Thursday, December 17, 2015

5 Tips for Charting Your Retirement Lifestyle

By Walter Updegrave
RealDealRetirement @RealDealRetire

You probably already devote considerable attention to the financial side of retirement planning: how much to save, how to invest, different ways of turning your nest egg into a reliable retirement income, etc. But have you done any retirement lifestyle planning?

Unlike financial planning, lifestyle planning focuses less on money and more on how you’ll actually live your life once you retire.

And just as it’s essential to know whether you’ve got the financial resources to call it a career, it’s equally important to be sure you’re ready to make the lifestyle transition from the work-a-day world to post-career life. You’re going to be spending a good part of your life in retirement. Without the framework of a job to provide structure each day, you’re going to have to find new ways of spending your time that will be satisfying, meaningful and fulfilling.

Of course, the lifestyle you’ll live in retirement is also linked to your finances. You’ll need a much larger nest egg if you expect to travel frequently than if you plan to live a laid-back lifestyle close to home. Ditto if you go into retirement with a mortgage or other debt.
In short, financial planning and lifestyle planning really complement each other. You can’t really do either justice without considering the other.

Here are five tips for getting a start on this crucial aspect of retirement planning:

1. Think Big: One of the most important questions you’ll face in retirement is where you want to live. Will you stay in the same city and neighborhood you’re living in now, or relocate for a change of pace or perhaps to save some money? And whether you stay where you are or move, you’ll also want to consider whether to downsize to a smaller place that requires less maintenance and upkeep.
On the relocation issue, you can check out any number the of “Best Places To Retire”  lists that abound on the Net. If nothing else, you’ll get a good sense of the options available. You can then assess living costs at a site like Sperling’s Best Places. As for downsizing, you can scout out real estate prices in different areas by going to a site like Zillow, and then following up with a local real estate agent to get a more detailed assessment of housing and living costs.

2. And Then Think Small: Wherever you choose to live during retirement, you’ll also need to put some thought into how you’ll spend those years. Here, I’m talking about the small-picture issue of what you’ll actually do day-to-day now that a job won’t be soaking up eight or more hours of your time and attention each day.

Going to a tool like Ready-2-Retire, which you’ll find in Real Deal Retirement’s Retirement Toolbox, can help you sharpen your retirement vision. Ready-2-Retire offers icons representing 24 different retirement activities (travel, returning to school, hobbies and creative interests, etc.) that you then drag and drop into three different baskets—Very Important, Moderately Important or Trash—based on how important each is to you. This exercise doesn’t necessary provide actual structure, but it can help you replace vague musing about how you might spend your time with some actual activities.
For a more in-depth and nuanced assessment of what your post-career life might involve, you may want to check out one of the growing number of pre-retirement seminars. One example is the Paths to Creative Retirement workshops offered by the Osher Lifelong Learning Institute at the University of North Carolina-Asheville, where participants explore retirement options and receive guidance on managing the transition to retirement.

3. Do a Trial Run: Don’t stop at a tool or workshop. The only way you can realty tell whether your vision of retirement is realistic is to give it a test drive. Thinking of moving to Key West and starting a small business selling those terrific photos you took of the sunset when you vacationed there for a week last year? Try renting a house in the Keys for a few months and setting up shop to find out if there’s actually a demand for those pictures, not to mention whether the laid-back vibe will lose its appeal after a few weeks. Better to find out whether your vision of an ideal retirement jibes with reality before you relocate than after.

4. Crunch Some Numbers: Once you’ve decided how you want to live in retirement, you’ve got to make sure you can afford that lifestyle. Can the combination of Social Security payments, your pension and reasonable draws from your 401(k) or IRA really support your condo in the city, that mountaintop retreat you want to buy and all the traveling you plan to do?
The only way to really know is to estimate the cost and compare it to the income your nest egg and other sources will generate. If the outlays for your dream retirement exceed your likely income, you can either dial back your “must-have” list a bit, or put in a few more years on the job so a larger nest egg and higher Social Security payments can give you the cash flow to do the Full Monty.

5. Assess Your Social Connections: As important as financial security is in retirement, a Merrill Lynch study  found that, after retiring, people missed the social connections they had through work even more than they missed the regular paychecks. Indeed, other research  also shows that retirees who felt satisfied with the number of friends they had were almost three times more likely to be happy than those who felt they came up short on the friendship front. Along the same lines, retirees who volunteered or attended some form of worship were likely to feel more content than those who rarely or never volunteered or attended religious services.

I’m not at all suggesting that you’re doomed to a life of misery if you’re not a social extrovert or you’re not particularly religious or spiritual. But having a social network of friends and family that can provide companionship and support in times of need can be as important as having financial reserves that you can fall back on.

Walter Updegrave is the editor of If you have a question on retirement or investing that you would like Walter to answer online, send it to him at

Thursday, December 3, 2015

4 Tips for Finding The Right Financial Adviser

By Walter Updegrave
RealDealRetirement @RealDealRetire
For years the Securities and Exchange Commission and Department of Labor have been yakking about coming up with ways to better protect investors from adviser conflicts of conflicts. And who knows, maybe they’ll get around to doing so in our lifetime. In the meantime, here are four tips to help you find a pro who’s competent, honest and willing to work for a reasonable fee.

1. Start with questions to yourself. 
The adviser that’s the right fit for you can depend a lot on what kind of assistance you need. So before you begin your search for financial help, take a little time to ask yourself exactly what it is you want an adviser to do for you.
For example, are looking someone who can do a comprehensive evaluation of your finances, assisting you with everything from developing a retirement plan to assuring you’re saving enough and making sure you have sufficient life and disability insurance? Than in that case you probably want to deal with a certified financial planner, a pro who can take a comprehensive look at all of your financial needs.

If, on the other hand, you’re primarily looking for investing advice, say, someone who can create a portfolio of mutual funds or ETFs and manage it for you, then the portfolio advisory services that large investment firms like Vanguard, Fidelity, Schwab and T. Rowe Price may be a better fit. Or, for that matter, if you’re looking to keep costs way down and you’re okay getting your investing advice mostly online, you might want to consider a robo-adviser, one of the new breed of investment management services that use algorithms to create and monitor portfolios.
The point is that just as you would think of how you’re going to use a car before you go shopping for one, so too should you know what sort of financial help you need before you start looking for it.

2. Do some due diligence.
Don’t be awed just because some adviser hands you a business card that has a long string of professional credentials. Fact is, so many organizations have issued so many titles and designations over the years—The Financial Industry Regulatory Authority alone lists 157 on its site—that it’s become a virtual mission impossible to separate the bona fide ones (such as the CFP and ChFC) from ones that are mere marketing gimmicks, or worse.

So do a little digging. A good way to begin is by going to the Check Out A Broker or Adviser section of the Securities and Exchange Commission site. There, you’ll find detailed information on how to research the background of brokers, planners and investment advisers, as well as links to regulators’ sites and other resources. But don’t stop there. Before signing on with an adviser, ask him to be more specific about the products and services he’ll offer. Can he mix and match investments from many funds or is he restricted to a limited menu? Even if he can choose from a large roster, does he primarily sell one type of investment? The more you can find out about how an adviser makes his living, the better you’ll be able to evaluate whether that adviser is right for you.

3. Get details on fees and charges—in writing.
  Advisers are usually compensated in one of three ways: they charge a fee for the advice they give (typically a percentage of assets under management that’s paid each year); they collect commissions for the investment products and services they sell; or they get a combination of fees and commissions. A minority of advisers are willing to charge by the hour or work for a flat fee for specific projects, such as deciding whether to convert to a Roth IRA.

Each arrangement has advantages and disadvantages. But whichever method the adviser uses, he should be willing to estimate in writing the total amount you’ll pay and give a detailed breakdown of that cost (initial and annual fees, upfront commissions and “trails,” or commissions you pay on an annual basis and any underlying costs of the investments themselves, such as investment management or administrative fees).  Any exit fees or surrender charges you’ll pay if you sell an investment should also also be disclosed. After you get this fee disclosure, ask the adviser whether there are comparable investments or services available for a lower cost—as there almost always are—and why he didn’t choose those instead.

4. Ask the adviser how he’ll manage conflicts of interest.
There’s been a lot in the press recently about the move to hold all financial advisers to a fiduciary standard—that is, require advisers to put clients’ interests first. That sounds nice. But in the real world there’s always some way that an adviser’s interests may not completely square with yours.

For example, advisers who charge commissions may have an incentive to steer you to products or services that provide them with the fattest payout. Those who eschew commissions in favor of an annual percentage fee based on the value of assets they oversee may be tempted to keep that percentage fixed  as the value of your portfolio climbs even if they’re doing the same amount of work for you. Or they might be reluctant to put you into investments that may not be covered by their arrangement, such as CDs or annuities, and thus reduce the fee you pay.

So before signing on with an adviser, ask him to explain the potential conflicts and how he plans to manage them. If the adviser balks at this request or says your interests and his are perfectly aligned, move on to another adviser. There are more than enough out there.

Walter Updegrave is the editor of 
RealDealRetirement.comIf you have a question on retirement or investing that you would like Walter to answer online, send it to him at

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