Sep 24, 2020
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Jane Bryant Quinn’s New Thinking On Making Your Money Last

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Jane Bryant Quinn author of A way to Make Your Money Last SIMON & SCHUSTER As someone who has been writing and editing personal-finance stories for over four decades I’ve got some idols in my field. On the top of the list is Jane Bryant Quinn. So I used to be delighted to have the prospect to ring her up in Rome where Quinn and her husband Carll Tucker have begun living La Dolce Vita during their first year of retirement

 

Our two main topics: 1) her newly revised book A way to Make Your Money Last: The Indispensable Retirement Guide which reveals how her thinking has changed on the subject and 2) how she and her husband planned for their very own retirement. Even though Quinn is 80 (hard for me to believe) I somehow never pictured her retired

 

Quinn as you likely know has written a money column for the AARP Monthly Bulletin and AARP. com for years and a number of other other personal finance books. She was also probably the most successful syndicated newspaper columnists a writer for Newsweek Good Housekeeping and Woman s Day a PBS host and an everyday for CBS News

 

Also on Forbes: Play Video Highlights from our 4 300-mile six-hour-time-difference phone conversation: Richard Eisenberg: Why did you want to put in writing a brand new version of A way to Make Your Money Last three years after the last one? Have things changed that much? Or has your advice changed? PROMOTED UNICEF USA BRANDVOICE | Paid Program
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Show Me The Equal Money Jane Bryant Quinn: There have been three things on my mind

 

For people who find themselves middle age or near Medicare age I felt it was important for them to understand what s happening with the Affordable Care Act and with employee health insurance. And there are the new fiduciary rules put out by the SEC [Securities and Exchange Commission] where people who find themselves actually salespeople at heart are actually allowed to say they’re putting your interest just before theirs

 

But they are not fiduciaries; I call them fake fiduciaries. It truly is insane. Another excuse I revised the book is that individuals are concerned in regards to the stock market having gone up a lot for therefore long. They think around every corner there s going to be a market collapse

 

So with this fabulous market I assumed they needed to be updated and reminded about asset allocation [dividing your investment portfolio among stocks bonds and cash]. Your book is termed A way to Make Your Money Last. How concerned are you about the potential of Americans running out of money in retirement? How do you prudently decide how much you are able to afford to spend each year and have it last thirty years? That s a difficult thing to figure out

 

I am concerned that people don t make those calculations. When your paycheck income stops it s a terrifying moment. You go searching and say: Now what? When individuals are working it s like climbing a mountain with a [retirement savings] dollar value in mind or maybe it s just saying I want more money

 

But when the paycheck stops you have an entire different view of money; now it s a decumulation mind not an accumulation mind. So you have to say to yourself: How can I create income out of this money? That s what I wrote about inside the book. When you retire it s like when get out of school: You don t know who you’ll be or what you’ll do

 

Everything is open. But presumably you have thirty years to live so what is going to you do with that time? It s style of like being young again but with some aches and pains. I lost my mother this year at one hundred and three. When you have a for much longer life span than you think you do

 

And the retirement-income calculation are more complex for couples? When a pair sits down and does the calculation or goes to an adviser they look into themselves and say: We will afford to spend X amount. But that s only portion of what you would like to do. You would like a second calculation on what would happen if my spouse or partner died tomorrow? And a third calculation on what would happen if I died tomorrow? Those calculations may help you opt whether you are able to afford to retire

 

You wrote in your book that your views have changed on some things regarding getting cash last in retirement. What have you ever changed your mind about and why? A simple low-cost single-premium immediate-pay annuity that pays monthly income for you or your spouse for life. I ve become so much more drawn to them

 

The prices of those annuities have gotten better relative to bonds as interest rates on bonds have come down. In case you move money from a bond fund to a simple lifetime annuity your income will improve. They re especially worth considering for people who find themselves aging and think their savings goes out the door faster than they wanted and who’re conservative about money

 

Social Security is the best longevity insurance anywhere because benefits are associated with inflation. But you aren t a fan of all styles of annuities. There are other annuities [variable annuities or fixed-index annuities paired with living-benefit guarantees] that promise a guaranteed lifetime good thing about five percent for life. To get that when you have to pay three or three-and-a-half percent in costs

 

That s a heckuva lot of money. It is not sensible to me. And you ve changed your mind about reverse mortgages. You like them more for some people who find themselves a minimum of sixty-two — the minimum age to qualify —than you once did right? Yes I m feeling better about them

 

Two things have happened. In the past among the problems with reverse mortgages was that those who almost ran out of money took them and the reverse mortgage income wasn t enough to pay their bills and keep up their house. So they d run out of money and be on the risk of foreclosure

 

The law changed. Now in case you apply for a reverse mortgage and the lender s analysis is which you probably unable to pay your bills after ten or fifteen years you don t get all of the money to spend. The lender keeps some aside to pay for the property taxes and keep the house going

 

So there are fewer risks for people who don t have much money. And for people with quite a few money you may take a reverse mortgage at sixty-two inside the style of a credit line that increases each year by the quantity of interest due on the loan. This credit line is a hedge against inflation and gives you the choice so if the stock market goes down in place of selling stocks you are able to borrow out of your credit line instead

 

What s your view about working in retirement to earn money last? It s clearly one thanks to continue to have a paycheck without living entirely in your savings. However it s an exceedingly individual thing: Is your health good? Are there jobs in your area? For a married couple where both are working and one becomes very ill often the other spouse will quit his or her job to guard the spouse

 

I’d ask couples to think very carefully about doing that. In case you stay at work you ll still have a paycheck and may contribute in your savings plan and build up more earnings for Social Security. Then you are able to hire the kind of help you would like at home

 

Emotionally it feels right to quit your job to guard your loved one spouse but you would like to look at the financial aspects. How important is selecting when to begin claiming Social Security retirement benefits? Quite a few people leave money on the table by claiming benefits starting at sixty-two since the payments are reduced when compared with waiting to begin claiming until age seventy

 

The longer you wait the larger your Social Security check will be. Social Security is the best longevity insurance anywhere because benefits are associated with inflation. But for couples it s very hard to determine when each spouse should start claiming Social Security benefits. I like to recommend using among the services that help do the calculations: SocialSecurityChoices

 

com SocialSecuritySolutions. com or MaximizeMySocialSecurity. com. The stock market had a very good year in 2019 and has been on a pretty good run in recent years. What s your advice to people nearing retirement or in retirement who have money inside the stock market? It truly is an asset allocation question

 

My feeling is that people towards retirement might desire to perhaps hold a smaller percentage in stocks after they first retire in case the market goes down. There will be a decline in the market at some point; and that s the time to return to a standard allocation for stocks

 

Research has shown that using the four-and-a-half percent withdrawal rule [taking out that quantity from savings inside the first year you retire; in each subsequent year taking the previous year s dollar amount plus an inflation increment] works when you have stock-market index funds and intermediate-term Treasury bonds — even if you have as little as thirty-five percent of your portfolio in stocks or as much as sixty-five percent in stocks

 

That s an attractive wide range. In your book you make a distinction between index funds. You recommend buying low-cost index funds and not high-cost index funds. Are you able to explain the difference? The difference is a salesperson. When you re buying from among the firms that has brokers and sales charges an index fund will cost quite a few money

 

But Fidelity has an index fund that costs zero and Vanguard has one close to that. Interest rates are still very low. What do you advise people looking for safe and steady retirement income? I d tell them that things sold as bond substitutes aren’t bonds. Quite a few financial products say they’re safe and pay a more robust interest rate

 

How can that be true? You also write that the last and hardest plan for making your money last in retirement is planning for what might happen in case you develop dementia or a have a stroke. What s your advice on this? First you have to think about it

 

Where might you want to live in case you become indisposed? What renovations might you would like to make in your home? You would like to make a will and you would like to ask yourself if you would like a trust. And in case you ll have a trust who ought to be your trustee? Do you have a living will? A medical power of attorney? These are important things so if all of a sudden you are able to t guard yourself you don t just say: Oh the youngsters will handle it

 

You lately retired yourself and moved to Rome along with your husband Carll for a year. Are you able to walk me through that decision — both when to retire and where? Why now? Because I ve been working since I used to be sixteen. I took a look into my age and asked: Do I desire to write a further column or book? And the reply to that was: No

 

We could afford to retire. I ve done as you may expect some decent financial planning. Our original plan was to downsize from our big New York City apartment and sell it and get something smaller maybe rent. We actually have a second home an hour and a half north of New York City

 

Then my husband and I said to every other: If we sell the New York City place and keep the weekend place what might we do? And we checked out each other and said: Let s live in Italy! Clone of that. Rome has art and culture and music and without a doubt great food

 

We ve always loved Italy. We told our friends we were going to do it so we couldn t back out. We came to visit last June to look for apartments and located a very good one and signed a lease. And we came here to live October first. Do you have plans for retirement after your year in Rome? Nope! It s hard for me to say I won t work anymore

 

My emotional mind says: Who am I if I m not writing columns or books? But I m learning Italian taking in culture and making friends. We ve got an entire new life here that s just fabulous. I call it my gap year. When it s over I ll be used to not working

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