|
Retire Rich: Take control of your Future.
It has not been the sort of year that makes you breathe easy
about retirement. United Airlines got permission from a judge
to default on $6.6 billion in pension commitments. The government’s
Pension Benefit Guaranty Corp., which picks up some of the
burden when companies like United fail, is in need of a taxpayer
bailout itself. President Bush declared in his State of the
Union address that Social Security was "headed toward
bankruptcy." Ford announced that it was suspending matching
contributions to the 401(k)s of its salaried employees. Even
state and local government pension funds, those bastions of
old-style retirement generosity, ran into money troubles and
political headwinds.
Get real about your future.
Retirement planning isn’t rocket science, but it isn’t
as easy as it used to be. Among the challenges: a stagnant
stock market, low interest rates, and looming cutbacks in
Social Security and private pensions. To help you sort through
these difficult issues, FORTUNE’s Julia Boorstin assembled
a panel of top-flight investment thinkers: Alison Deans, chief
investment officer at a private-investment division of Lehman
Brothers; Harold Evensky, of the financial-planning firm Evensky
& Katz in Coral Gables, Fla.; Jeremy Siegel, finance professor
at the Wharton School of the University of Pennsylvania and
author of Stocks for the Long Run and The Future for Investors;
Allen Sinai, chief economist and strategist of Decision Economics
in Boston; and Quinn Stills, the founding partner of Palisades
Investment Partners, a pension-management firm in Santa Monica,
Calif. While their overall outlook is sobering, they offer
a lot of valuable guidance that can help you achieve a prosperous
retirement, despite the obstacles. Here are edited highlights
of the panel’s conversation.
Can't retire early? Be Happier at work!
With Americans living longer and saving less for retirement,
many of us may have to work past 65. An expert tells how to
attain work-life balance and be more content—even in
old age. The refrain that runs through many of our heads during
our working lives goes something like this: "I'll work
really hard now, putting in such long hours that there's no
time to pursue other interests or take really good care of
myself, because at some point I'll retire completely and not
have to work at all anymore. Man, won't that be great—whenever
it finally happens.
Three threats to your retirement
Even the most diligent savers and savviest investors may face
serious challenges to their financial health in retirement.
Here are five of the most significant threats that you may
not have fully factored into your planning—and what
you can do about them.
Lower Stock Returns Solution: Stocks are still your best bet,
but reduced returns mean that you'll have to save more and
pay closer attention to investing costs that you can control,
like fees and taxes.
Inflated Inflation Solution: Treasury Inflation-Protected
Securities are safe investments that are guaranteed to keep
pace with the CPI. (It's better than nothing). Most important:
Be realistic about how much money you'll need to maintain
your standard of living in retirement.
Piddling Interest Rates Solution: Dividend-paying stocks offer
some relief, with many strong companies yielding 3% or 4%.
And those payments are taxed at a lower rate than the interest
on bonds. Also, stick with term bonds, so that if rates do
rise you can get into new bonds with fatter yields.
|
|
