Saturday, January 4, 2014

Answers to: Are You Prepared for Retirement?

     You took the quiz -- and if you've been paying attention at Sightings Over Sixty you should know most of the answers. So . . .  check out the explanations below to see if you're really ready for retirement:

     1. b)  Most experts estimate that you can safely spend about 4% of your retirement assets every year, without worrying about running out of money. Some people who are concerned about current low interest rates recommend a more conservative 3% withdrawal rate; but if that doesn't work for you, you can always (but I'm not necessarily recommending it) buy an annuity which will pay more; or even a 30-year Treasury bond at the current rate of 4%.

     2. c)  According to Social Security actuarial tables, the average 66-year-old male can expect to live another 16 years, 10 months. The average 66-year-old woman will live another 19 year and 5 months . . . for an average of about 18 years.

     3. b)  In smaller accommodations near their old home. According to the U. S. Census Bureau fewer than 2% of retirees moved across state lines in 2010, the latest year reported. Most retirees do downsize at some point, but they typically stay within a two-hour drive of their old home, to be near family and friends.

     4. a)  Florida. In 1990 better than one out of four retirees who moved out of their home state relocated to Florida. Today, it's down to one out of seven. Still, despite the increasing popularity of the Carolinas and the Pacific Northwest as retirement destinations, more retirees move to Florida than any other state.

     5. c)  62. You can start withdrawing money from your IRA without penalty at age 59 1/2. You can begin your Social Security benefits at age 62 -- and receive "full benefits" once you hit full retirement age, which is 66 for most of us. But the better way to look at it: you're eligible to begin benefits anytime between age 62 and 70, on a sliding scale. The longer you wait, the bigger your check.

     6. d)  The average monthly Social Security benefit for a retired worker as of Nov. 2013 (the latest available figure) was $1,274. Benefits are going up marginally for 2014.

     7. e)  All of the above. If Social Security is your only source of income, you will likely pay no income tax. But a portion of your benefit may be taxed by the Federal government if your total income is above a certain amount, starting at $25,000 a year. Also, if you're under 66 and have more than $15,480 in earned income, your benefit will be "reduced." In addition, there are 15 states that, depending on your income, may levy state income tax on your Social Security benefit.

     8. c)  As noted, you can begin Social Security anytime starting at age 62, and the longer you wait the higher your monthly benefit ... up to age 70. After that, you get no increase, so there's no point in waiting beyond age 70.

     9. c)  65. While the age that Social Security considers "Normal Retirement Age" has gone up from 65 to 66, and will continue to go up to 67 for people born in 1960 and later, the age at which you're eligible for Medicare has remained the same, at 65.

     10. d)  It's hard to pin down your chances of ending up in a long-term care facility. Today, there are slightly more than 1 million people in these facilities, and close to 90% of them over age 65. The best guess you'll end up in a facility? About one out of three. If you are female, the chances are higher; for males the chances are lower.

     11. c)  According to Genomes Unzipped, the baseline risk of getting Alzheimer's is approximately 9% for men and 17% for women, for an average of about 13%. It's not that women lose their minds more often; it's that they live longer -- and the primary risk factor for Alzheimer's is age.

     12. b)  Despite all the advances in heart medicine, from statins to transplants, the number one killer in America today is heart disease, accounting for 31.8% of deaths for people over age 65. Cancer is number two, responsible for 21.6% of deaths. Alzheimer's is the cause of death for fewer than 5% of older Americans.

     13. e)  According to several sources, retirees say their favorite activity is traveling. Retirees also volunteer, spend time with friends and family, play golf, go fishing and work in their gardens. But in actual fact, according to U.S. News Retirement, people's favorite activity in retirement is relaxing -- reading, resting, watching TV.
     14. a)  The Big O himself, Roy Orbison. Other members of this late-'80s band included Tom Petty, Bob Dylan and George Harrison.

Here's "Handle with Care" by the Traveling Wilburys which came out in 1988:


Olga said...

Oh, I am sailing down Nostalgia Way today! Thanks for the Traveling Wilburys video!

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Fascinating information. Females/males = All people Women/Men= Over age 17 population
girls/boys= under18 pop. At least that's how demographers denote the sexes.


Kirk said...

I commented on the withdrawal percentage on the prior post. To summarize, the 4% number is a decent starting point, but some research is needed for each individual case. A good monte carlo simulation is recommended. With interest rates so low these days, annuities are a very poor option in almost all cases.

Re #12, everyone dies from something. If heart disease were to be significantly reduced, we might live longer on average but something else would take its place.

And as for that prior comment, I'd not recommend either.

Stephen Hayes said...

I always appreciate all the info. I'm trying to decide if I should start taking my Social Security next year (at 62) or wait until I'm 66. This choice might be easier if I had a crystal ball and knew how long I was going to live, but that might just lead to different problems.

Anonymous said...

Since the hubs had to retire the job was absolutely toxic to him at let's see 63 and I was 62 we are oky doky..We live in the pacific northwest it is 200 days of cold and clouds, moss grows freely on our grass and our patio..Our home was only 48,000 in 1978 early 1978 one can get a repod home for little money but one must put in a full heating system and insulation which will jack it up..gasoline is up near $3.50 and food soaring, since one has to stay inside over 200 days of a year unless one is a Nordic skier a warm paid off home is a must, taxes about 8.4 cents on the dollar for non food items grocery (food) no, no state income tax, but the weather is something else and no public transportation even after 35 years of living here, we are at the butt end of the state near God-Forsaken Oregon highest poverty and hunger rate of all the of the USA people come here thinking they will find the new highest per hour minimum wage of $9.32 not sooo fast even the native people who were born here can't find those jobs, so misery is in our county, city and state a lot! You cannot eat the atmosphere, we went to the coast for some crab a short drive, the waitress who got our crab in a tiny restaurant lamented over the lack of winter customers and they all go to the casinos and play the money they normally would tip and buy the crab, I left her $10.00 tip and she ran and hugged me..I felt for her the coast is dead for about 4 to 5 months one has to live each day..So just cause a place is pristine and gorgeous does not mean that many don't suffer, we yearn for Colorado where the sunshines all the time but we are not Happy about the Marijuana selling and dealing really, one can only do a little when retired, travel it costs enormous..we wanted to take the inside cruise to Alaska for our 40th and had a friends daughter try to arrange the small journey on a freighter not the big ships, it would have cost us about $4,500 and it would have been a very rustic trip but seeing all of Alaska in august, we have to worry about health costs going up and maintaining our home, but might just go, our daughter said it would be her gift to us, she will never marry and spoils us a lot, we don't want her to pay that so we shall see, 40 years ago one could really enjoy themselves in retirement if one lived to any retirement but sadly not today!

catlady said...

#13 - Hear, hear ! I have earned every second of the relaxing I'm doing in retirement. The fact that I have a choice in how busy I am is glorious. No bosses, no alarm clock, no work clothes, no one to answer to but myself, That, my friends, is Nirvana.

Anonymous said...

Thanks for the post. Actually, I think I have found the 55 and over communities on long island that I think would suit a relative. They offer mental and physical stimulation to their seniors too. Not only that, they also have great facilities that everyone can use.

Jason Hayes said...

The decision on when to start cashing out is tricky. By starting early, there's a chance that the fund will run out earlier, or you could only withdraw less per month. Getting the right balance between when to start, and by how much money you'll get per month should help in solving this issue. Of course, if there are medical problems, starting now might be the best option. Thanks for sharing!

Jason Hayes @ DECO Recovery Management