Table of Contents
Preface to the Revised and Updated Edition 7
Introduction 9
Part 1 The Nitty-Gritty of Retirement Finances 11
Chapter 1 How Far Away Are You? A Realistic Definition of Retirement 13
Getting Ready for Retirement in the Next Five Years 14
Chapter 1 Takeaways 18
Chapter 2 Saving and Budgeting for the Next Five Years: Maximizing Your Savings 19
Maximize Your Employer's 401 (k) Contribution Match 20
Maximize Retirement Contributions 20
Reduce Your Expenses 22
Ask the Expert 23
Budgeting Before Retirement 24
Budget Basics 25
Needs versus Wants 31
Taking Another Look at Expenses 33
Balancing Your Budget 37
Chapter 2 Takeaways 40
Chapter 3 Income in Retirement 41
Savings versus Income 41
The 4 Percent Withdrawal Rule 42
Required Minimum Distributions 50
Annuities 53
Thinking about Mortality 60
Chapter 3 Takeaways 61
Chapter 4 Find the Right Financial Planner 63
Whom Not to Trust 64
Types of Financial Advisers 65
Financial Planners 65
Insurance Agents 69
Registered Investment Advisers 70
Registered Representatives 71
Interview Questions for Prospective Financial Advisers 73
Chapter 4 Takeaways 75
Part 2 The Government Giveth (and taketh away) 77
Chapter 5 What to Expert from Social Security 79
The Mechanics Behind Social Security 80
How Social Security Works for Beneficiaries 82
Spousal and Survivor Benefits 84
Divorce and Spousal Benefits 85
Survivor Benefits 85
How Working in Retirement Affects Your Benefits 86
Taxes and Your Social Security Benefits 87
Applying for Benefits 88
Chapter 5 Takeaways 89
Chapter 6 Taxes and Your Retirement Income 91
Social Security Income 92
Income from an Employer Pension Plan 97
401 (k) and Traditional IRA Distributions 97
Roth IRAs and Roth 401 (k)s 98
Taxable Investments: Stocks, Bonds, and Mutual Funds 99
Annuities 100
Deferred Annuities 101
How to Mitigate Your Tax Burden 102
Chapter 6 Takeaways 105
Chapter 7 What to Expect from Medicare 107
Understanding Original Medicare 107
Medicare Part A 108
Skilled Nursing Facility Care 112
Home Healthcare 113
Hospice Care 114
Medicare Part B 114
Understanding Medicare Assignment and Medicare-Approved Amounts 115
Enrolling in Original Medicare 118
Medicare Advantage and Medicare Prescription Drug Coverage 120
Medicare Part D 124
Chapter 7 Takeaways 127
Chapter 8 Planning for Healthcare Expenses in Retirement 129
Medicare Supplement Insurance, aka Medigap 130
Other Insurance Issues to Consider 134
Disability Insurance 135
Long-Term Care Insurance 137
Steps to Take Before Retirement to Keep Your Finances Healthy 141
Using a Health Savings Account for Retirement Healthcare Savings 141
Using a Roth IRA for Retirement Healthcare Savings 144
Healthcare Options If You Retire Before Sixty-Five 145
Individual Coverage Through the ACA's Health Insurance Marketplace 148
Understanding the ACA's Health Insurance Marketplace 148
Chapter 8 Takeaways 151
Part 3 Home, Family, and other Considerations 153
Chapter 9 Housing in Retirement 155
Have You Paid Off Your Mortgage? 155
Deciding to Stay Put 157
What about a Reverse Mortgage? 159
Deciding to Downsize 164
Deciding Whether to Rent or Buy 165
Retirement Communities 166
Chapter 9 Takeaways 169
Chapter 10 The Family Fortunes 171
Prioritizing Your Retirement 171
Financial Planning with Your Family in Mind 173
Life Insurance and Retirement 173
Estate Planning 175
Chapter 10 Takeaways 181
Chapter 11 Creating a Budget on a Retirement Income 183
Chapter 11 Takeaways 191
Chapter 12 Common Retirement Pitfalls 193
Retirement Pitfall #1: Relying on Factors Outside of Your Control 194
Retirement Pitfall #2: Overreacting to Market Volatility 195
Retirement Pitfall #3: Inactivity 196
Retirement Pitfall #4: Retiring Without Your First Three Years' Income Set Aside 197
Retirement Pitfall #5: Taking a Loan from Your 401 (k) 198
Retirement Pitfall #6: Taking Money from Your Retirement Plan Prior to Age Fifty-Nine-and-a-Half 198
Retirement Pitfall #7: Forgetting to Account for Healthcare Costs 199
Retirement Pitfall #8: Carrying Debt Into Retirement 200
Retirement Pitfall #9: Taking Social Security Too Early 201
Retirement Pitfall #10: Scams 201
Chapter 12 Takeaways 204
Chapter 13 If You Don't Have Enough Saved 205
What Not to Do 207
Option 1 Work Longer 208
Option 2 Generate Income in Retirement 211
Option 3 Cut Your Spending to the Bone 212
Option 4 Create a "Plan B" Retirement 215
Get Where You're Going 218
Chapter 13 Takeaways 218
Appendix A The Retirement Readiness Checklist 220
What Will Your Ideal Retirement Look Like? 220
Income in Retirement 220
Calculate Your Projected Nest Egg 221
Social Security Income 221
Healthcare in Retirement 222
Life Insurance 222
Estate Planning 223
Appendix B The Five-Year Syllabus 224
Appendix C The Age-Based Syllabus 229
Bibliography 230
Index 235
