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How to Make Your Money Last

How to Make Your Money Last

The Indispensable Retirement Guide
by Jane Bryant Quinn 2015 384 pages
4.14
1k+ ratings
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Key Takeaways

1. Retirement is a reinvention, not just financial planning

Retirement challenges us like nothing else. We have to reinvent our lives.

Identity shift: Retirement marks a significant transition from work-defined identity to a new phase of life. This shift requires thoughtful planning beyond finances.

Purpose and engagement: Successful retirees actively seek new interests, social connections, and meaningful activities. Consider volunteering, part-time work, learning new skills, or pursuing long-held passions.

Stages of retirement: Robert Atchley's research identifies five stages:

  • Preretirement: Planning and anticipation
  • Honeymoon: Initial excitement and freedom
  • Disenchantment: Potential feelings of loss or boredom
  • Reorientation: Actively creating a new lifestyle
  • Stability: Settling into a satisfying retirement routine

2. Social Security: Maximize benefits by delaying claims

If I can give you just one word of advice about when to claim Social Security benefits, it would be WAIT.

Increased benefits: Delaying Social Security claims can significantly increase monthly payments. Waiting from age 62 to 70 can result in up to 76% higher benefits.

Strategies for couples: Married couples have additional options to maximize their combined benefits:

  • Higher-earning spouse delays to age 70
  • Lower-earning spouse may claim earlier
  • Survivor benefits are higher when primary earner delays

Consider life expectancy: The break-even point for delaying benefits is typically in the early 80s. Given increasing longevity, especially for higher-income individuals, waiting often provides greater lifetime income.

3. Health insurance: Navigate options before and after Medicare

Peace of mind is knowing that you can see a doctor when you're sick.

Pre-Medicare options: Explore Affordable Care Act (ACA) marketplace plans, COBRA, or employer retiree coverage. Consider:

  • Premium subsidies based on income
  • Plan metal levels (Bronze, Silver, Gold, Platinum)
  • Health Savings Accounts (HSAs) for high-deductible plans

Medicare enrollment: Sign up during your Initial Enrollment Period to avoid penalties. Understand the parts:

  • Part A: Hospital insurance (usually premium-free)
  • Part B: Medical insurance
  • Part C: Medicare Advantage plans
  • Part D: Prescription drug coverage

Supplemental coverage: Consider Medigap policies to cover gaps in Original Medicare or choose a comprehensive Medicare Advantage plan.

4. Pensions and annuities: Reliable income streams for life

I love Social Security. It's America's finest retirement plan.

Pension decisions: If offered a pension, carefully consider:

  • Single-life vs. joint-and-survivor options
  • Lump sum vs. monthly payments
  • Coordination with Social Security benefits

Immediate annuities: These insurance products can provide:

  • Guaranteed income for life
  • Protection against outliving savings
  • Options for inflation adjustment or fixed payments

Annuity considerations:

  • Shop for competitive rates
  • Understand fees and surrender charges
  • Balance annuities with other investments for flexibility

5. Optimize retirement savings plans for tax advantages

If you haven't saved pots of money, don't waste time kicking yourself. It's never too late to give your future a boost.

Tax-deferred accounts: Maximize contributions to:

  • 401(k)s, 403(b)s, 457 plans
  • Traditional IRAs
  • SEP-IRAs or Solo 401(k)s for self-employed individuals

Roth options: Consider Roth contributions for tax-free growth:

  • Roth IRAs (subject to income limits)
  • Roth 401(k) if offered by employer
  • Backdoor Roth IRA conversions for high earners

Required Minimum Distributions (RMDs): Plan for mandatory withdrawals starting at age 72 (70½ if you reached 70½ before January 1, 2020) from most tax-deferred accounts.

6. Create a sustainable withdrawal strategy from investments

How much cash can you take from your nest egg every year without running the risk of eventually going broke?

4% rule: A common starting point is withdrawing 4% of your portfolio in the first year of retirement, then adjusting for inflation annually.

Flexible approaches:

  • Variable withdrawal rates based on market performance
  • "Bucket" strategies separating short-term and long-term needs
  • Dynamic spending adjustments in response to portfolio changes

Longevity risk: Plan for a retirement lasting 30 years or more, especially for couples. Consider delaying Social Security and using annuities to provide longevity insurance.

7. Diversify retirement portfolio with low-cost index funds

Index funds are the only "secret" to investing. You are paying your fancy fund manager to lose.

Benefits of indexing:

  • Low costs
  • Broad diversification
  • Consistent market returns

Core portfolio: Consider a simple three-fund portfolio:

  • Total US stock market index fund
  • Total international stock market index fund
  • Total bond market index fund

Asset allocation: Adjust stock/bond mix based on risk tolerance and time horizon. A common rule of thumb: 110 minus your age in stocks.

8. Leverage home equity as a retirement income source

Your house is a piggy bank. This might be the moment to break it open.

Downsizing: Selling a larger home to move to a smaller, less expensive property can free up equity for investment or spending.

Reverse mortgages: Home Equity Conversion Mortgages (HECMs) allow homeowners 62+ to borrow against home equity:

  • No monthly payments required
  • Loan repaid when home is sold or owner moves/dies
  • Options for lump sum, line of credit, or monthly payments

Considerations:

  • Fees and interest reduce future equity
  • Impact on heirs and estate planning
  • Alternatives like home equity lines of credit (HELOCs)

9. Life insurance in retirement: Reevaluate and restructure

There's money in a life insurance policy and you don't have to die to get it.

Assess need: Determine if life insurance is still necessary:

  • No dependents or adequate assets may eliminate need
  • Continuing coverage for spouse or special needs dependents

Policy options:

  • Term insurance: Usually ends or becomes expensive in retirement
  • Whole life: May have cash value to access
  • Universal life: Review to ensure it remains in force

Alternatives:

  • Surrender policy for cash value
  • Convert to paid-up policy with reduced death benefit
  • Sell policy through a life settlement

Last updated:

FAQ

What's How to Make Your Money Last about?

  • Retirement Planning Focus: The book is a comprehensive guide on managing finances during retirement, focusing on creating a reliable income stream from savings and investments.
  • Life Transition: It addresses the transition from full-time work to retirement, covering both financial and emotional challenges.
  • Practical Strategies: Jane Bryant Quinn provides advice on maximizing Social Security, managing health insurance, and making informed investment choices for financial security.

Why should I read How to Make Your Money Last?

  • Expert Insights: Jane Bryant Quinn is a respected financial journalist, offering credible and actionable advice based on research and expert interviews.
  • Comprehensive Coverage: The book covers a wide range of topics, from budgeting to investment strategies, providing a well-rounded understanding of retirement finances.
  • Empowerment: It empowers readers to take control of their financial future with clear steps and strategies to make their money last.

What are the key takeaways of How to Make Your Money Last?

  • Income Management: Emphasizes creating a sustainable income plan that balances withdrawals from savings with other income sources like Social Security.
  • Rightsizing Your Life: Discusses adjusting lifestyle and expenses to align with retirement income, promoting living within means.
  • Investment Strategies: Highlights the importance of diversifying investments to ensure growth and income stability over time.

How can I maximize my Social Security benefits according to How to Make Your Money Last?

  • Delay Claiming: Advises waiting until at least full retirement age or 70 to maximize monthly payouts.
  • Spousal Strategies: Discusses coordinating claiming dates for married couples to increase total benefits.
  • Avoid Early Claims: Warns against early claims, which can significantly reduce lifetime payouts.

What are the best quotes from How to Make Your Money Last and what do they mean?

  • Health Insurance Importance: “Peace of mind is knowing that you can see a doctor when you’re sick,” underscores the need for reliable health insurance.
  • Home Equity as Resource: “Your house is a piggy bank,” suggests using home equity for additional retirement income.
  • Proactive Financial Steps: “It’s never too late to give your future a boost,” encourages taking action at any stage of financial planning.

What is the “4 percent rule” mentioned in How to Make Your Money Last?

  • Withdrawal Strategy: Suggests a 4 percent annual withdrawal rate from retirement savings to avoid running out of money.
  • Market Considerations: Notes that the rule may need adjustment based on market conditions and investment types.
  • Personalization Needed: Emphasizes that individual circumstances should influence withdrawal rates, requiring regular reassessment.

How does How to Make Your Money Last suggest managing health insurance in retirement?

  • Understanding Medicare: Provides a detailed overview of Medicare parts and how they work together for comprehensive coverage.
  • Supplemental Insurance: Discusses the importance of Medigap plans to cover costs not included in Medicare.
  • Cost Management: Advises shopping for the best health insurance options and budgeting carefully for associated costs.

What investment strategies does How to Make Your Money Last recommend for retirees?

  • Diversification: Stresses the importance of diversifying investments between stocks and bonds to balance risk and growth.
  • Income-Producing Investments: Advises focusing on dividend-paying stocks and real estate for reliable cash flow.
  • Regular Reassessment: Emphasizes the need to regularly review and adjust investment strategies based on market conditions.

How should I prioritize my retirement accounts according to How to Make Your Money Last?

  • Taxable Accounts First: Recommends spending from taxable accounts before tax-deferred accounts to minimize tax liabilities.
  • Consider Tax Brackets: Suggests withdrawing from traditional IRAs first if in a low tax bracket to reduce future RMDs.
  • Roth IRA Strategy: Advises letting Roth IRAs grow tax-free for as long as possible for future tax-free withdrawals.

What are the benefits of a Roth IRA as discussed in How to Make Your Money Last?

  • Tax-Free Growth: Funds grow tax-free, and qualified withdrawals are also tax-free, making it an excellent retirement savings vehicle.
  • No RMDs: Roth IRAs do not require minimum distributions, allowing for greater flexibility in retirement spending.
  • Inheritance Advantages: Heirs can inherit Roth IRAs without immediate tax consequences, preserving tax benefits.

How does How to Make Your Money Last suggest handling Social Security benefits?

  • Delay Benefits: Emphasizes delaying benefits until at least full retirement age to maximize payouts.
  • Spousal Benefits: Discusses strategies like "file and suspend" for optimizing benefits for married couples.
  • Survivor Benefits: Highlights the importance of understanding survivor benefits for long-term financial security.

What are some common pitfalls to avoid in retirement planning as outlined in How to Make Your Money Last?

  • Ignoring Inflation: Warns against underestimating inflation's impact on savings, advising planning for rising costs.
  • Overly Conservative Investments: Advises against being too conservative, which can lead to insufficient growth.
  • Neglecting to Update Beneficiaries: Stresses the importance of keeping beneficiary designations up to date to avoid unintended consequences.

Review Summary

4.14 out of 5
Average of 1k+ ratings from Goodreads and Amazon.

How to Make Your Money Last receives overwhelmingly positive reviews, with readers praising its comprehensive and accessible approach to retirement planning. Many highlight the book's practical advice on Social Security, Medicare, investments, and budgeting. Readers appreciate Quinn's clear explanations of complex financial concepts and her ability to address various retirement scenarios. The book is recommended for both those nearing retirement and younger individuals planning ahead. Some reviewers note that it serves as an excellent reference guide, with many planning to revisit it periodically for updated information and strategies.

Your rating:

About the Author

Jane Bryant Quinn is a highly respected financial advisor and author known for her expertise in personal finance and retirement planning. She has written extensively on these topics, with her work appearing in various publications and media outlets. Quinn's writing style is praised for its clarity and accessibility, making complex financial concepts understandable to the average reader. She has a reputation for providing practical, actionable advice and addressing the needs of diverse audiences, including singles and married couples. Quinn's experience and knowledge in the field have made her a trusted source of financial guidance for many readers approaching or already in retirement.

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