Table of Contents
Introduction 1
About This Book 2
Foolish Assumptions 2
Icons Used in This Book 2
Beyond the Book 3
Where to Go from Here 3
Part 1 Getting Started 5
Chapter 1 Retirement Planning Is Up to You 7
Blazing Your Own Retirement Plan 8
Measuring Your Lifespan 9
Social Security Administration's Life Expectancy Calculator 10
Bankrate's Life Expectancy Calculator 10
Living to 100 Life Expectancy Calculator 12
Retirement Planning Beginnings: The Pension 12
Changing Times: The 401(k) 13
Behold the power of the 401(k) 17
An opportunity to save 18
Social Security: The De Facto Safety Net 18
Chapter 2 Determining How Much You Spend 21
Finding Out Where Your Money Goes 22
Eyeing your expenses 22
Tracking your money's every move 23
Spending guidelines 24
Measuring Your Spending 25
Using your credit card company or bank's online resources 25
Diving into the world of third-party apps and online tools 26
Checking out other money-tracking options 30
Doing something with all this data 31
Putting Your Spending in Context 31
Using government statistics as a guide 32
Seeing how spending changes as you age 33
Improving Your Numbers 36
Figuring out if your latte is ruining your retirement 36
Finding easy ways to stop wasting money 38
Boosting your income with a side gig 39
Chapter 3 Calculating How Much You Need to Retire 41
Getting to Know the 4 Percent Rule 42
How the 4 percent rule works 43
The magical power of the 4 percent rule 45
Shortcomings of the 4 percent rule 45
Using Online Retirement Calculators 49
Getting started 49
Exploring retirement calculators from mutual fund companies 51
Drilling in with detailed retirement calculators 54
Avoid gambling with retirement: Monte Carlo analysis 55
Understanding Why Starting Early Is Important 57
Compounding: The most powerful force in the universe 57
Inspiration to start retirement planning now 57
The race to $1 million: Doable if you start soon 59
Chapter 4 Choosing the Right Account 61
Retirement Planning in a Nutshell 61
Getting started 62
What about pensions and Social Security? 63
A Great Place to Start: 401(k)s 65
Advantages of 401(k) plans 65
Drawbacks of 401(k) plans 67
The Roth: An interesting twist on retirement savings 68
IRAs: A Cornerstone of Retirement Planning 68
Advantages of IRA plans 69
Drawbacks of IRA plans 70
A few IRA odds and ends 72
Self-Employed Plans 73
The spectacular SEP-IRA 73
The 401(k) for one: A one-participant 401(k) 74
Keeping it SIMPLE 74
What's the Catch? 75
Tax-deferred isn't tax-free 75
Beware the 10 percent early withdrawal penalty 76
Don't mortgage your future: Retirement plan loans 77
Chapter 5 Gauging Your Appetite for Risk 79
Getting a Handle on Your Risk Tolerance 80
Determining your investor type 80
Understanding risk tolerance 82
Looking at risk tolerance differently 83
Using risk-assessment tools 85
The ABCs of Asset Classes 87
Putting stocks in a box 87
Adding bonds 89
Including a few other asset classes 91
Seeing how risk tolerance and returns work together 91
Chapter 6 Opening Your Accounts 93
Getting Your 401(k) Up and Running 94
Understanding target-date funds 96
Knowing the people involved in your 401(k) 97
Getting familiar with your 401(k) plan 97
Plugging into Your IRA 98
Knowing what you'd like to own 98
Choosing someone to handle your IRA 99
Mutual fund companies 99
Traditional and discount online brokerages 102
Robo-advisors 106
Connecting with a Financial Planner 110
Finding a financial planner 111
Deciding what is right for you 113
Part 2 Using Online Resources 115
Chapter 7 Managing and Optimizing Your 401(k) 117
Getting Online 118
Registering for 401(k) access 118
Getting to know your 401(k) tools 122
Checking your performance 124
Checking Your Portfolio Allocation 125
Understanding the key asset classes 126
Looking at your current mix without using a calculator 128
Finding your optimal asset class mix 130
Changing your asset allocation 131
Powering Your 401(k) with Contributions 132
Inspecting your current contribution level 133
Deciding how much to contribute 133
Seeing the power of putting more away 135
Discovering Other Nifty Aspects of Your 401(k) Plan Site 136
Locating information on plan loans and withdrawals 136
Digging into the statements 137
Finding various plan documents 138
Chapter 8 Taking Your IRA to the Next Level 139
Getting Online with Your IRA Provider 140
Opening your IRA account 140
Logging in and looking around 142
Understanding your portfolio holdings 142
Checking Your Portfolio Asset Allocation 143
Understanding correlation 143
Viewing your asset allocation on your provider's website 145
Enhancing your asset allocation 145
Understanding Your IRA Contributions 150
Setting up IRA deposits 150
Roll over Beethoven: IRA rollovers 152
Funding an IRA with a Roth conversion 152
Taking Money out of Your IRA 153
Getting money out early: 72(t) distributions 153
Taking your required minimum distribution 154
Setting up a beneficiary 155
A word about inherited IRAs 155
Chapter 9 Optimizing Your Retirement with Third-Party Offerings 157
Understanding Fees 158
Improving success with lower fees 158
Knowing the types of fees 159
Uncovering the shocking truth about fees 160
Examining Your Portfolio Using Morningstar 161
Pulling up individual funds that you own 162
Putting your entire portfolio to the test 169
Putting Your401(k) Under the BrightScope Microscope 170
BrightScoping your 401(k) 171
Learning more about your funds 173
Getting to know your advisor 173
Grading Your Retirement Plans in Other Ways 174
X marks the spot for a better 401(k) 174
Getting up close and personal with Personal Capital 175
Chapter 10 Digging into Social Security 177
Discovering All the Benefits of Social Security 178
Disability coverage (SSDI): The forgotten bonus of Social Security 178
Medicare for All 180
Survivors benefits 181
Retirement benefits 181
Managing Social Security Information Online 183
Examining what you're paying into Social Security 183
Signing up for and accessing Social Security information online 185
Understanding your history of Social Security credits 187
Planning for Social Security in Retirement 189
Claiming your Social Security benefit 191
Applying for benefits 193
Part 3 Maximizing Your Retirement Knowledge 195
Chapter 11 Balancing Retirement Savings with Other Needs 197
Cleaning Up Your Personal Balance Sheet 198
Building an emergency fund 199
Cutting the debt anchor loose 206
Opening a taxable brokerage account 209
Saving for a Home 211
Seeing how a retirement plan can help 211
Knowing how much you can afford 212
Budgeting for homeownership 213
Saving for College 215
Understanding why your help matters 216
Choosing a college-savings account 217
Choosing a 529 provider 218
Figuring out how much you should save 219
Chapter 12 Fine-Tuning Your Asset Allocation 221
Exploring Stock Strategies 222
Understanding small versus large companies 223
Knowing where your money is: international, global, and emerging markets 225
Trusting real estate investment trusts 227
Diving for Income 229
Getting to know bonds better 230
Going to town with municipal bonds 232
Using Morningstar to study bonds 233
It's Easy Being Green: The Rise of ESG 235
Deciding whether to include ESG in your retirement plan 236
Understanding ESG investments 237
Buying into an ESG 238
Chapter 13 Keeping Your Retirement on Track 241
Tracking Your Portfolio's Health 242
Measuring returns and asset allocation 243
Modifying your plan 248
Tracking and Updating Your Goals 250
Assessing your goals 251
Seeing if your goals change your plans 252
Tracking retirement progress and milestones 256
Chapter 14 Gearing Up for Retirement 259
Creating a Retirement Budget 260
Test-driving your budget 260
Keeping your stock exposure 262
Waiting until 70 to collect Social Security 262
Having a healthcare plan 263
Knowing the bucket strategy 264
Working longer 264
Thinking about Annuities 266
Understanding the types of annuities 267
Finding an immediate annuity 269
Running sample annuity numbers 271
Unlocking a Goldmine: Reverse Mortgage 273
Understanding reverse mortgages 274
Understanding the drawbacks of reverse mortgages 275
Using a reverse mortgage 275
Chapter 15 Understanding Pensions 277
Checking a Private Pension's Funding 278
Understanding the Problems with Public Pensions 279
Understanding Pensions Inside-Out 282
Choosing a lump sum versus ongoing payments 282
Choosing single life versus survivor 284
Managing Your Pension 287
Using online tools 287
Calculating the value of a lump sum payment 288
Rolling over a pension 291
Chapter 16 Getting Insurance 293
Building a Health Insurance Plan 294
Unlocking the health savings account 294
Understanding Medicare supplemental plans 298
Exploring the exchanges 299
Considering long-term care insurance 302
Defending Your Money with Insurance 303
Checking property and casualty coverages 303
Getting ready for a rainy day: Umbrella insurance 304
Protecting your family with life insurance 306
Part 4 The Part of Tens 311
Chapter 17 Top Ten Retirement Mistakes 313
Waiting to Save 313
Ignoring Fees 314
Not Securing Your Information 314
Prioritizing College Savings Over Retirement 314
Not Diversifying Your Portfolio 315
Waiting for the "Right Time" to Invest 315
Having Inadequate Insurance 315
Taking Money from Your Accounts Early 315
Not Checking Your Social Security Benefit 316
Not Thinking about Income 316
Chapter 18 Top Ten Retirement Questions 317
How Much Money Do I Need? 318
Is Medicare Enough? 318
What Will I Do with My Free Time? 319
Will I Run Out of Money? 319
Should I Have a Roth or Traditional IRA? 319
How Good Is My 401 (k)? 320
What's an RMD? 320
Can Retirement Rules Change? 321
What Can I Do If I'm Near Retirement Age and Don't Have a Plan? 321
Do I Need a Financial Advisor? 322
Index 323
