Well-Respected Advice To Stay Away From
Try something radical in your old age.
Make no mistake: Retirement is extraordinarily expensive. How will you generate the income you need? Forget the standard advice you've heard from friends and family.
Much of this advice isn't merely wrong. Rather, it's downright dangerous. Here are three pieces of conventional thinking -- and why it is time to trash them.
1) Life is Short
Retirees may not live like there's no tomorrow. But they often make financial decisions that way. Folks in their 60s are typically way too concerned about dying early in retirement, and that drives them to make foolish choices.
Possibly the most foolish choice is taking Social Security retirement benefits early. You can start Social Security at any age from 62 to 70. The earlier you claim benefits, the smaller your monthly check. Nonetheless, in 2004, 54% of women claiming Social Security were age 62, as were 49% of men.
Sure, if your health is poor, taking benefits early could be the right decision. Even then, however, you need to consider your spouse's life expectancy. Why? If you were the family's main breadwinner, your spouse will likely get your benefit as a survivor's benefit -- and thus it may make sense to delay and get the larger check.
But let's suppose you aren't married and you aren't sure how long you will live. Should you delay benefits or should you claim early? It's no contest: You ought to delay.
True, if you postpone benefits and you die early in retirement, you may get precious little out of Social Security and, as a result, your estate will be a tad smaller. But the risk of dying a little poorer is nothing compared to the risk of being poor and still very much alive.
That, unfortunately, might happen if you live a surprisingly long time and you deplete your savings. At that point, your only income could be your monthly Social Security check -- and the earlier you claimed benefits, the smaller it will be.
2) Preserve Principal
How many times have you heard "never dip into principal" and "never touch your capital"? In truth, dipping into principal may be the best way to ensure you don't run out of retirement savings.
That brings me to some advice I have often doled out in this column: When you retire, consider sinking 25% to 50% of your nest egg into an immediate fixed annuity that pays lifetime income. To give yourself some inflation protection, buy an annuity with payments that are linked to inflation or that are stepped up by, say, 3% a year.
Yet many folks balk at the idea of purchasing income annuities. In part, this reflects the same sort of thinking that spurs retirees to claim Social Security early.
Seniors hate the idea that they will buy an annuity and die soon after, getting scant income in return for their huge investment. You can reduce this risk somewhat by making smaller annuity purchases over the first 10 years of retirement, rather than stashing a big sum in an annuity all at once.
Retirees, however, have another objection to annuities. When you sink cash into a lifetime-income annuity, the money is gone, which violates the rule about "dipping into principal." But dipping into principal and buying the annuity could, in the long run, help to preserve your portfolio.
The fact is, in retirement, your spending will likely exceed your portfolio's after-inflation investment return. In the early years of retirement, this will mean a slow shrinking of your portfolio's "real" value.
But as the years go by, this shrinking will pick up speed, as your need for income climbs along with inflation and as your dwindling portfolio kicks off less investment gains. By your 80s, you may be on the verge of exhausting your savings.
You are less likely to face this sort of financial Armageddon if you purchase an annuity. Not only will your annuity kick off income for life, but also that income means you won't have to draw so heavily on your remaining portfolio. Result: There's a good chance you will die with a decent chunk of your portfolio still intact.
If you opt for the immediate annuity, toss out another piece of conventional wisdom. You might have heard that you shouldn't buy an annuity inside an individual retirement account.
Yes, you wouldn't want to purchase a tax-deferred fixed or variable annuity inside an IRA. The IRA is already giving you tax deferral, so there's not much point in using this money to buy investments that also give tax-deferred growth.
But purchasing an immediate annuity with IRA money can be a smart move. For starters, there won't be any immediate tax bill. By contrast, if you buy an immediate annuity with taxable-account money, you may have to sell stocks to fund the purchase, triggering a capital-gains tax bill.
Moreover, annuity income is taxed as ordinary income, just like your IRA withdrawals. Thus, you won't be generating unnecessarily large ongoing tax bills by purchasing an immediate annuity with IRA money.
3) Buy Bonds
Conventional wisdom says that, as you approach retirement, you should dump stocks and buy bonds. And a little selling may be in order.
Don't, however, sell all your stocks. I believe retirees ought to keep 40% to 60% of their portfolio in a globally diversified mix of stock funds. What about the conventional wisdom? It's built on a faulty assumption -- and it overlooks a major risk.
There is an assumption that retirees are highly risk averse. But, in fact, retirees are often less unnerved by bear markets than younger investors, because they have a lifetime of investing under their belts.
Admittedly, a stock-market crash is a far bigger financial problem if you're living off your portfolio, rather than merely saving for retirement. But plunging stock prices aren't the only risk that retirees face.
Over the course of a 25- or 30-year retirement, inflation could wreak havoc with your cost of living. To combat that risk, you need an investment that will generate healthy, inflation-beating gains -- and that's why you need to own stocks.
走出退休理财的三大误区
晚年时也不妨作一些大胆的尝试。
别搞错了：退休后你仍将有大笔开销。那么怎样才能高枕无忧呢？千万别相信老朋友和家人们的传统观念。
他们的很多建议不只是错误的，而且蕴藏着巨大的风险。下面我们就列举三个传统观念，并将其一一攻破。
1) 生命短暂
退休的人在安排自己的生活时可能很少考虑生命的长短，然而当他们作出财务决策时，却总是好像过了今天就没有明天一样。60几岁的人经常会过于担心他们在退休后不久就会去世，这往往导致他们作出愚蠢的决定。
可能最愚蠢的做法就是从社会保障基金中提前支取退休金。你可以在62岁至70岁之间开始提取你的退休金，提取的越早，每月得到的金额就越少。尽管如此，2004年仍有54%的女性选择在62岁支取退休金，在这一年龄支取退休金的男性比例为49%。
没错，如果你的健康状况很差，早点支取退休金或许不失为明智之举。但即便如此，你也应该考虑一下配偶的预期寿命。为什么？如果你是家庭收入的主要创造者，你的配偶在你过世后依然可以领取丧偶退休金──所以晚些提取对配偶大有好处。
但如果你是单身，又不能确定是否长寿，你应该推迟提取还是早些提取呢？毫无疑问，也应该推迟提取。
没错，如果你推迟提取退休金，又在退休不久后去世，你从社保基金中享受到的福利就寥寥无几了。但是与活着但却过着拮 的生活相比，简简单单地死去也没什么大不了。
不幸的是，如果你活得很长，但却早早地用光了你的储蓄，你就很可能陷入一贫如洗的境地。到那时，你唯一的收入就是每个月从社保基金中领取的退休金──而你提取得越早，领取的金额就越少。
2) 保留本金
你是不是经常会听到有人说，“不要动用本金”，“不要 你的资产”？
事实上，提取一些本金可能是让你的退休储蓄保值的最好办法。
我又要老生常谈地提一下我经常在这个栏目发表的观点了：当你退休时，不妨考虑将25%或50%的资产转到即期固定年金中，这样你可以在有生之年按照经通货膨胀调整后的水平逐年提取，通货膨胀率大约为每年3%左右。
不过很多人仍然不愿购买年金。对于某些人来说，不去购买年金的理由和提前支取退休金如出一辙。
很多老年人担心他们在购买年金后不久就去世，而他们的庞大投资也就打水飘了。其实你可以在退休后的前十年陆续地少量买进年金，而不是一次性大笔投入，这样风险就小多了。
很多退休人员还有一个顾虑。当你将资金投入到固定年金的时候，钱就没了，这违背了“不要动用本金”的原则。不过从长远来看，动用本金购买年金有助于保留你的资产。
事实上，退休时你的支出可能会超出你的资产组合在扣除通货膨胀后带来的回报。在退休的早些年，你的资产的“真实”价值可能会慢慢萎缩。
而随着时光的流逝，这种萎缩程度也将加速，你需要让你的收入增长跟上通货膨胀的步伐，而投资组合价值萎缩后所带来的投资回报却在减少。到80岁左右，你的储蓄就基本上用光了。
如果你购买了年金，你就不会陷入这种绝境。年金不仅可以保证让你在有生之年都有收入，而且有了年金你就不用大手笔地支取剩余资产了。最后：在你去世的时候可能有大量资产还未动过。
如果你选择即期年金，你可能还会受到另外一个传统观念的束缚。你或许已经听说过，不应该在个人退休帐户(IRA)中购买年金。
是的，你可能不想动用个人退休帐户去购买可递延税款的固定或可变年金。个人退休帐户本身已经为你提供了递延税款的待遇，因此用这部分钱来进行可递延税款的投资就毫无意义。
但在个人退休帐户中购买即期年金仍然不失为明智之举。这不会立即产生任何税项。而如果你动用应纳税帐户购买即期年金，你可能要卖出股票，这就产生了资产所得税。
而且，年金收入将被作为正常收入计税，就像你从个人退休帐户中进行支取一样。因此用个人退休帐户购买即期年金，你就省下了随后引发的大笔税款。
3) 购买债券
传统观念认为，随着退休年龄的临近，你应该逐渐卖出股票，买进债券。这种说法有一定的道理。
不过不要将股票全盘卖出。我认为退休人员应该将其在全球多元化股票基金中的投资保留40%-60%。那么该如何解释上述传统观念呢？它是建立在一种错误的假设基础上──并且忽视了一个重大风险。
他们假设退休人员非常不愿承担风险。但事实上退休人员对于熊市经常比年轻投资者更加无所畏惧，因为他们拥有长期的投资经验。
诚然，如果你的投资组合是你的主要生活来源，而不仅仅是为退休作储备，那么股市崩盘对你的打击就大多了。不过除了股价下跌外，退休人员还要面临其他风险。
在25年至30年的退休过程中，通货膨胀可能给你的生活成本带来灾难性的打击。为了防范这种风险，你的投资回报就要超出通货膨胀率──这也就是你需要持有一定股票的原因。
Jonathan Clements
