When Retirement Beckons

Think through how you want to live in retirement"not just how you'll finance it.

By Mary Rowland

Illustrations by Elwood Smith

Three years of corporate scandals, stock fraud, and a sinking market have upset the plans many Americans held for their "golden years." The silver lining in those financial gray skies is that we've been forced to focus on what we really want our lives to be like in retirement. We need to plan with an eye toward both how we wish to spend our time and how we'll pay for it.

Retirement calculators such as the one at www.quicken.com/retirement/ planner are a great tool for mapping out the financial side of the equation. Simply plug in current income, expenses, life expectancy, taxes, inflation, and rate of return, as well as expected sources of retirement income like your pension, Social Security, and personal savings. Push a button and bingo: You're told you'll have $2,117.63 per month to live on in retirement. Or $3,043.16.

This 10-minute exercise is worth doing because it provides estimated Social Security benefits as well as a calculator to estimate how savings will grow and how long they will last in retirement. But the recent uncertainties in the financial markets show us the danger of taking comfort in an answer that gives us a false sense of precision.

Financial planners these days are moving from a focus solely on dollars and cents to what they call "life planning." They ask new clients questions like: If you had so much money that it wasn't an issue, what would you do with your life? If you had 24 hours to live, what would you most regret not doing? As our life expectancies rise, we're faced with planning for several different phases of retirement.

It's critical to learn all you can about what financial resources will be there for you when you finally retire. But to have a satisfying retirement, you should also think more broadly. Some questions to ask yourself:

What does the ideal setting for your retirement look like to you? Do you want to live by the water, in the mountains, in the town or city where you grew up? Is living near family and friends an important consideration?

What do you see yourself doing each day of the week? Are you interested in volunteering with groups like Literacy Volunteers of America? How about a second career? Is it something you could start on earlier and build until you're ready to retire?

Do you find yourself saying "Once I retire..." as a way of putting off worthwhile and fun endeavors? Don't make the mistake of putting off your life until retirement. You should be enjoying life today"but with a plan for how you will move gradually to less work and more leisure.

Get revved up about your retirement options at Web sites like www.2young2retire.com and www.notyetretired.com. They're bursting with ideas and personal stories on enjoyable and rewarding ways to spend your retirement.

Get help from friends. Your NEA-Retired colleagues share their tips in "Six Ways to Thrive in Retirement," published in the September 2003 issue of This Active Life. Check it out online at www.nea.org/activelife/0309/cover.html.

Safe Shopping

Giving out personal information isn't part of the bargain.

Almost everywhere we shop"from the toy store at the mall to an online linen warehouse"we are asked to provide personal information. Some stores ask for a zip code or phone number at the checkout. Online sites may demand more, including your mailing and e-mail address, phone number, or even your Social Security number.

The quandary: the more information about you floating around in marketing databases and in cyberspace, the more vulnerable you are to identity theft, one of the fastest growing financial crimes. According to the Federal Trade Commission, more than 27 million Americans have been victims of ID theft in the past year, suffering $5 billion in out-of-pocket expenses.

Some ways to shop more securely: When a clerk asks for unnecessary personal information, just say no. Clerks may ask for certain identification as a safeguard when you write a check or use a credit card. But when a store asks for a phone number or zip code, even when you're paying cash, that goes beyond what's necessary.

Never volunteer personal information about your house, kids, job, mortgage, or credit lines. Even little pieces of information like the names of your pets can be entered into that giant computer looking to build a profile of you, according to Marc Eisenson, a consumer consultant in Elizaville, New York.

When you shop online, deal with reputable companies that display their privacy policy and also indicate that they have a secure site (often denoted by a "lock" symbol and security alert page).

Call 1-888-5-OPTOUT to have your name removed from the lists that the major credit bureaus sell to lenders and others.

Rip up and destroy all pre-approved credit offers you receive in the mail.

Finally, carefully check your credit card and bank statements. Anyone with access to your card number can make online and telephone purchases with it.

College Quiz Bowl

As if planning for your son or daughter's college education isn't stressful enough, sorting through all the attendant jargon and acronyms is like wading in alphabet soup. Do this matching quiz to test your planning-for-college "verbal ability."

Answers
1.b The SAT I is a three-hour test that measures verbal and mathematical reasoning skills.

2.e The Uniform Gift to Minors Act (UGMA) permits parents to put up to $10,000 a year for a child in an account in that child's name. Tax laws have whittled away at the advantages of these accounts. Parents pay tax on current earnings. The money belongs to the child when the child reaches the age of majority.

3.c The Free Application for Federal Student Aid (FAFSA) determines if a student is eligible for financial aid by applying a standard formula that includes factors such as parent income, number of children in the family, and money in the child's own name.

4.a 529 plans are named for the section of the Internal Revenue Code that permits special college savings accounts where earnings grow free of federal tax.

5.d The American College Test (ACT) measures academic achievement and knowledge in specific subject areas. Most schools either require it or accept it as an alternative to the SAT I and SAT II tests.