Month: July 2015

If you’re past traditional retirement age but unwilling to give up the 9-to-5, you’re not alone. According to a study from Merrill Lynch and Age Wave, 72 percent of pre-retirees over the age of 50 say their “ideal retirement” picture will include a job. Forty-seven percent of current retirees have worked or plan to seek employment during their golden years.

Interestingly, the study also found that 52 percent of working seniors took a break between their pre-retirement job and post-retirement work. These sabbaticals averaged 2.5 years, and usually required the retiree to conduct a new job search—a process often fraught with mistakes no matter one’s age. Consider the following errors common among those over the age of 50—and how to avoid making them.

Losing connections – You held a career for multiple decades and now you want to relax for a while. No one says you can’t, but if you intend to seek part or full time work after some time off, you’ll want to stay visible and connected in your industry while you do so. Keep in touch with former colleagues and use social media to build new relationships. You might even want to take on a little consulting work; it could lead to a new job when you’re ready.

Avoiding the Internet – These days you need an online presence if you want to land almost any job. While this doesn’t mean you have to spend all your free time writing Facebook posts or Tweets about your day, a LinkedIn profile is a valuable job search tool every senior should have. In fact, in one survey, 94 percent of the HR professionals questioned said LinkedIn was their number one source for recruiting candidates.

Writing a book instead of a resume – In most professions, a resume more than one page in length is going to overwhelm (or worse, turn off) the people doing the hiring. Experts have said that recruiters spend only 20 to 30 seconds scanning the resumes they receive, so limit yourself to the last ten years, make ample use of bullet points, and use data-based examples (such as “lowered department overhead 45 percent”) to illustrate your accomplishments.

Using an old email account – If you’re still sending out resumes from an AOL or Yahoo email address, potential employers are going to assume you’re behind the times. Create a new account using Gmail or Outlook. You can name it whatever you want as long as it’s not already taken—just keep it professional. To get you started, consider an email address that contains your name and profession, such as “robertwhitesales” for example.

Being a salary stickler – Sure, it might feel insulting to be offered less than you were making before you retired, but there are negotiating tactics you can use to beef up your compensation without demanding a specific dollar amount. For example, ask for the work schedule you want, flex time, more personal days and other benefits that will enable you to continue enjoying more of your retirement after going back to work.

 

Life expectancy in the U.S. recently hit a new high. According to the National Center for Health Statistics, it’s currently 78.8 years on average—or 81.2 years for females and 76.4 years for males. That’s great news—unless you’re struggling to put money way for retirement. The longer you live the more you’ll need, though there are ways to stretch your nest egg a little further. Consider the following suggestions to help you avoid outliving your retirement savings.

Overestimate your lifespan. Unfortunately, many retirees underestimate how long they’ll live by at least five years—saving less aggressively as a result. They also overestimate how much they can withdraw each year without dangerously depleting those savings. They wind up living on social security and the charity of family and friends.

When calculating your retirement savings needs, it’s best to err on the side of caution and plan to live longer than even your doctor expects you to. Then you’ll be able to make a more informed decision on how much you can spend each year. The advice of a financial planner can be a big help.

Choose a safe pace for withdrawals. Even just a few years ago, many experts considered withdrawing 4 percent each year to be safe. That meant if you had $1 million in your retirement account, you could take out $40,000—plenty for a senior to live on. Your nest egg would last at least 30 years as a result.

Unfortunately, low interest rates, combined with the potential for lower returns in today’s market environment, require an even more cautious approach. You’ll find experts advocating initial withdrawals of 3 percent per year or even less.

Consider an income annuity. Also known as immediate annuities, income annuities involve depositing a lump sum of cash with an insurer who then sends you a monthly payment—for as long as you live—that is not based on market performance. You can check out current annuity rates at www.immediateannuities.com. A 65-year-old woman would receive close to $800 per month for a $150,000 investment at today’s rates.

Of course, when you purchase an immediate/income annuity, you essentially give up access to your money. You cannot tap it to pay for unexpected expenses, nor can you leave it to your heirs. Seek the opinion of a trusted financial advisor before buying.

Take a personalized approach. With the help of a financial planner, you should be able to customize your retirement savings and withdrawals to take advantage of the upsides of various strategies while avoiding their downsides. For example, you could try to cover essential retirement expenses with Social Security and then make up the difference with an immediate annuity—covering discretionary outlays with draws from the remainder of your savings.

This will give you the flexibility to react to changing retirement needs and market conditions—reducing both the chance that you will outlive your nest egg and the possibility that you’ll still be sitting on a big pile of cash when you finally pass on.

Whether you’re still preparing for retirement or have already embarked on that great journey, we’re here to help. Please don’t hesitate to contact us whenever you need retirement planning or other financial advice.