Famed Personal Finance Guru Warns Of Making Mistakes In Retiring

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Well-known financial journalist and leading commentator on personal finance Jane Bryant Quinn recently offered advice on avoiding retirement mistakes.
The bad news is, that she leads off the article for the American Association of Retired Persons magazine with a warning against taking that important step too early.
“Before you retire, figure out a solid retirement budget first,” Quinn wrote. “Just by working a few more years, you can make your future more secure. If you lose your job, look for part-time work.”
Quinn goes on to advise retiring with outstanding credit card debt and car loans.
“And even consider prepaying your mortgage, too,” she suggested.
Further the journalist advises against accessing Social Security when it becomes available as opposed to when it’s advisable.
“It’s tempting to grab your Social Security benefit as soon as it’s there, at age 62,” Quinn wrote. “If you do, however, the amount of your benefit will be cut by 25 percent, a cut that affects you for life.”
While cash and bonds can help a retiree through the initial years, investing in stocks is vital for the period after that, according to the commentator.
In addition, Quinn suggests that people expect to live to a ripe old age, and plan accordingly so that if and when they reach 95 they are still in good financial shape.
Finally, Quinn warns against failing to protect a spouse.
“If you have a pension, it should cover your spouse’s life as well as yours, unless your spouse has plenty of money of his or her own.”

Not All Who Want To Retire Early Are Ready For It

Many people long for early retirement, but not very many are actually prepared for it, according to a recent article in Forbes magazine.

“Many Americans seem to be turning a blind eye to good advice, instead doing what they want to do rather than what may be best for them,” according to the piece “One particularly strong example? Americans are retiring early despite the fact that many are unprepared.”
The story cites a new study from the Center for Retirement Research at Boston College that shows men are now retiring at an average age of 64.
“This retirement age has remained relatively unchanged for four decades, despite the retirement landscape changing around us. The news isn’t all good, however. According to the Employee Benefit Research Institute 2014 Retirement Confidence Survey, 65% percent of pre-retirees plan to work in retirement, yet only 27 percent actually do. Only 44 percent of workers have actually calculated how much they might need to have a comfortable retirement.”
Monthly Social Security benefits, the story states, using statistics from the National Academy of Social Insurance, can be 76 percent higher for those who wait to retire until they are 70 rather than at 62.
“The bottom line is that you may be able to retire in your early 60s and you may not,” the article concludes. “Before you do, instead of ignoring advice … solicit advice from a qualified advisor and take it to heart.

Act Would Recognize Sacrifices Of Caregivers

Although it would appear, in this political day and age, to have much chance of passage, a New York congresswoman showed some real courage in the summer when she introduced the Social Security Caregiver Credit Act.
http://gty.im/103022754
The measure, if passed, would offer some small attempt to make whole wage earners who forego income to care for their children or, increasingly, elderly parents or other relatives. Since Social Security payments are based solely on income, and not acts of kindness or meeting familial obligations, caregivers often face a grim future when it’s their turn to retire.
On the website of the National Organization for Women, which backs the measure because caregivers are disproportionately female, the act introduced by U.S. Rep. Nita M. Lowey is recognized for its fairness.
“The caregiver credit option is a responsible preventive measure,” the site states. “It would provide improved retirement security for millions of Americans, especially women, whom the caregiver role often falls upon, and recognize the valuable caregiving services that they provide for our country’s children and the growing elderly population.”
“It’s hard to feel optimistic about its passage in this political environment,” Paula Span wrote a The New York Times article about the measure. “But you can’t really argue with the problem it tries to address. The toll that family caregiving can take isn’t only emotional and physical; it’s also financial, but not always in obvious ways.
“The groceries you pick up on the way to see your mother, the utility bills you quietly pay for your aunt, you’re aware of those. If you cut back your hours, turn down promotions or leave your job, as some caregivers feel forced to, you’re keenly conscious of your lost income.
“But I wonder how many people consider the ways that their own retirements, years down the road, may suffer. The pressures of caring for a disabled or dependent family member can reduce Social Security income for the rest of the caregiver’s life.”
The impact can be profound, according to the article.
“A MetLife study in 2011, based on data from the national Health and Retirement Study, estimated that men who reduced work hours to provide care for parents received almost $38,000 less in Social Security benefits,” Span continued. “If they stopped working, they gave up more than $144,000. The damage from cutting back on work was worse for women: they lost more than $64,000 in Social Security benefits. Leaving the work force to care for a parent cost them more than $131,000 in addition to the lost wages and, sometimes, pension contributions themselves.”
“We should ensure that caregivers won’t have to be torn by the impossible choice of taking care of a family member, or earning less for themselves and their family,” Lowey stated via email