Five ways to make your nest egg last a lifetime
Marketwatch, September 17th, 2009
Back in the good old days, before the crisis of 2008-09, many experts
suggested that all you needed to do was withdraw 4% per year, adjusted
for inflation, from your nest egg. That strategy, experts said, was a
near guarantee that your nest egg would last a lifetime.
Well, go tell that to the guy selling apples and pencils on the street corner.
Yes, conventional wisdom has proven to be more conventional than
wise. And now everyone is trying to figure out the best way to turn a
nest egg into an income stream that will last throughout retirement.
And that includes AARP, which this week released two tip sheets that
"challenge conventional thinking and offer general guidance about how
to make the best decision for you and your circumstances."
One of the tip sheets, "Making Your Nest Egg Last a Lifetime," which
was written by Anthony Webb of the Center for Retirement Research at
Boston College, suggests the following:
1. Delay claiming Social Security
Retirees and would-be retirees need to consider matching their fixed
and, best-case, inflation-adjusted sources of income against their
fixed expenses. And one way to create the best inflation-adjusted
source of income at the moment is to delay taking Social Security for
as long as possible, certainly at least until your full retirement age
if not longer, said Janet McCubbin, director of financial security at
AARP's Public Policy Institute.
At the moment, many people claim Social Security -- even though it
means a reduced benefit -- at age 62, using the faulty logic that they
may not live past the so-called break-even point. The break-even point
is the date at which the sum of your reduced early benefits no longer
exceeds what you would have drawn with the heftier, delayed benefits.
(There are plenty of Wed-based calculators to help you figure your
break-even age.)
Read more of this article.About Reverse Mortgages: Learn all about reverse mortgages at NewRetirement.com
Professional Financial Advisors: Find out what a financial advisor can do for you at NewRetirement.com.