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Highlights of the November 2007 Issue of MONEY
[Full stories also available online at www.CNNMoney.com ]
SPECIAL REPORT: RETIRE RICH, A REAL-WORLD GUIDE TO FINANCIAL FREEDOM
BEST PLACES TO RETIRE: BACK TO THE CITY, by Carolyn Bigda, Erin Chambers, Joe Light, Sarah Max, and Jennifer Merritt, page 127
If life after work means more to you than settling into a beach chair, then a big city, with all its culture and street life, might be just the ticket.
The kids are grown and that suburban house is starting to feel a little outsized for the two of you. But you can't see spending the next phase of your life in a golf community in Arizona or a Gulf Coast condo in Florida. So how about launching your own urban renewal? Sure, city life isn't for everyone. There's the expense, for starters. But one in eight 60-to-64-year-olds who plan to move want to head for the city, according to Robert Charles Lesser & Co., a real estate advisory firm. Since you're no longer a kid, though, not just any neighborhood will do. MONEY combed five of the country's largest cities for areas that have low crime, rich cultural amenities, easy access to transportation and great medical facilities.
MAKE YOUR MONEY LAST A LIFETIME, by Walter Updegrave, page 96
You're working and you're investing. As retirement gets closer to reality, you'll need a plan for turning all your savings into security — so you can really enjoy the next phase of your life. Start here.
One of the most important transitions you'll make when you're finally ready to call it a career is shifting your attention from putting money away to turning your savings into an income that will support you for the rest of your life. At that point your standard of living will no longer depend on your earning power and become entirely an issue of how well you manage your money. MONEY is often asked, "How can I turn the money I have sitting in 401(k)s, IRAs and the like into regular spending cash for retirement — and how do I do this so that I don't outlive my savings?" There's no one-size-fits all answer to that question. Nor are there any guarantees. Life and the investment markets are too uncertain for that. But if you follow MONEY's four-step strategy, you can be sure you're doing all you reasonably can to generate the income you'll need to enjoy retirement.
- Figure out what's coming in.
- Look for ways to boost your income.
- Invest for growth.
- Create a personal pension.
HOW TO HARVEST A RICH 401(k), by Janice Revell, page 106
Would you like your retirement income guaranteed or tax-free? That's the choice you get with two new 401(k) investment options. One — or both — could be coming to a plan near you.
Recently it's been dawning on the folks who design 401(k)s that the ultimate goal of the plans is to provide a living income in retirement. And that the best time to start planning for that eventuality is when you put the money in. The result is two new 401(k) investment options that may show up in your plan soon. MONEY explores your options.
FACING UP TO THE COSTS OF LONG-TERM CARE, by Amanda Gengler and Pat Regnier, page 136
No matter how well you plan retirement, the catastrophic expense of long-term care could ruin it all. Insurance looks like the obvious solution. Turns out it's anything but.
Long-term-care insurance seems simple — at first. Its purpose is to protect you from a very real, very scary possibility — that one day you might be unable to take care of yourself. If you wind up in a nursing home or need extensive assistance at home, you will face catastrophic costs that could eat up every dollar you ever earned. Insurance looks like the solution — the customary mechanism for sharing a potentially devastating financial risk with thousands of other policy-holders. And it can work. Long-term-care insurance, however, has plenty of catches. MONEY explores the issue.
WORKING IN RETIREMENT: THE REAL STORY, by Walter Updegrave, page 113
You know you won't put away the work shoes for good. But do you know the answers to the most important questions about your post-career job? You will now.
Even if you're pretty well set, it doesn't hurt to have a few extra bucks coming in during retirement. And research shows that older people who work — especially those in jobs they enjoy — tend to be happier and live longer than those who don't. But you need to be realistic too. The type of work you can most easily get as a retiree won't offer the pay and prestige you once commanded. Bottom line: You've got to be flexible and resourceful, maybe even more than when you were climbing your career ladder. So before you start polishing your resume, ask yourself MONEY's five questions. Our answers will give you a realistic sense of the opportunities and challenges you'll face, and they could help you find work that thickens your wallet and engages your brain.
- What kind of job can I get?
- How much can I earn?
- Can I get health benefits?
- How can I tell if a company is serious about hiring retirees?
- What happens to my Social Security benefits?
TIME TO GET REAL, by Penelope Wang, page 86
A lot of what you might think you know about saving for retirement is simply a myth. Before you can consider yourself solidly on track to financial freedom, you have to get a few things straight.
When you start to think seriously about retirement, you come across plenty of widely held beliefs: You're in trouble without a pension; your home can be your security blanket if all else fails; and according to one widely reported survey, you are more likely to see a UFO than to collect Social Security. Sure, you can find a grain of truth in all such folk wisdom. But accept every truism and you're plotting a course to retirement with bad directions. Challenge a few common myths, and more often that not you'll find that the reality is more reassuring than you'd expect. And it's certainly more useful. Before you take another step toward your retirement, MONEY helps you get real about what it takes to get where you want to go.
ALSO IN THIS ISSUE
DECISION TIME, by Jennifer Merritt, page 21
It's 2008 open enrollment, your chance to elect better health coverage, special tax breaks and other goodies from your employer. Here's how to vote:
- Pick a health candidate
- Say yes to flexible spending
- Don't miss other ballot issues
YOUR MONEY & YOUR LIFE, by Jean Chatzky, page 28
The buddy system can make you richer. Research suggests that hanging with the thin crowd can shrink your waistline and fatten your wallet.
Academics and other researchers who have dipped a toe into the networking pool are finding that if you're surrounded by people who save and invest, you're likely to do the same. And if your pals spend like crazy, well, you're in trouble. So how do you make the network effect work for you? Money has some helpful hints.
YOUR MONEY AND YOUR LIFE, by Jean Chatzky, page 34
Making the Best of a Bad Bet: When money was easy and housing was booming, piling on debt seemed to pose little risk. Uh-oh.
Not so long ago, living a little beyond your means may have struck you as a downright sensible thing to do. That gamble, you may know all too well, is no longer paying off. The housing bust and the credit crunch that followed the collapse in subprime lending have put an end to the house as a piggybank — as well as to a lot of other tried and true borrowing tactics. If you are in over your head now you've got to think strategically about managing your debt portfolio so that it doesn't crush you. MONEY's three-step plan that follows can help you bear the burden:
- Reset your priorities
- Stretch it out
- Shop like crazy
IS MARRIAGE A DUMB MOVE?, by Jennifer Merritt, page 39
Falling in love after years of building wealth can make life complicated. Tying the knot sometimes only makes it worse.
The decision to wed or not, of course, is between you, your intended and your conscience. But you should realize that from a coldhearted financial perspective, the U.S. tax code and Social Security rules don't necessarily come down in favor of marriage for people with a substantial amount of assets. True, you'll automatically reap certain legal benefits from tying the knot, such as access to employee perks or a greater voice in health-care decisions. On the other hand, you may find yourself paying a significant price, from lost income to higher taxes. So whether you plan to say "I do," or "Let's not," be sure to ask yourself MONEY's questions.
PLUS: Three fast fixes: A union of heart, mind and money.
YOU OWN IT. YOU SELL IT., by Josh Hyatt, page 55
Be your own broker when you sell your house and you could save thousands. Here's what it takes.
Welcome to the brave new world of FSBO (pronounced fiz-boh), an acronym for "for sale by owner" and the short-hand way to refer to houses that sellers market themselves. With home prices expected to fall this year and next, more sellers are going the FSBO route. Their goal: to keep a bigger share of the proceeds from a sale by forgoing the services of a listing broker and saving the 3% commission she'd likely charge. But even in the best of times, many homeowners who start out doing a FSBO eventually enlist the aid of a broker. Luckily, as interest in FSBOs has grown, so has the number of businesses that serve them. As long as you're willing to show the place, you can pay a few experts here and there and still wind up saving a big chunk. MONEY asked homeowners who did it — and experts who serve them — how to do a successful FSBO.
ARE YOU REALLY SUCH A DAREDEVIL?, by Paul J. Lim, page 67
You welcomed risk as the bull market rewarded every bold bet. Now that the ride is bumpy, it's time to ask just how brave you are.
Isn't it wrong to let emotions guide your investment decisions? A growing school of thought says it would be a mistake not to factor in your emotional fortitude when assessing how aggressive you should be. The point is to position your portfolio in a way that makes it less likely that your emotions will get the better of you in a sharp downturn, and to do so while giving up as little as possible of the long-term gains that stocks offer. There are several sensible ways to do that and MONEY highlights them for you.
DEPARTMENTS
START: Don't Pick the Joker Medicare Advantage might be right for you or your parents. Just play your cards right. Do The Right Thing Is it okay to inflate my salary in a job interview? PLAN: The Boom Years "Don't trust anyone under 30" and other misplaced ideas about younger colleagues. HOME: Six Cures For the Small-Kitchen Blues Expand your kitchen without breaking the bank. SPEND: An Affair to Remember Make yours the bash everyone's talking about. INVEST: The Intelligent Investor As you age, you perceive risk differently. That can make you rich — or cost you dearly. Sivy on Stocks Stocks that can beat the credit crunch.
MONEY is available in digital format. To access this version go to http://digital.money.com
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