This is a major financial decision for retirees. 25% of retirees over 60 still have their savings in a 401k plan, 5 years after retirement. There are advantages for each option. IRA More investment options. Easy to implement complex investment strategies Consolidation of multiple 401K accounts into one IRA simplifies finances. 401K Costs and fees are normally lower. Better protection against law suits, creditors and bankruptcy. There are many more pros and cons for each. Much will depend on individual situation. If you are already a retiree, which option did you pick and why? Are you happy with that decision? What would be your advice to others? If you are planning to retire soon, which option are you considering and why?  

I was reading this New York Times Article today titled: " How one man lost $740,000 to scammers targeting his retirement savings". See this link. This is a shocking reminder that scammers are getting more and more sophisticated. It is going to get worse. Criminals on the internet are increasingly going after Americans over 60 for their retirement savings. Potential losses last year were over $3.4 billion. Here's another link that's relevant. What steps should we take to protect our assets from scammers? What telltale signs will you look for,  to warn you of a potential scam in the making?

WE’VE ALL HEARD THE maxim that “without risk, there’s no reward.” Over the years, we’ve all taken countless risks—big and small, financial and otherwise—to get to where we are today. Every activity has a risk associated with it, and that includes retirement. It’s best to be aware of these risks and, when prudent, take steps to limit them. Here are nine risks that retirees face. 1. Health. Even if we’re fortunate to enjoy a long, active retirement, our health may not be great in our later years. Alternatively, even if our own health holds up, our spouse may have medical issues. On top of that, we’ll likely face escalating health costs as we age. I’ve watched a friend move from independent living to assisted living to a nursing home to memory care. Each move was progressively more expensive. Good planning is needed to manage such life-changing events. 2. Longevity. I met a retiree at a party who said, “My mother passed away at 70 and my father at 72. The chance of me reaching my 90s is virtually nil. My plan is to spend more and enjoy life while it lasts.” A wise move? No matter what our family health history, it’s risky to assume we won’t enjoy a long life. And even if we don’t live to a ripe old age, our spouse may. 3. Market downturns. While the stock market has returned an average 10% a year over long stretches, a major drawdown of 20% or more could happen at any time. When we were young, we had many years to recoup such losses. But once we’re retired and drawing on our portfolio for spending money, our time horizon is often considerably shorter. A balanced portfolio of stocks and bonds can help reduce this risk. 4. Spending. We can’t control how the financial markets perform, but we can control our own spending—and avoid the excesses that can put our retirement at risk. My advice: Prior to buying anything, consider whether it's a need or want. 5. Family. Our retirement plan could be derailed by a host of family issues, whether it’s divorce, the need to support adult children, paying for children’s or grandchildren’s college costs, the death of a spouse and estate-planning mistakes. 6. Inflation. Most employer pensions aren’t indexed to inflation. Our pension might seem ample when we first retire. But a decade later, the buying power will be much reduced. As with many risks listed here, ample savings are likely our best defense. 7. Scams. Thieves are using increasingly sophisticated techniques to target seniors. We’ve all heard horror stories of investors losing huge sums to trickery and to get-rich-quick schemes. You no doubt recall the saying, “If something sounds too good to be true, it probably is.” Those words are worth bearing in mind. 8. Known unknowns. Think about threats such as flooding, fire, hurricanes, long-term-care costs, accidents and lawsuits. We know these are all possibilities, but we don’t know when or if they’ll come to pass. Still, we can prepare. 9. Unknown unknowns. Consider the recent pandemic. The world was unprepared and billions of lives were turned upside down. We can’t make specific preparations for threats we’re unaware of, but we can make sure our financial life can withstand large, unforeseen shocks. I’ve spent time thinking through the above risks, and I believe it’s helped me to make more rational financial choices. Maybe we should all take our cues from the quote that’s sometimes wrongly attributed to Mark Twain: “I am an old man and have known a great many troubles, but most of them never happened.” Sundar Mohan Rao retired recently after a four-decade career as a research and development engineer. He lives in Tampa in a 55-plus community. Mohan's interests include investing, digital painting, reading, writing and gardening. Check out his earlier articles. [xyz-ihs snippet="Donate"]

MANY FOLKS CLAIM TO be ready for retirement, both financially and psychologically. But they’re often surprised to discover that the reality is different from what they expected. I started planning well in advance of my 2023 retirement. I read dozens of books on the subject, and talked to many classmates and friends who’d already retired. Of all the books and videos that I reviewed, one talk on YouTube stood out: a TEDx Talk by Dr. Riley Moynes on the four phases of retirement. The four phases he identifies are honeymoon, loss of identity, trial and error, and reinvention. Based on my observations of recent and long-term retirees in two 55-plus communities, these four phases do indeed reflect what happens in retirement. But I also think two further phases need to be added. Phase 1: Honeymoon. New retirees start traveling to exotic places, visit long-lost friends and relatives, and splurge on expensive things. Freedom from a nine-to-five job is liberating. Decades of saving and investing provide sufficient cash flow and a big enough nest egg to make retirement feel like one long vacation. This phase can get derailed by unforeseen events. I know many who retired during the pandemic and stayed home for a while. The retirement honeymoon can also get derailed by a sudden change in your health or your partner's, or by the need to care for elderly parents. Moynes says that, “Phase 1 lasts for a year or so, then it begins to lose its luster. We begin to feel a bit bored, and we ask ourselves, ‘Is that all there is to retirement?’” When I retired, I didn’t spend much time in the honeymoon phase. I was clear about what I wanted to do and got busy right away. Phase 2: Loss of identity. This is the phase when folks start regretting that they retired. They feel the loss of their old routine, their interactions with colleagues and their identity. Moynes says that, "Phase 2 is also where we come face to face with the three Ds: divorce, depression and decline, both physical and mental. The result of all of this is we can feel like we have been hit by a bus.” Phase 2 is a challenge that some retirees struggle to escape. Sometimes, health issues crop up, derailing dreams of an active lifestyle. Phase 3: Trial and error. “In phase 3, we ask ourselves: How can I make my life meaningful again?” says Moynes. “How can I contribute? The answer often is to do things that you love to do and do well.” This is a period of trial, error and experimentation. There could be many disappointments as you figure out what works for you. You might find yourself taking classes, trying new hobbies and expanding your social network. You may also decide to downsize or move. This is the phase I’m in now, trying out different things. My writing for HumbleDollar is one such experiment. Phase 4: Reinvent and rewire. This is the stage where we try to get the most out of retirement. Moynes encourages us to ask, “What’s the purpose here? What’s my mission? How can I squeeze all the juice out of retirement?” In this phase, you’re reinventing yourself to make meaningful contributions. This could be one of the happiest phases. I see retirees starting a blog, a business or a charity, or helping the needy and volunteering. There are many ways to make contributions that are deeply satisfying. To the above four phases, I’d add two more phases to cover the entire spectrum of retirement. Phase 5: Routine. As you get older, your energy level decreases. You pick a routine to follow every day. A daily walk, healthy eating and meeting friends become important. I see retirees enjoying the simple things in life. It’s a blessing if you can maintain good health. This is also the time to develop a plan to manage your next phase. Phase 6: End of active life. While you can skip one or more of the previous phases, going through the end of active life is almost inevitable. Your mobility may be affected, and you may need help managing daily activities. Even if you’ve prepared the necessary estate planning and financial documents, you must still come to terms with the fact that your time on earth is limited. The death of a spouse or a terminal health diagnosis are shocks you may need to bear. Major life changes can include moving closer to children or to a continuing care retirement facility. I’ve been lucky so far. The future, however, is impossible to predict—and no doubt many challenges lie ahead. Sundar Mohan Rao retired after a four-decade career as a research and development engineer. He lives in Tampa in a 55-plus community. Mohan's interests include investing, digital painting, reading, writing and gardening. Check out his earlier articles. [xyz-ihs snippet="Donate"]

I was reading an article focusing on the caregiving burden on adult children.   Shocking statistics: 63 million Americans — nearly 1 in 4 adults — now provide care to an adult with health or functional needs, or to a child with a serious medical condition or disability — a record high.   Nearly half of caregivers are struggling with finances.  More than 20% have taken on more debt, about a third have used up short-term savings, 30% have stopped saving, and roughly 20% are leaving bills unpaid or paying them late, according to the data. Return-to-office requirements are not helping.  More than 60% of caregivers are balancing their caregiving responsibilities while still employed. And half report they reduced hours, have taken unpaid leave, or even quit their job entirely. See link below:  https://finance.yahoo.com/news/63-million-adults-are-moonlighting-as-caregivers-with-little-support-130037767.html  We can minimize the caregiving burden for our children by moving to CCRC or assisted living, providing for long term care, downsizing and relocating closer to them, preparing a robust estate plan, and saving enough to provide for all future expenses. Even if we do these, the stress and emotional toll on children or relatives will still be significant. Many of you have experienced this already.  What should we do to make sure our children do not have to sacrifice so much when we need help due to our deteriorating health?  How are your family and friends managing to provide such help to their loved ones? 

After making progress on estate planning, documenting financial records, and updating family history, it suddenly occurred to me that I should make a list of life lessons I have learned along my life journey.   Obviously, these life lessons are a lot more than strictly financial, but certainly they will contribute to overall success and a fulfilling life for the next generation.   I came up with these and put them in a document along with my financial records. Hopefully, someday it will help the next generations in my family.  Here is my list of 10.   1. Live your own dreams, not someone else's 2. Believe and invest in yourself 3. Focus on health, family, financial security and a purpose larger than yourself 4. Be a lifelong learner 5. Be self aware and know who you are and what makes you tick 6. Learn from failures and keep moving 7. Be positive to overcome life's many challenges 8. Give to receive 9. Start small, think big 10. Leave everyone better than you found them   Everyone has different life experiences and value systems. What life lessons would you like to pass on to the next generation?