The New Savage Number How Much Money Do You Really Need to Retire?

by Savage, Terry

• ISBN13: 9780470538760
• ISBN10: 0470538767
• Edition: 2nd
• Format: Paperback
• Copyright: 2009-09-28
• Publisher: Wiley

Summary

Will you ever be able to retire? How much money will you need? And how will you be able to reach your Savage Number? Financial expert and author Terry Savage offers street-smart advice for those hoping to retire. Whether you're approaching retirement age, just starting out, or in the middle of your career, Savage helps you create a long-term plan for financial security.

Author Biography

Terry Savage has financial expertise that comes from experience. She started her career as a stockbroker and became a founding member of-and the first woman trader on-the Chicago Board Options Exchange. Terry is a nationally known expert on personal finance and is a regular TV investment and financial markets commentator. She is the nationally syndicated Chicago Sun-Times personal finance columnist, contributor to TheStreet.com, and author of three bestselling books. Terry has won numerous awards, including the National Press Club Award, and received two Emmys for her television work.

Table of Contents

Preface	p. xv
Introduction: Can You Retire?	p. 1
Retro-Retirement
The Savage Number	p. 7
Shaping Retirement Reality	p. 9
Avoiding Generation Warfare	p. 12
Hoping for a Miracle?	p. 14
You're Not Alone	p. 15
The Likely Solution: Retro-Retirement	p. 17
The Starting Point	p. 18
Time Is Money	p. 19
Consuming Time and Money	p. 21
Running Out of Time	p. 22
What's Your Time Worth?	p. 23
The Time Value of Money	p. 24
How to Avoid Wasting Time (and Money)	p. 25
The 10 Key Questions	p. 27
How Long Will I Live?	p. 29
What Will Inflation Do to the Value of My Savings?	p. 30
How Can I Save Enough?	p. 31
How Should I Invest the Money I've Saved for Retirement?	p. 32
How Much Will I Spend to Live in Retirement?	p. 33
How Much Can I Withdraw Each Month without Running Out of Money?	p. 34
What's the Biggest Danger to My Retirement Plans?	p. 35
How Can I Earn Money during Retirement?	p. 36
How Can I Retain Control of My Financial Life?	p. 37
What If I Have Money Left Over When I Die?	p. 38
Getting the Answers	p. 39
Getting Your "Ballpark Estimate"	p. 40
Monte Carlo Your Money
The Savage Answer: Monte Carlo Modeling	p. 45
Monte Carlo Modeling: How It Works	p. 46
Beware of Averages	p. 48
Monte Carlo Modeling and Retirement Planning	p. 52
Monte Carlo and You	p. 56
Do-It-Yourself Monte Carlo: ToolsforMoney.com	p. 58
Saving Up, Drawing Down	p. 59
Accumulation Phase	p. 61
Withdrawal Phase	p. 63
The Right Balance	p. 64
Seven Best Ways to Save for Retirement	p. 65
Getting It All Together	p. 69
Online, on Paper, on Your Computer	p. 71
Free Online Money Management	p. 72
The Basics: Paying Bills Online	p. 74
Organizing Your Online Financial Life	p. 76
A Credit Checkup	p. 78
Portfolio Tracking	p. 79
Quicken	p. 80
Morningstar	p. 81
Moving Beyond Tracking-to Advice	p. 85
Resources for Getting It Together	p. 85
A Road Map to Monte Carlo	p. 87
The Best Routes	p. 90
Financial Engines	p. 91
Morningstar Asset Allocator	p. 93
T. Rowe Price	p. 94
Fidelity	p. 95
Vanguard	p. 96
Financial Planners	p. 98
Arriving in Monte Carlo	p. 99
Choosing a Financial Adviser	p. 100
Investing for Retirement
Stocks, Bonds, and Chicken Money	p. 105
Realistic Stock Market Expectations	p. 108
Stock Market Returns-Then and Now	p. 109
Historic Returns-The Big Picture	p. 110
Long Term-Do You Have 20 Years?	p. 112
Persuasive Perspective	p. 113
Opportunity of a Lifetime?	p. 114
What to Expect-The Next 20 Years	p. 116
Understanding Bonds	p. 119
How You Can Lose Money in Bonds	p. 120
The Advantage of Bond Funds	p. 121
Total Return, Total Risk	p. 122
Stocks versus Bonds-An Alternative?	p. 125
Keep Your Nest Eggs Safe with Chicken Money	p. 125
Chicken Money Investments	p. 126
Chicken Money and Risk	p. 128
A Minute on Mutual Funds	p. 128
Resources for Stocks, Bonds, and Chicken Money	p. 130
Beyond the Basics	p. 133
Exchange-Traded Funds	p. 135
Real Estate Investment Trusts	p. 137
Gold and Natural Resources	p. 138
The U.S. Dollar	p. 140
Options	p. 141
Futures	p. 142
Hedge Funds	p. 144
Resources for Investing	p. 146
One-Step Retirement Investing	p. 149
Buying the Whole Market	p. 151
Index Mutual Funds	p. 151
Exchange-Traded Funds: Spiders	p. 152
Futures: E-mini S&P 500	p. 152
Retirement Investing Made Easy: Targeted Retirement Funds	p. 153
How Targeted Retirement Funds Work	p. 154
Comparing the Companies	p. 155
Starting Small-No Excuses!	p. 157
U.S. Global Funds-ABC Plan	p. 158
ShareBuilder	p. 158
Make the Call	p. 159
Streams of Retirement Income
Where Will the Money Come From?	p. 163
The Balancing Act: Income versus Principal	p. 165
Gainful Employment in Retirement	p. 166
Withdrawals from Retirement Accounts	p. 168
Where and When to Withdraw	p. 168
Required Minimum Distributions and Required Beginning Date	p. 170
Getting It Right	p. 171
Generating Income from Your Portfolio	p. 172
Laddering: A Bond Strategy for Retirement	p. 172
Covered Call Writing to Add Investment Income	p. 173
Income Resources	p. 175
Annuities for Income and Tax-Deferred Growth	p. 177
Immediate Annuities	p. 179
Tax-Deferred Annuities	p. 181
Fixed-Rate Tax-Deferred Annuities	p. 182
Variable Tax-Deferred Annuities	p. 182
The Latest Annuity Products	p. 183
Guaranteed Minimum Income Benefits	p. 183
Equity-Indexed Annuities: A Warning	p. 186
Tax-Deferred Annuity Withdrawals	p. 188
Tax-Deferred Annuity Exchanges	p. 188
Your IRA Inside an Annuity?	p. 189
Annuities: The Real Risk Factor	p. 190
Annuity Information and Pricing	p. 191
Social Security and Medicare	p. 193
Social In-Security	p. 194
How Much Can You Expect?	p. 196
How Much Can You Earn?	p. 198
How to Apply for Benefits	p. 199
Medicare	p. 200
Medicare Enrollment	p. 200
How Medicare Works	p. 201
Medicare Supplement Policies	p. 202
Medicare Prescription Coverage-Part D	p. 203
A Final Thought about Social Security and Medicare	p. 204
Government Benefit Resources	p. 204
How to Turn Your Home into Your Pension	p. 205
Reverse Mortgages	p. 206
Reverse Mortgage for Income	p. 207
Reverse Mortgage for Purchase	p. 209
More Income from Your House Using Trusts	p. 210
Installment Sale	p. 210
Private Annuity Trust	p. 211
Reverse Mortgage Resources	p. 213
Long-Term Care: The Greatest Risk of All
Long-Term Care Insurance: Who Needs It?	p. 217
The Government's Role in Long-Term Care	p. 219
Insurance for Your Retirement	p. 222
Our Parents, Ourselves	p. 223
Long-Term Care Insurance: A Woman's Issue	p. 224
What If You Don't Use It?	p. 225
Why You Shouldn't Procrastinate!	p. 226
Long-Term Care-The Facts	p. 227
How to Understand Long-Term Care Coverage	p. 229
Rising Demand, Soaring Costs	p. 231
When to Buy? While You Can!	p. 232
How Do I Use My Policy?	p. 234
What Should My Long-Term Care Policy Cover?	p. 235
Elimination Period	p. 235
Daily or Monthly Benefit	p. 236
Length of Benefit	p. 236
Inflation Protection	p. 237
Reimbursement Policy	p. 237
Guarantee Period	p. 238
Spousal Discounts	p. 239
Intergenerational Transfers	p. 239
Care Coordinators	p. 240
Optional Riders	p. 240
Partnership Programs	p. 241
International Coverage	p. 242
Key Elements of a Long-Term Care Insurance Policy	p. 242
Buying Your Long-Term Care Policy	p. 243
Which Insurance Company Should You Choose?	p. 244
What Should It Cost?	p. 245
10-Pay: Controlling Price Risk	p. 246
Long-Term Care Policies and Income Taxes	p. 247
Paying for Long-Term Care with Life Insurance and Annuities	p. 248
Acceleration Riders	p. 249
Blended Life Insurance Policies	p. 249
Blended Annuities	p. 250
Employee Group Long-Term Care Policies	p. 251
The Federal Long-Term Care Insurance Program	p. 252
Long-Term Care Insurance from Affinity Programs	p. 252
A Final Argument: The Cost of Not Having Long-Term Care Insurance	p. 253
Resources for Purchasing Long-Term Care Insurance	p. 254
Estate Planning: The Price of Success
What's Left?	p. 259
What Could Happen?	p. 261
What Is Your Estate?	p. 263
What Are Estate Taxes?	p. 263
What Is Probate?	p. 264
What Is a Revocable Living Trust?	p. 265
Health-Care Power of Attorney	p. 266
Living Will	p. 266
Durable Power of Attorney	p. 267
Naming Retirement Plan Beneficiaries	p. 267
Your 401(k) Plan Beneficiary	p. 268
Your IRA Beneficiary	p. 269
What Else Should You Consider?	p. 271
Guardianship of Children	p. 271
Bequests to Minor Children	p. 271
Trusts for Disabled Adult Children	p. 271
Division of a Business	p. 272
Moving Assets Out of Your Estate	p. 272
529 College Savings Plans to Avoid Estate Taxes	p. 273
Reverse Mortgage to Fund Life Insurance Outside the Estate	p. 273
Life Insurance and Your Estate	p. 274
What Kind of Life Insurance Do You Need?	p. 274
Keep Life Insurance Outside Your Estate	p. 275
Changing Policies	p. 276
Spouses and Estate Planning	p. 276
Choosing an Estate Planner	p. 278
Estate Planning Checklist	p. 279
Conclusion	p. 281
Acknowledgments	p. 283
Index	p. 287
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