{"id":347542,"date":"2021-10-02T21:38:00","date_gmt":"2021-10-02T18:38:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/planning-for-retirement-is-hard-but-you-can-do-it-one-step-at-a-time\/"},"modified":"2024-06-03T16:21:52","modified_gmt":"2024-06-03T13:21:52","slug":"planning-for-retirement-is-hard-but-you-can-do-it-one-step-at-a-time","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/planning-for-retirement-is-hard-but-you-can-do-it-one-step-at-a-time\/","title":{"rendered":"#: Planning for retirement is hard, but you can do it, one step at a time"},"content":{"rendered":"<audio class=\"wp-audio-shortcode\" id=\"audio-347542-1\" preload=\"none\" style=\"width: 100%;\" controls=\"controls\"><source type=\"audio\/mpeg\" src=\"https:\/\/m.wsj.net\/audio\/20211001\/a7167123-b753-4a82-ad22-4a92af19fdcb\/2\/joanna-wp-mktw-0000428294-full.98b566a7-fbfd-4f47-addf-7da1db12cc28.mp3?_=1\" \/><a href=\"https:\/\/m.wsj.net\/audio\/20211001\/a7167123-b753-4a82-ad22-4a92af19fdcb\/2\/joanna-wp-mktw-0000428294-full.98b566a7-fbfd-4f47-addf-7da1db12cc28.mp3\">https:\/\/m.wsj.net\/audio\/20211001\/a7167123-b753-4a82-ad22-4a92af19fdcb\/2\/joanna-wp-mktw-0000428294-full.98b566a7-fbfd-4f47-addf-7da1db12cc28.mp3<\/a><\/audio>\n<p class=\"article__subhead\"><span style=\"font-size: revert; color: initial;\">Retiring seems like an overwhelming prospect \u2014 because it is.\u00a0<\/span><\/p>\n<div class=\"column column--full article__content\" role=\"region\" aria-label=\"article body\">\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" role=\"document\" data-sbid=\"WP-MKTW-0000428294\">\n<p>You\u2019re trying to save up enough money to last the rest of your life, including uncovered health costs, and you\u2019re not exactly sure how long you need to save for, because, well, you don\u2019t know how long you\u2019ll live.<\/p>\n<p>But don\u2019t panic. While the numbers are big, if you take things in steps and use the tools available, it\u2019s doable.<\/p>\n<div class=\"paywall\">Expenses drive everything, Robert Powell, co-founder of Finstream.TV, editor of Retirement Management Journal and a MarketWatch columnist, said in an interview during MarketWatch\u2019s Mastering Your Money event, which examined saving, spending and investing and the impact that COVID-19 had \u2014 and will have \u2014 on our lives.<\/p>\n<div class=\"\n          media-object\n          type-InsetMediaVideo\n            inline\n  article__inset\n          article__inset--type-InsetMediaVideo\n            article__inset--inline\n  \" data-layout=\"inline\n                \" data-layout-mobile=\"\"><\/p>\n<figure class=\"media-object-video article__inset__video media-object-video--standard\">\n<div id=\"http:\/\/www.marketwatch.com\/news\/3B5D03A0-72C1-45E9-AAA9-31FF80D6D847\" class=\"video-container article__inset__video__player\" data-src=\"http:\/\/www.marketwatch.com\/news\/3B5D03A0-72C1-45E9-AAA9-31FF80D6D847\" data-format=\"standard\" data-esplash=\"\" data-msplash=\"\" data-suppressheadline=\"\" data-verticalstill=\"\"><\/div><figcaption class=\"wsj-article-caption article__inset__video__caption\">Robert Powell of FinStream.TV chats with MarketWatch retirement editor Angela Moore about tips on determining when and where to retire, how to handle healthcare and other expenses &#8212; and how to avoid outliving your money.<\/figcaption><\/figure>\n<\/div>\n<p><strong>Get an idea of your expenses<\/strong><\/p>\n<p>People should start off by determining what their expenses will be in retirement, but Powell acknowledges that it isn\u2019t an easy task.<\/p>\n<p>\u201cWhat your expenses will be in retirement is actually a hard question to answer, in part, because you don\u2019t know how long you need to fund your retirement, you don\u2019t know your date of death\u2026if you knew your date of death I could build you a perfect retirement plan,\u201d he said with a laugh.<\/p>\n<p>However, one place to start is by assuming you\u2019ll have a long life. Powell suggests people \u201cplan\u201d to live to age 90 or 95, and that could mean a 30-year retirement.<\/p>\n<p>One way to estimate what your costs will be is to \u201cballpark it\u201d and set a budget of 80% of your preretirement income, or a better strategy, Powell said, is to use a spreadsheet or budgeting tool to figure out more precisely what your spending will be \u2014 keep in mind that you\u2019re likely to spend more in the early years of retirement than you do in the later years.<\/p>\n<p>If you\u2019re married, make sure that financial plans include enough money to cover the expenses of a surviving spouse in the likely case that one of you will die first.<\/p>\n<p><strong>Save, and then save some more<\/strong><\/p>\n<p>Save aggressively, and constantly monitor whether you\u2019re reaching your goals, so you know if you need to save more, invest more aggressively, or work longer. \u201cYou\u2019re going to be constantly monitoring and adjusting your plan as you go,\u201d Powell said.<\/p>\n<p>What about working longer as a way to fund your retirement years?<\/p>\n<p>\u201cIt\u2019s good advice because most people are behind the 8-ball,\u201d Powell said. \u201c[Only] half the people who say they plan to work longer into retirement are able to do that \u2014 they suffer the loss of a job, a healthcare shock, they have to become a caregiver. So telling someone to work longer is a great plan, but if it\u2019s only a coin-toss whether you\u2019ll be able to work longer, you\u2019d better have a backup plan to your backup plan.\u201d<\/p>\n<p><strong>Staying healthy isn\u2019t cheap, but it\u2019s manageable<\/strong><\/p>\n<p>Then there\u2019s the ever-rising cost of healthcare in retirement. Fidelity Investments said earlier this year that a 65-year-old couple retiring in 2021 would be facing roughly $300,000 in out-of-pocket healthcare costs over the rest of their lives.<\/p>\n<p>An eye-popping number like that makes most of us feel hopeless, Powell said. \u201cMost people don\u2019t even have that much set aside in their 401(k), so how in the world would they be able to fund those kinds of expenses in retirement?\u201d<\/p>\n<p>The key is not to think about it as a lump sum that you need to have on hand at age 65, think of it as an annual expense.<\/p>\n<p>Read Powell\u2019s column: How to pay for healthcare costs in retirement for more ideas<\/p>\n<p>There are different types of healthcare costs, he pointed out. Some of those expenses are predictable, and could be paid from sources of income like <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Social<\/a> Security, while unpredictable expenses might be paid through assets, so you might spend $5,000 a year if you\u2019re single, maybe $10,000-$12,000 if you\u2019re a couple.<\/p>\n<p>Investors should set aside up to 15% of what they\u2019re saving for retirement and earmark it for healthcare expenses. \u201cThen I think you\u2019ll be fine, because healthcare expenses represent an increasingly large portion of a person\u2019s budget in retirement and healthcare expenses can escalate at a rate of twice the average cost of living.\u201d<\/p>\n<p>Powell said health savings accounts (HSAs) are a good way to set aside money for healthcare in retirement. If you have access to one at work he advises funding it and not t<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ing into it now, instead letting it grow for future expenses and invest it as you would an IRA or a 401(k). (Note you must have a high-deductible health plan to be eligible for a health savings account. <a class=\"icon none\" href=\"https:\/\/blog.achievable.me\/resources\/everything-you-need-to-know-about-health-savings-accounts\/\" target=\"_blank\" rel=\"nofollow noopener\">Read more about the rules for HSAs<\/a>.)<\/p>\n<p>If you\u2019re not sure which investment vehicle to fund first, Powell has this advice:<\/p>\n<p>\u201cIf you have a company that provides an employer match on your 401(k), obviously fund that to get the full match, that\u2019s free money. And then after that start funding your HSA to the fullest amount possible, and then once you fund that and there\u2019s money leftover then think about going back to your 401(k) and trying to max out.\u201d<\/p>\n<p>Read: 4 ways to keep healthcare costs low in retirement<\/p>\n<p><strong>Can I finally spend my money?<\/strong><\/p>\n<p>When it comes to spending the money you\u2019ve saved up in retirement, how do you know how much you can spend? This is called decumulation and it\u2019s a hot topic in retirement circles. A popular rule of thumb is the 4% rule, which essentially says you can withdraw 4% of your portfolio each year of retirement and never run out of money. Not everyone is a fan, including some of the rule\u2019s creators and Powell, who says it\u2019s no longer valid.<\/p>\n<p>Read: The inventor of the \u20184% rule\u2019 just changed it<\/p>\n<p>\u201cWhat you\u2019re doing is relying on risky assets to generate income for what oftentimes is an essential need,\u201d Powell said. \u201cI\u2019ve become a fan recently of the bucket approach\u2026because it guarantees the possibility of you having exactly the amount of income you need to fund the next two or three years of retirement.\u201d Powell wrote a helpful column about the bucket strategy, read more here.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"byline article__byline\">\n<p><strong>By <span style=\"color: revert; font-size: revert;\">Angela Moore<\/span><\/strong><\/p>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B20C05575-04D4-B545-7689-0656DBD0DF18%7D&amp;siteid=rss&amp;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Retiring seems like an overwhelming prospect \u2014 because it is.\u00a0 You\u2019re trying to save up enough money to last the rest of your life, including uncovered health costs, and you\u2019re not exactly sure how long you need to save for, because, well, you don\u2019t know how long you\u2019ll live. But don\u2019t panic. While the numbers&#8230;<\/p>\n","protected":false},"author":1,"featured_media":622883,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.mktw.net\/im-410241?width=700&size=1.5005861664712778","fifu_image_alt":"#: Planning for retirement is hard, but you can do it, one step at a time","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-347542","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/347542","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=347542"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/347542\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/622883"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=347542"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=347542"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=347542"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}