviews knowledgeable individuals who are able to discuss quality-of-life issues that are crucial to happiness in later life, including establishing important relationships.
For example, in the closing chapter, she interviews a physician who gave up a high-paying position to focus on lessons he learned about living a productive life from individuals who were at the end of their lives.
Many of the experts whom Benz interviewed, and others who have recommended this book, have written their own books that I previously have recommended because of their expertise.
These authors include Ed Slott, Wade Pfau and Mary Beth Franklin, who have all written excellent retirement planning books.
Here are some of the topics Benz discusses with experts that will help you plan a more successful retirement:
Asset allocation
Benz interviewed William Bernstein, who recommends that in order to change your portfolio effectively as you enter retirement, you should ask yourself four questions:
What is your planned spending rate? After answering this question, you would know how aggressive you have to be in structuring your portfolio.
At what age do you plan to retire? The expected length of your retirement also dictates how aggressive your portfolio should be.
What is your risk tolerance? If you are very conservative and want to avoid large fluctuations in value, this will determine how conservative your portfolio should be.
Finally, what balance do you wish to strike between making a bequest with your money and “personal safety”? Bernstein uses the example of an individual who is willing to invest conservatively because he wants to be able to endow a wing to a hospital.
Plan for healthcare
Benz interviewed Carolyn McClanahan, who emphasizes the importance of having a good primary doctor. She recommends a primary doctor who is a “board-certified geriatrician.”
McClanahan also stresses the importance of geography. Make sure that you select a retirement location in which there is no shortage of doctors.
She reviews the pros and cons of different insurance options. If you select a plan that doesn’t cover dental, vision and hearing, you should have an emergency fund to cover such costs.
McClanahan also points out the importance of having long-term care insurance, noting that traditional Medicare does not cover long-term care in a nursing facility.
Create an estate plan
In one chapter, Benz discusses the importance of a comprehensive estate plan with Jenifer Rozelle, who points out that a basic estate plan has three sets of documents.
The first set has to do with healthcare. It consists of the appointment of a healthcare representative, a healthcare power of attorney and advanced directive, and ideally a living will.
The second set refers to financial power of attorney. It is important that you select an individual to make legal and financial decisions before you may be incapacitated.
The third set is the last will and testament, which dictates who receives what, and who is in charge after you die. She points out that some individuals may have a need for trust documents, and you should ask an estate planning attorney whether they apply to your situation.
The book covers all other important issues relevant to retirement, such as Social Security, taxes and housing. And every important financial issue is covered by an expert. You will find this book to be a great addition to your retirement library.
Elliot Raphaelson welcomes your questions and comments at raphelliot@gmail.com.
© 2024 Elliot Raphaelson. Distributed by Tribune Content Agency, LLC.
