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Top Tips to Retire Comfortably
Take five ways to boost your income and five ways to reduce your expenses and debts and you have USA Today's 10 secrets to a financially secure retirement.
Click through our gallery to see the steps you should be taking, including why you should not start collecting Social Security checks at age 62 (Slide No. 5).
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First Up: 5 Ways to Boost IncomeMore From USA Today:
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1. Don't Retire Impulsively
"The decision to retire is sometimes made for superficial reasons," Alicia Munnell, director of Boston College's Center for Retirement Research, says. She's heard many stories of older workers quitting suddenly because they had been stuck on airplanes too long during business trips. She heard of a woman recuperating from a sprained ankle who decided she really liked to watch daytime television, so she retired. Some quit because they were peeved at younger bosses. Leaving in a huff without developing a solid exit strategy, though, can be financially foolhardy.
Next: Secret No. 2More From USA Today:
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2. Invest in Long-Term Stocks
Plenty of investors turn timid as they age, so it's no surprise that many retirees consider stocks off-limits. What they fail to realize is that an ultra-conservative portfolio stuffed with bonds and certificates of deposit can't keep up with inflation. It may be hard to imagine, given the current bloodbath on Wall Street, but over the long run, returns from stocks and stock mutual funds tend to surpass the returns on other investments. Adding stocks to a retirement portfolio can boost your returns without exposing you to reckless risk.
Next: Secret No. 3More From USA Today:
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3. Seek Pension Help
Those lucky enough to retire with a pension must often decide whether to take a lump sum or a lifetime of monthly checks. Grabbing that huge chunk of change all at once is exceedingly tempting, but retiring workers should consider consulting a pension actuary before making such a momentous decision.
Next: Secret No. 4More From USA Today:
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4. Delay Social Security
You can start collecting Social Security checks at age 62, and most Americans go for it. But their eagerness can curtail their retirement income. If you delay Social Security past age 62, your benefits will increase significantly. Crunch your own numbers, using various retirement scenarios, by visiting the Social Security Administration's website at www.ssa.gov.
Next: Secret No. 5More From USA Today:
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5. Be a Smart Investor
What's required to be a successful investor hasn't really changed from the days when stock prices were ripped off ticker tapes. "The whole purpose of investing for the long term is to make your money grow faster than inflation deteriorates it, " says author Lewis Schiff. "For those investors who take the long view and practice the simple arts of diversification, compound returns and dollar-cost averaging, and especially those who do so in tax-advantaged accounts, this growth is well within reach." If you're not confident in your own investing skills, consider using low-cost target retirement funds offered by big mutual fund companies.
Next: 5 Ways to Reduce ExpensesMore From USA Today:
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Cassandra Shie, AOL
1. Pay Attention to
After-Tax PerformancePeople need to remember that it's after-tax returns that matter," says author Taylor Larimore. The after-tax performance of mutual funds can look shockingly different from their posted figures. During the decade that ended in 2007, for instance, Lipper estimated that fund investors lost anywhere from 17% to 44% of their returns to taxes. Many retirees woefully underestimate their tax hit because they incorrectly assume that their tax burden will plummet once their paychecks dry up. A great way to stanch the tax hemorrhaging is to invest in tax-efficient index and exchange traded funds.
Next: Secret No. 2More From USA Today:
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2. Shrink Credit Card Costs
Obviously, carrying a credit card balance is a no-no, but if you haven't managed to erase your debt, there's a painless way to tackle the problem: Call your card issuer. "If you have good credit -- a 700 FICO score or better -- you have a ton of leverage with credit card companies, which are scared and worried about their profit margins," observes author Liz Pulliam Weston. Card issuers hate losing customers, so they're generally willing to negotiate. If you enjoy good credit, you should be able to capture a rate below 10%.
Next: Secret No. 3More From USA Today:
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3. Track Expenses
No one's asking you to deny yourself a $4 latte, but if you're living beyond your means, it makes sense to root out the budget-busters. "You have to know where the money is going in order to know where to cut back," Weston says. Recording your purchases for a week can prove a tremendous help.
Next: Secret No. 4More From USA Today:
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4. Be a Frugal Investor
Investment fees are a natural enemy of retirement portfolios. But many investors are oblivious to this predator. Why? Because investors of mutual funds and annuities aren't billed for these expenses. Instead, the fees are automatically deducted. You can see for yourself the damage that even average expenses can wreak on a mutual fund by using the U.S. Securities and Exchange Commission's mutual fund cost calculator at www.sec.gov/investor/tools.shtml. Try sticking with mutual funds that charge an annual expense ratio of 1% or less.
Next: Secret No. 5More From USA Today:
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5. Think Healthy
Regardless of your age, take care of your health and you'll probably save money. "Eat right, exercise and care for your teeth, eyes and ears," says Henry Hebeler, the creator of AnalyzeNow.com, a financial website geared toward retirees. "By the time we get to retirement age," Hebeler adds, "health care costs are the single largest item in most of our budgets, and early prevention of health problems pays huge financial dividends."
More: Toughest Retirement QuestionsMore From USA Today:
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10 Toughest Retirement Questions
Now that you've seen 10 secrets to a financially secure retirement, check out Dan Solin's straightforward and easy-to-understand answers to 10 of the toughest -- and most common -- retirement questions.
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Recent Comments
Getwau 11:21:32 AM Oct 20 2008
If you are counting on Social Security to pad your retirement income, you are going to be disappointed. We are not producing enough children to support Social Security. I learned a lot about spending, SAVING and living a "richer" life from the book "How to Become Filthy Rich on Your Current Income" at www.how-to-become-rich.com. If people read books like this one they would be a lot smarter and have more money.
ICEONE2008 10:28:01 PM Oct 12 2008
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Yourcash4freedom 05:14:17 PM Oct 05 2008
Yes I would take it at 62 and easily suppliment more than the difference with your own work from home online cash generator.You work all your life,your valuable time given to some one else,,not your family and then the Government ask you to sacrifice even more, so they can put off more years until paying you, that is called big government GREED and at the same time they hope you die in those couple of years so they never have to pay out. OK what about that extra income from home online? 97% of MLM's don't work but there is something that finally does! "yourwealthdelivered.com" I hope this really helps some of you out there in the struggle of this economy. Be Blessed.
Mspattollie 09:57:08 PM Oct 04 2008
For those of the baby boomer era that retire @ the age of 62 your benefits are reduced by 25%, 20% @ age 63, 15% @ age 64, 10% @ age 65 etc, as full retirement age is actually higher than 65!
W8tLFTer 07:32:06 PM Oct 04 2008
i dont care who is in office... here's how i see it.. if any candidate did half of what they said they would do this country would be great once again....... we need to stop outsourcing jobs to china and put more Americans back to work.... things have become ridiculous lately and gas prices are nuts.. no way gas cost what it does today, if thats the case then the oil companies wouldnt profit 10 billion in 1 quarter........ neither candidate is going to help this country in my eyes.... but i hope they prove me wrong.....
Murfspud3 07:01:56 PM Oct 04 2008
Congress doesn't need Social Security....because they are well compensated with government pensions when they retire.....and a great health care plan for themselves....and everyone in their family.....and what good do they do?.......it's a national disgrace the way this country runs.......the middle class are sadly overlooked in these United States...the "American Dream".....has become a nightmare...............
Kareblblt 07:00:50 PM Oct 04 2008
I am 68 years young and I was on disabilty since I was 55 them my husband died at the age of 63 and they took half of his s s and all of mine and put it together and that is not enough to live on today. with all the high prices of every thing.I still need help. as far as obama helping us don't count on it. look up his back ground for your self .I am a democrate and he has a terriable back ground . if he be comes president we are all in trouble.Palin is right in what she is saying. I dare you to look it up you will be shocked.
Murfspud3 06:57:58 PM Oct 04 2008
you collect exactly the same amount of money whether you retire at 62 or wait till full retirement age.......until you reach the age of 78........that's when it makes a difference....How many who put into S.S. all their lives......will even make it to 78?And if you take early retirement at 62.....there is a cost of living increase once a year.......of course that could all change......couldn't it?
Nvb506 05:47:58 PM Oct 04 2008
Teamwork, working together for the common good, sharing equally in a job well done...these are old-fashioned values that we need to get back to if we expect to survive.
Nvb506 05:47:03 PM Oct 04 2008
The jobless rate is outrageous. We need to roll back prices; not continue to raise them.While I'm on the subject of jobs, if management from companies would hire according to who can do the job, rather than playing favorites (their friends, who happen to be people with very little work ethic), they would accomplish more and get farther ahead. They waste so much time, being there just to receive a paycheck, I sometimes wonder how they keep going as long as they do. Nobody is checking them. Also, Management doesn't need to get rich while their workers scrape for pennies. Where I work, we have received very little in the form of raises in the past years, while Management, just because they are so, gets most ot the allotted monies. They haven't earned any of it. This is so wrong! What ever happened to teamwork? The U.S. is going to be in big trouble if we don't get back to the old-fashioned ways of doing things. Teamwork, working together for the common good, sharing equally in a
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