Second Half Life (Retirement & Death) 03 (Mar 14 - Dec 26)

[winston]

Four Keys to Sidestepping This Huge Retirement Risk

By Alexander Green


Over the last century, the average bear market has lasted almost exactly one year, according to Ned Davis Research. The average recovery to a new all-time high took the market an additional 2.1 years.

So long-term investors who plan to put fresh money to work should not wish for the market to keep going up – because that would only mean investing in equities at ever-higher prices – but rather pray that it starts going down, so that they can invest at lower prices.

Bear markets are an enormous opportunity for the accumulation of retirement assets. (Although far too few folks see it that way.) Yet for another group of investors, they pose a serious risk.

I'm referring to those just entering retirement. They face what is often called sequence-of-returns risk. And it can be a serious challenge.

Here's what I mean...

One of the toughest potential developments for any individual with equities is retiring right into the teeth of a bear market. If you are forced to make withdrawals early in retirement from a portfolio that is rapidly declining in value, there will be fewer shares left to benefit when the market eventually rebounds.

And while an average of 3.1 years (one year of decline followed by 2.1 years of recovery) from one bull market top to the next may not sound that long, history shows it could take years longer.

The bear market that began in 1973, for example, took almost 12 years to reach a new high. So prepare in advance for sequence-of-returns risk with four key steps.

1. As you get ready to retire, put one to three years of income in cash. But don't start spending it immediately. If we're in a bull market, you can cull annual gains to cover your overhead. But when we go into a bear market – as we will eventually – use this cash account for spending needs so you won't have to invade your long-term assets when they are at a low ebb.

2. Of course, with the worst of luck, stocks could start declining as soon as you retire and still be falling or near the bottom three years later. In that case, you would be better off cashing in bonds and other low-risk assets rather than selling your stocks. Again, the reason is obvious. You can't recover from a bear market in equities if you sell your stocks when they are near the bottom.

3. Set up a home-equity line of credit. It may seem foolish to borrow and pay interest to meet your expenses in retirement, but you can always pay off that home-equity loan in the future by cashing in some of your stocks after they've recovered.

4. As a final sequence-of-returns strategy, consider a reverse mortgage. If you own your home and are 62 or older, you can pull equity out of your house and pay the bank nothing until you move, sell, or die. However, reverse mortgages also have drawbacks and can be complicated. So I recommend this only as a last resort.

There are other non-investment-related moves you can also make to maximize the life of your portfolio in retirement. These include cutting costs, downsizing, or plunking for a low-cost immediate fixed annuity like the kind Vanguard brokers. (This is the only type of annuity worth considering, in my view. The rest benefit the annuity salesman far more than the purchaser.)

In short, your primary investment goal in retirement is to make sure your portfolio doesn't kick the bucket before you do. A bear market that begins right after you leave the workforce can be a substantial challenge. But follow the four steps outlined above, and you can easily sidestep potential sequence-of-returns risk.


Source: The Oxford Club

[winston]

Do You Need a Bucket List? Happiness Comes Naturally As You Age

By Steve McDonald

Some seniors report life becoming a boring interlude between trips, devoid of the satisfaction they knew in their preretirement life.

Maybe teaching your grandchild to swim or fish will be a whole lot more rewarding than swimming with dolphins or sharks.

Source: The Oxford Club

http://wealthyretirement.com/videos/thr ... ?src=email

[winston]

Is Death Reversible?

By Ira S. Pastor

Source: Bioquark Inc.

http://www.theepochtimes.com/n3/2023266 ... eversible/

[winston]

Cash-strapped boomer? You can retire using home equity

Source: The American College of Financial Services

http://www.cnbc.com/2016/04/13/cash-str ... yourwealth

[winston]

6 ways to have a happy retirement

by Robert Powell

Source: USA TODAY

http://www.usatoday.com/story/money/col ... yptr=yahoo

[winston]

Retirement Strategy: Should You Be Buying More Stocks?

By Amy Fontinelle

An asset allocation of 30% stocks is ideal in early retirement and that this allocation should gradually shift more and more toward stocks as you age.

A portfolio that starts with a 30% allocation to stocks and increases to 60% outperformed one that started with a 60% allocation to stocks and decreases to 30%. They say this strategy can be especially helpful for a portfolio that experiences poor returns early in an individual’s retirement.

Source: The Trading Report

http://www.thetradingreport.com/2016/06 ... re-stocks/

[winston]

Study Says Happiness Arrives in Retirement

By Steve McDonald

Source: The Oxford Club

http://wealthyretirement.com/videos/stu ... ?src=email

[winston]

The Key Mistakes Investors Make in Retirement

by Scott Hanson, CFP

After they retire, most people completely change some of their investment habits—and risk depleting their wealth.

Source: Kiplinger

http://www.kiplinger.com/article/invest ... FLxcLYZ.99

[winston]

12 Life Lessons the Dying Can Teach Us

Source: Be Well Buzz

http://www.bewellbuzz.com/life/12-life- ... -teach-us/

[behappyalways]

John Simpson on his plan to commit suicide - and why he refuses to be an old bore
http://www.telegraph.co.uk/men/fatherho ... e-refuses/