The Bogleheads' Guide to Retirement Planning by Taylor Larimore, Richard A. Ferri, Mel Lindauer, Laura F. Dogu, John C. Bogle Read Free Book Online Page B
is needed to meet your needs may help you stay on track for retirement.
Changes in the law or the tax code are also unpredictable events that could affect disposable income needed in retirement. Changes that have been proposed in the past, such as increasing income taxes or capital gains taxes or reducing the cost of living adjustment for Social Security benefits would also have an impact on a retiree’s standard of living. People approaching retirement and those already retired should be flexible in their planning and living to adjust to changes as they occur. Tax law changes may mean a few years of no inflationary increase in annual withdrawals from retirement funds and/or reductions in some discretionary expenses.
Health-care costs in retirement represent both the greatest known additional expense for retirees and the greatest potentially unknown cost. Be mindful that cost of coverage is likely to continue to increase in the years ahead and that the benefits from government programs are apt to decrease. It is prudent for retirees to overestimate health-care costs and underestimate benefits from government health insurance programs.
Although computer models can provide a withdrawal strategy based on inputs, they cannot anticipate scenarios where future investment returns and rates of inflation are vastly different from those of the past or tell you what the cost of health care will be when you really need it. The only way to protect against these unknowns is to rework your plan annually to reflect the new realities.
ADDITIONAL RESOURCES
General Planning for Retirement
• Richard N. Bolles and John E. Nelson, What Color Is Your Parachute? In Retirement. Berkeley, CA: Ten Speed Press, 2007. The most introspective book in terms of planning what to do in retirement.
• Jean Chatzky, You Don’t Have to Be Rich: Comfort, Happiness, and Financial Security on Your Own Terms. New York: Portfolio, Penguin Group USA, 2003. This book is a more balanced mix of the two topics.
• Lee Eisenberg, The Number: A Completely Different Way to Think about the Rest of Your Life. New York: Free Press, 2006. An autobiographical style with interesting profiles and case studies.
Financial Planning for Retirement
• Taylor Larimore, Mel Lindauer, and Michael LeBoeuf, The Bogleheads’ Guide to Investing . Hoboken, NJ: John Wiley & Sons, 2006. A complete guide to investing principles.
• Henry Hebler, Getting Started in a Financially Secure Retirement. Hoboken, NJ: John Wiley & Sons, 2007. A well-rounded guide to financial planning and investing for retirement.
• Ed Slott, Your Complete Retirement Planning Road Map. New York: Ballantine Books, 2007. More of a reference book than a narrative, with many useful forms and checklists covering a variety of retirement planning situations.
CHAPTER SUMMARY
Saving for retirement should start at an early age, as soon as a person has steady income from employment. Planning for retirement is done later in life, once a person has lived a good many years and is comfortable with present living standards. Everyone over the age of 50 should have a written plan that lays out goals for retirement living and the financing that will support them. Younger planners, too, should have a written plan. Their plan should focus more on examining their personal and financial values, committing to a plan with their partner, establishing some long-range financial goals, and indicating the strategies they will use to achieve them.
If you are within a decade of retirement, your planning should add detail about what you expect to do during your postretirement years. Your annual financial plan adjustments should reflect changes in your life and explore additional strategies for achieving your financial goals if it appears you will fall short. Creating a clear vision of your future life provides the positive affirmation you need to choose the most meaningful course of action today, without a feeling of regret or
Changes in the law or the tax code are also unpredictable events that could affect disposable income needed in retirement. Changes that have been proposed in the past, such as increasing income taxes or capital gains taxes or reducing the cost of living adjustment for Social Security benefits would also have an impact on a retiree’s standard of living. People approaching retirement and those already retired should be flexible in their planning and living to adjust to changes as they occur. Tax law changes may mean a few years of no inflationary increase in annual withdrawals from retirement funds and/or reductions in some discretionary expenses.
Health-care costs in retirement represent both the greatest known additional expense for retirees and the greatest potentially unknown cost. Be mindful that cost of coverage is likely to continue to increase in the years ahead and that the benefits from government programs are apt to decrease. It is prudent for retirees to overestimate health-care costs and underestimate benefits from government health insurance programs.
Although computer models can provide a withdrawal strategy based on inputs, they cannot anticipate scenarios where future investment returns and rates of inflation are vastly different from those of the past or tell you what the cost of health care will be when you really need it. The only way to protect against these unknowns is to rework your plan annually to reflect the new realities.
ADDITIONAL RESOURCES
General Planning for Retirement
• Richard N. Bolles and John E. Nelson, What Color Is Your Parachute? In Retirement. Berkeley, CA: Ten Speed Press, 2007. The most introspective book in terms of planning what to do in retirement.
• Jean Chatzky, You Don’t Have to Be Rich: Comfort, Happiness, and Financial Security on Your Own Terms. New York: Portfolio, Penguin Group USA, 2003. This book is a more balanced mix of the two topics.
• Lee Eisenberg, The Number: A Completely Different Way to Think about the Rest of Your Life. New York: Free Press, 2006. An autobiographical style with interesting profiles and case studies.
Financial Planning for Retirement
• Taylor Larimore, Mel Lindauer, and Michael LeBoeuf, The Bogleheads’ Guide to Investing . Hoboken, NJ: John Wiley & Sons, 2006. A complete guide to investing principles.
• Henry Hebler, Getting Started in a Financially Secure Retirement. Hoboken, NJ: John Wiley & Sons, 2007. A well-rounded guide to financial planning and investing for retirement.
• Ed Slott, Your Complete Retirement Planning Road Map. New York: Ballantine Books, 2007. More of a reference book than a narrative, with many useful forms and checklists covering a variety of retirement planning situations.
CHAPTER SUMMARY
Saving for retirement should start at an early age, as soon as a person has steady income from employment. Planning for retirement is done later in life, once a person has lived a good many years and is comfortable with present living standards. Everyone over the age of 50 should have a written plan that lays out goals for retirement living and the financing that will support them. Younger planners, too, should have a written plan. Their plan should focus more on examining their personal and financial values, committing to a plan with their partner, establishing some long-range financial goals, and indicating the strategies they will use to achieve them.
If you are within a decade of retirement, your planning should add detail about what you expect to do during your postretirement years. Your annual financial plan adjustments should reflect changes in your life and explore additional strategies for achieving your financial goals if it appears you will fall short. Creating a clear vision of your future life provides the positive affirmation you need to choose the most meaningful course of action today, without a feeling of regret or
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