If you are in need of retirement help or ideas in preparation for retirement, Carla Fried from Money magazine, also seen as CBS MoneyWatch.com on the internet, is a great source.
Carla Fried is a contributing writer for Money magazine and is responsible for “The Retirement Beat” on CBS MoneyWatch.com. (Site is located at http://moneywatch.bnet.com/retirement-planning/blog/retirement-beat/ ). She started reporting on retirement help and issues when 401(k)s were brand new in the mid 1980s. As senior writer for Money magazine in the 1990s, she covered a wide range of topics regarding personal finance, including retirement planning and investment, real estate and insurance.
Carla is no stranger to the dot-com world, as she served as the managing editor of Quicken.com personal finance website where she developed various online tools and managed a group of journalist who wrote on the site’s Stocks, Funds, Retirement and Small Business sections. Since 2002 she has freelanced for a number of websites and publications including Business 2.0, Kiplinger’s, Money, The New York Times, and Real Simple.
1. Hello Carla. I want to thank you for sharing your time with us. You have quite an extensive background in journalism and involvement in financial planning. Would you mind telling us more about how, as a journalist, you got started discussing retirement help, such as investment and planning?
I sort of fell into it Don. I graduated from college (degree in journalism) in 1985 and started as a freelancer at Money magazine. I was assigned to a small, relatively “unpopular” beat: mutual funds. Remember, this was before 401(k)s had taken hold, and individuals weren’t typically active investors. But as we all know, funds became quite important in the ensuing decade, mostly because the 401(k) became increasingly popular with corporate America. So I sort of grew along with the explosion in mutual funds, and that meant I also closely covered retirement investing: 401(k)s and IRAs represent the vast majority of fund assets.
2. You have written an article recently entitled “Boomer Career Tip: Make Yourself Uncomfortable”. In it you state that boomers have actions they can take when they suffer from TOT disorder (Tip Of Tongue). Could you give us a short synopsis?
I stumbled upon a terrific article in the New York Times by a reporter who has a new book coming out in April that I am eager to read: The Secret Life of the Grown-Up Brain. I spend a lot of time reading research on aging, and talking to retirement and career-management experts. One of the challenges is that many people are now deciding they may want to keep working into their 60s and 70s. One oft-heard challenge is whether older workers will stay sharp given all the research that our cognitive skills start to erode a bit beginning in our 50s. Anyone who has ever had a TOT moment knows exactly what I am referring to. That’s a subtle cognitive issue, but it hints at how the brain can begin to lose some of its sharpness. But author Barbara Strauch says new research is showing that if Boomers challenge their brains to think differently you can offset a lot of the wear and tear. By learning a new language, considering alternative opinions, or just taking a different route on a daily walk we push our brains to literally get out of their well-trained ruts. That’s what I meant by make yourself uncomfortable: Break routines, try new things. It’s important exercise for your brain.
Photo courtesy of Anssi Koskinen
I think the biggest issue is not which calculator you use, but what assumptions you make when you are plugging in your personal information. Put garbage in, and you will get garbage out. You can make the calculators tell you whatever you want. My advice is to be honest and use reasonable assumptions based on what is likely to happen, not what you hope will happen. If you use a calculator that asks you how many years you expect to live in retirement, base it on living to 95. Sound extreme? It isn’t. Any decent financial advisor will tell you that’s how long you want to plan for. Any less and you run the risk of running out of money. If you use a calculator that asks you how much you want to withdraw in each year of retirement, keep in mind that another basic rule of thumb is that you likely don’t want to withdraw more than 4% of your balance each year (adjusted annually for inflation.) Again, at a higher rate you run the risk of running out of money. And of course, if the calculator asks you to pick your estimated rate of return, you would be wise to err on the side of being conservative.
You get the idea: I think many sites have fine calculators; but just make sure the assumptions they make for you, or the assumptions they ask you to make for yourself reflect real-life probabilities.
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