4 RETIREMENT PLANNING 2019

CONTENTS

The big picTure

8 ready, Set, retire What to do when you are 10 years, five years and one year out.

16 Make Sure You’re Saving enough Use our worksheet to see if you’re in the ballpark—or if you need to up your game.

20 You Can retire a Millionaire How much you need to put away each month to reach the magic milestone, whether you’ve saved a little or a lot.

40 Safeguard Your portfolio With the bull market a mature 10 years old, it makes sense to play defense so your investments don’t get mauled when the market turns bearish.

48 great Funds for every Season Use the Kiplinger 25, the list of our favorite actively managed funds, to reach your retirement goals. plus: Key performance data and model portfolios.

52 Aim for the right Target-Date Fund These all-in-one funds do the heavy lifting of retirement investing. We help you choose one that’s right for you.

54 100 biggest Funds in 401(k) plans We outline three steps to help you decide which mutual funds are worth owning in your retirement savings account. plus: Total returns for the 100 biggest 401(k) funds.

The righT inveSTMenTS

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56 Make Your Money Last How to turn your savings into a stream of

reTireMenT incoMe

27 Super early retirement Inside the Financial Freedom, Retire Early (FIRE) movement.

31 budget for State Taxes Our tax map shows the 10 most friendly and 10 least friendly states for retirees.

34 Strategies for Singles How to plan for a secure retirement on your own.

37 Find great Advice at the right price You don’t have to commit a lot of money to find a planner who will put your best interest first.

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RETIREMENT PLANNING 2019 5

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82 Five Awesome places to retire These small cities offer a gentle pace, moderate cost of living and lots of amenities—and they are close to high-quality health care.

88 A guide for Snowbirds Before you make good your escape to a warmer clime, make use of our tips to winter-ize your year-round home while you’re gone, handle finances and more.

91 Age-Friendly remodeling If you’re ready to update your house, these suggestions will let you age in place comfortably and stylishly.

96 Travel in Style for Less

Living weLL

70 navigating the Medicare Maze Congratulations! You’re 65 and qualify for Medicare. But Medicare has many moving parts, and in some cases you could be better off delaying some coverage.

74 paying for Long-Term care The cost can be daunting, but so is the cost of coverage. Take advantage of ways to slice premiums, or consider other options to cover the cost.

A heALThY reTireMenT

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income that lasts as long as you do.

62 Social Security: now or Later? You can claim reduced benefits at 62, full benefits at 66 or 67, or wait until 70 for an even bigger monthly check. We help you decide when to pull the trigger.

66 on the Menu: Annuities A “free” dinner could come with a pitch for some complicated investments.

79 health insurance for early retirees Used to be, if you didn’t have employer health benefits, getting coverage before Medicare kicked in was challenging. The Affordable Care Act changed all that.

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6 RETIREMENT PLANNING 2019

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CONTENTS

Kiplinger.com free, trusted retirement planning advice at your fingertips year-round

retirement Savings calculator Determine how much you need to save each month to meet your goals.

■ kiplinger.com/links/ retirementcalculator

Social Security retirement Age Determine when you’re eligible to collect full Social Security benefits.

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rMD calculator Compute your required minimum distributions from a traditional IRA.

■ kiplinger.com/links/rmd

when Your First rMD is Due Pinpoint when you must take your first IRA required minimum distribution.

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Listen to our Your Money’s Worth podcast every week for insights on saving for retirement, investing for income, cutting your tax bill, and much more.

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boost Your cash Yield

Kiplinger’s Investing for Income will show you how to generate steady income with moderate growth and manageable risk, no matter what the market is doing.

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retire on Your TermsWhether you’re almost there or have a few years to go, Kiplinger’s Retirement Report will show you how to retire on your schedule.

■ kiplinger.com/go/ retirementreport

RetiRee tax Map Our state-by-state guide helps you choose the right home for you and your nest egg. See how states tax various forms of retirement income, which ones offer property tax breaks for retirees and how states ultimately ding your estate.

■ kiplinger.com/links/retireetaxmap

podcast

MoRe HeLp FoR YoUR RetiReMeNt

tooLs

staY coNNected!■ twitteR: @Kiplingerretire

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Copyright 2019 • The Kiplinger Washington Editors, Inc. • 1100 13th Street NW • Washington, DC 20005-4051 • www.kiplingerincome.com

Investing for Income

Everybody loves U.S.

bonds, gushed the Bank of

America in a star-spangled

testimonial it issued in February.

And since our September 2015

“USA! USA!” cover story, our

anthem to an all-American invest-

ment mix, most dollar-denomi-

nated investments, stocks and real

estate investment trusts, as well as

bonds, have returned substantially

more to an American investor in

dollars than international alterna-

tives have. But bonds have been

the real revelation. (We’ll examine

global high-dividend stocks in the

next newsletter.)

Now, we didn’t command

readers to cut off the entire outside

world. As a practical matter, that’s

difficult. But the contrast between

robust U.S. and insipid foreign

performance endures. Over the

past five years, Standard & Poor’s

index of international “sovereign,”

or government, bonds from rich

countries has returned an annual-

ized negative 0.4%. International

investment-grade corporate bonds

lost 0.3% a year. Every broad

American bond index is ahead 2%

to 4% annually over that interval.

The one-year gap is even wider.

Why? One reason is that

more than $9 trillion of debt still

circulates with negative interest

rates, and none of it was born in

the U.S. Germany builds incompa-

rable automobiles, but if you test-

drive a five-year German “bund,”

a Deutschland federal bond, you’ll

take home minus 0.3%. Japanese

debt is also pointless. Even Austra-

lia, which from 2000 to 2018 paid

higher rates than Uncle Sam, now

borrows for less; its 10-year gov-

bution, a payout in obvious peril.

We might re-recommend FAX in

the future, but not yet.

A mild opening. In fact, in March

we repeated our preference for

domestic over international

bonds, all things being equal.

Rich Asia’s puny rates are a big

reason. But after some fresh

dialogue with several experts,

and after watching the world’s

bond and monetary action, we’re

willing to lighten up and endorse

a small, gradual drift into high-

yielding global credits. We’re

talking about a sliver of your sav-

ings—maybe 5% of your entire

bond bucket. And we don’t mean

pursuing miserly yields from

Germany, Japan or the U.K. A

developed-markets fund such as

IGOV, the iShares International

Treasury Bond exchange-traded

fund, serves up the terrifying

combination of an 8.4 duration,

In Search of Respectable Global Bond Yields

ernment bonds are at 1.99%. We

once loved Aberdeen Asia-Pacific

Income Fund (FAX) because its

largest concentration is customarily

Aussie bonds; Australia has a tri-

ple-A credit rating and hasn’t seen

a recession since 1991. But after

yields plunged in Australia and in

key regional countries Hong Kong,

South Korea and Taiwan, FAX

now returns considerable capital to

meet its high fixed monthly distri-

We’re willing to lighten up

and endorse a small drift

into global credits.

continued on next page ...

APRIL 2019, VOL. 8, NO. 4

Inside This Issue... Unless otherwise noted, prices and data are as of March 15, 2019

Ask Jeff 6

Can too many bonds spoil the fund? Also,

what to do with a troubled fund, and the

assessment of a proposed portfolio.

What’s New in Cash 7

New preferreds are sprouting like mad,

the college scandal has an impact, and

cannabis-created “REITer madness.”

Rates and Yields 7

Model Portfolio: Dividend-a-Month 8

There’s no compelling reason to kick any

of these off the schedule.

Are REITs Overvalued? We Don’t Think So 3

REITs keep rolling, but detractors still

circle. Still, only an economic earthquake

will make us skittish.

The Mad Rush Into Tax-Free Bonds 4

As the tax-exempt bond boom continues,

munis provide relief from pricing drama.

Timely Tactic of the Month 4

This REIT benefits from the growth of

“yieldcos,” as well as new opportunities.

Kiplinger’s 25 for Income 5

We have cause to celebrate as pluses for

the 25 are everywhere.

Strategies to Boost Your Cash Yield

KII_Vol8_No4.indd 1

3/22/19 12:59 PM

Your Guide to a Richer Retirement VOLUME 26 | NUMBER 2 | FEBRUARY 2019 | $5.00

how he’d spend his days in retirement: gardening,

reading, playing with his grandkids and working on

his stamp collection.

But all that preparation didn’t make the transition

easy. Since his November 2018 retirement, he has fo-

cused on staying busy, getting involved with his home-

owners association, joining a senior community center

and taking tai chi

classes. But “it’s not

fun yet,” he says.

“I feel tired, not

retired.” And the

recent market down-

turn has further un-

dermined his confi-

dence. “I’m sitting

here thinking, ‘How

long will it take to

recover from this?’ ”

he says. “Did I pick

the wrong time to

retire?” Even with years

of preparation, re-

tirement can be a

daunting prospect.

Can your portfolio

withstand a market

crash in your early

retirement years? Will you still have a sense of purpose

when you’re no longer heading to the office every day?

How do you know that you’re really ready—both finan-

cially and mentally?

For those on the brink of retirement, such questions

LAST YEAR, NICK CRISCI FELT MORE THAN READY TO

retire. After working nonstop for 46 years, the

69-year-old feared the stress of his information

technology job was affecting his health. Crisci, who

lives in Pflugerville, Tex., prepared for retirement by

whipping his finances into shape—paying off his mort-

gage and shifting some of his investments into Trea-

sury bills to create a cash cushion. He also envisioned

Are You Really

Ready to Retire?

RETIREMENT REPORT

JOH

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IN THIS ISSUE

INVESTING

6 | Stock Fund Picks for 2019

MANAGING YOUR FINANCES

8 | Consolidating Accounts

9 | Variable Annuity Basics

11 | Handling Market Volatility

12 | Information to Act On

14 | Your Questions Answered

TAXES

15 | Start 2019 Tax Planning

THEN & NOW

16 | Looking Back Over 25 Years

RETIREMENT LIVING

18 | Become a ‘Super Ager’

2 | FEBRUARY

days in retirement: gardening,

h his grandkids and working on

Y 2019 ||| $5.00