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Expert weighs in on the dos and don’ts of retirement

Author Emily Brandon discusses retirement issues in her

Author Emily Brandon discusses retirement issues in her book, "Pensionless: The 10-Step Solution for a Stress-Free Retirement." Credit: iStock

Emily Brandon, 34, a senior editor at U.S. News & World Report, knows far more about retirement issues than most people twice her age.

For the past 10 years, she’s been writing about retirement programs, savings and related topics. She began such coverage when working for Consumer Reports during the launch of the Medicare Part D prescription drug program. Brandon’s recently published book, “Pensionless: The 10-Step Solution for a Stress-Free Retirement,” describes clearly the many complex rules and decisions that face Americans in navigating Social Security, Medicare, retirement investment plans and other government programs and private financial options.

We asked her for insights about some of the most common decisions people need to make and pitfalls to avoid when it comes to retirement and finances.

Can people just rely on books like yours and what they read on the internet, or should they actually be sitting down with some kind of retirement planner or financial adviser?

It can be helpful to use a financial planner, particularly a fee-only planner and not someone who gets more by steering you into different investments. But not everyone can afford a financial planner, and those people need to do more research on their own. It’s worth checking out websites, but some are better and easier to understand than others. I’ve tried to do a guide (with the “Pensionless” book) that directs you to all the primary sources to get more information but also gets you started on the programs and rules and how to use them to your advantage.

What should people in their 30s and 40s be doing?

At that point, it’s important to save in a 401(k), and a program with an employer contribution will make it all the better. But it’s good to pay attention to vesting schedules when making career decisions, so as not to lose the employer match by changing jobs.

And what should people in their 50s and early 60s be focused on, if they’re still working while retirement looms?

It’s your last chance to get the most money you can into retirement accounts and get the tax breaks of saving for retirement. It’s also time to think a lot about Medicare and Social Security. You need to think about what age to begin collecting Social Security benefits that might work best for getting the most you can out of Social Security over your lifetime. And you need to think about Medicare in terms of signing up for it at 65 to avoid the late enrollment penalty.

And for people once they retire?

There are quite a few things. You want to make sure you’re not spending down your retirement savings too quickly. You also want to pay attention to minimizing taxes while taking savings out. Paying attention to when and how you withdraw money from traditional 401(k) or IRA accounts will help reduce your tax bill. If you’ve done some savings in a Roth account you’ve added diversification to your portfolio, because with a Roth, you don’t need to pay taxes on the earnings when you make withdrawals. If you can take some money from there and some from a traditional retirement account, you can try to stay in a low tax level.

So what are the most common pitfalls people need to avoid?

It’s incredibly important to sign up for Medicare on time, which is three months on each side of your 65th birthday. If you don’t sign up in the initial enrollment period, it means you could have to pay higher premiums for the rest of your life. If you’re already getting Social Security, Medicare enrollment happens automatically, but with the age of full retirement for Social Security going up to 66, it’s more likely to become a problem, and you really have to take care to sign up during this initial window.

What else do people need to give more thought to than might commonly be the case?

I would think carefully about when you should be signing up to receive Social Security. If you sign up early, at age 62, you get lower monthly payments for the rest of your life. It’s important to think about that, in terms of what you expect your lifetime to be, and it’s also important to think about your spouse and coordinating benefits with your spouse, because when the higher-earning spouse passes away the other one can inherit that benefit.

How many people make the wrong decision about when to collect Social Security?

When you turn 62, after paying into it your entire career, it can be difficult to wait a few years, particularly if you know people who are already signing up. The challenge is none of us knows how long we’re going to live. You can look at how long your parents lived, your current health, what chronic conditions you have. If you expect to live a long life into your 90s, you’re going to come out ahead by delaying as long as possible. If in poor health, you’re going to want to sign up earlier, but you should also take into consideration your spouse. You can go on the Social Security website and set up a personalized account that will tell you exactly how much you will get at various claiming ages. It’s worth taking a look at during your planning and factoring this in.

What are the comparable big decisions to make about Medicare?

The Medicare Part D plans change each year, with the insurance providers allowed to change which drugs they cover and what they charge. It’s important to shop around every year, because every year your medications may change and the coverage in your existing plan may have changed. The new sign-up period is from Oct. 15 to Dec. 7, and even if you’re happy with current coverage, it’s a good idea to shop around for a new plan.

How well has Medicare Part D worked out in living up to promises to reduce drug costs for seniors?

There are many good and bad things about Part D, but before that, retirees didn’t have prescription drug coverage at all. But there’s a lot of work involved for individuals, a lot you have to do as a consumer. It gets harder every year to be a good consumer when you’re not in good health, but the information’s all there on the Medicare website where you can type in the medications you use, and it tells you about all the coverage plans in your area and how much the drug would cost you.

Are there any savings people can make on retirement investments if they’re similarly diligent consumers?

It’s important to minimize the fees you pay on investments, and one document that can help is the 401(k) fee disclosure statement sent to you each year. Every fund within a 401(k) plan will charge different fees, and the disclosure statement lists them all. You may be able to switch into other funds with much lower fees.


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