kiplinger's retirement planning 2017retirement planning 2018 5 dadn page 80 5 great places to...
TRANSCRIPT
4 RETIREMENT PLANNING 2018
CONTENTS
The big picTure
10 Time for a reality check Are you on target to retire when you want? These steps will help you get there.
17 You can retire a Millionaire What you need to save each month to reach seven figures by age 65.
18 Make Sure You’re Saving enough Use our worksheet to crunch your numbers to see if you’re on track.
22 roth irAs rock You don’t get a tax deduction for contributions, but with-drawals are tax-free.
24 Taxes on Snowbirds Read this if you own a second home in another state.
26 The 401(k) plan Turns 40 Now it’s the cornerstone of retirement.
30 how i picked the Day Our columnist shares her decision process.
32 how to invest to reach Your goal These portfolios will get you from your peak-savings years to retirement and beyond.
38 inflation-proof Your investments Guard against inflation’s insidious drag on your earning power with these hedges.
41 hitting the Target Target-date funds simplify saving for retirement.
42 100 biggest Funds in 401(k) plans Three steps to help you decide which mutual funds are worth owning in your retirement savings account. plus: Total returns for the 100 biggest holders of 401(k) assets.
44 get good Advice That Suits You We help you pick the right financial adviser at the right price.
The righT inveSTMenTS
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RETIREMENT PLANNING 2018 5
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80 5 great places to Live in retirement These destinations are within an hour or two of big-city amenities.
86 help Aging parents With Their Finances Use our strategies to protect your parents’ money and dignity.
90 get continuing care and commu-nity Retirement communities offer peace of mind—for a price.
93 The new rules for giving to charity You can support your favorite causes and still get a tax break.
96 best and Worst States for retiree Taxes
Living WeLL
48 Social Security: get it right Don’t let a bum steer at a Social Security office prevent you from maximizing your benefits. plus: Good news about the dreaded earnings test.
54 Making the Most of rising rates Most income investors look to bonds to provide some combination of stability for their portfolio, income, and diversi-fication. Here are savings and invest-ment ideas to help you reach each of those goals.
58 Stretch Your retirement income One of the biggest challenges for retirees is making sure you don’t outlive your money. These strategies will gener-ate extra income and extend the life of your portfolio.
64 31 Ways to Save on health care We show you how to get the most bang for each buck you spend.
70 new to Medicare? The answers to these frequently asked questions will help you navigate an often tricky system.
73 how to Afford Long-Term care With insurance companies jacking up their rates, our strategies can help you trim your premiums or pay less for a new policy.
76 Manage the cost of cancer care
Scope out what your insurer will cover, then be ready to appeal if you are denied benefits.
79 get These Forms Lining up these legal documents in advance will save you precious time and hassle.
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CONTENTS
Kiplinger.com free, trusted retirement planning advice at your fingertips year-round
Copyright 2018 • The Kiplinger Washington Editors, Inc. • 1100 13th Street, NW • Washington, DC 20005-4051 • www.kiplingerincome.com
Investing for Income
continued on next page ...
Strategies to Boost Your Cash Yield
There are sensible
strategies and ideas
to help navigate these
cross-currents.
APRIL 2018, VOL. 7, NO. 4
Inside This Issue...
Many of us are hard-
wired to link advanc-
ing interest rates to
escalating market risk and
explosive daily swings. The
prospect of rate increases might
be so unnerving as to put you on
the cusp of liquidating your
long-term bonds and high-divi-
dend stocks. Is it time? Perhaps,
if you can live forever off your
savings ... pension and annuities
... rental income ... and Social
Security. But that’s rare, and
although higher interest rates
complicate investing, they can
also offer extra income. So relax,
and reserve the high anxiety for
true horrors: rampant inflation,
failing banks, slashed dividends.
Do The Math
Interest-rate pressure can attack
specific sectors. The most direct
peril is to Treasury bonds because
their returns are mathematical.
When the government pays more
to borrow, older, lower-coupon
T-bonds lose value. Less evident
is that the smaller a bond’s origi-
nal yield, the faster its principal
erodes when rates ascend; when
rates rise from a higher plane,
principal doesn’t erode as fast.
The prospect of forfeiting years
of yield is why we have refused
to endorse long-term Treasuries
since we started this letter in 2012.
There’s more emotion and
less precision in how markets treat
utilities, real estate investment
trusts, corporate and municipal
bonds, and preferred stocks.
For now, sellers and would-be
sellers are getting air cover from
Warren Buffett, who is breath-
lessly bashing bonds and beseech-
ing believers to avoid the “terrible
mistake” of holding too many
fixed-income investments or their
equivalents. Much as we admire
Buffett, though, we don’t share
his dark view. Nor would it apply
uniformly to everyone.
We concede Buffett’s point
for brief intervals. We doubt the
Dow Jones industrial average
would have crashed in February
had the 10-year Treasury yield
held at 2.5% instead of approach-
ing 3%. But it still hasn’t crossed
3%, and besides, bonds remain a
haven and a hedge against politi-
cal and economic shocks. Trea-
sury yields fell as stocks threw a
fit over President Trump’s steel
and aluminum tariffs, which
threaten bull-market engines such
as Boeing, Caterpillar and Deere.
In any case, long-term interest
rates still have a gap to cover be-
fore they become menacing. The
10-year Treasury “would have to
go over 3.25% before the markets
would fall into negative feedback
loops,” says Matt Toms, chief
fixed-income officer for Voya In-
vestment Management (formerly
ING). We’ve read and heard from
others that the Rubicon is 4%.
If stock prices and economic
growth stall, we expect interest
rates to hold the current range
The Lowdown on Higher Rates
Unless otherwise noted, prices and data are as of March 16, 2018
Ask Jeff
6
Questions about individual municipals, CDs
versus Treasuries, and a lagging sector real
estate investment trust.
What’s New in Cash
7
Bonds flood the marketplace, MLPs get a
tax hit, and a noted bond bull sounds aw-
fully skittish now.
Rates and Yields
7
Model Portfolio: Dividend-a-Month 8
Our defensive-minded, high yielding as-
sortment seems in a holding pattern, but
the dividend trend is sweet.
Stormy Weather or Climate Change? 3
Stock and bond markets have gone from
quiet to violent in a few weeks, but don't tear
up what's been working. Do trim leverage.
Timely Tactic of the Month
3
This high-dividend ETF is built to with-
stand high-pressure market sell-offs and
still deliver income with growth.
Surprises in Closed-End Stock Funds 4
Equity CEFs are fewer, but may be better
than their sponsors' regular funds.
Kiplinger’s 25 for Income
5
The markets are in a tizzy, but our favorites
are moving sideways or even rising a bit.
retirement Savings calculator Determine how much you need to save each month to meet your goals.
n kiplinger.com/links/ retirementcalculator
rMD calculator Compute your required minimum distributions from a traditional IRA.
n kiplinger.com/links/rmd
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.
n kiplinger.com/go/investing
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.
n 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.
n kiplinger.com/links/retireetaxmap
Special RepoRtS
MoRe Help FoR YoUR RetiReMeNt
toolS
MaxiMiziNg Social SecURitY BeNeFitS n kiplinger.com/links/maximize
eState plaNNiNgn kiplinger.com/links/estateplan
UNdeRStaNdiNg aNNUitieSn kiplinger.com/links/annuities
ReqUiRed MiNiMUM diStRiBUtioNSn kiplinger.com/links/rmds
NavigatiNg MedicaRen kiplinger.com/links/medicare
MakiNg YoUR MoNeY laStn kiplinger.com/links/makeitlast
StaY coNNected!@Kiplingerretire
Facebook.com/
Kiplingersretirementreport
ciaries took advantage of the benefit in 2012, according
to the Dartmouth Institute for Health Policy and Clini-
cal Practice—and recent research suggests that number
hasn’t budged much since then.
That’s not the only Medicare benefit left lying on
the examining table. Many healthy seniors pass up a
host of free preventive services, ranging from bone
mass measurement
to cancer screen-
ing—“the kinds of
things that people
don’t generally think
of if they’re not
sick,” says Bonnie
Burns, a consultant
at California Health
Advocates. Other
benefits, such as
home health care,
often go unused
because they have
complex eligibility
requirements that
are poorly under-
stood by both pro-
viders and patients.
In other cases,
Medicare beneficia-
ries and their fami-
lies simply don’t
know about their benefits until it’s too late. Jim Whit-
worth’s first wife, Anique, spent the final months of her
life in a nursing home. “It wasn’t until a couple of days
before she passed away that somebody mentioned to
medicare is vital to the health of nearly
60 million Americans. Yet many of its benefits
are overlooked, underused or misunderstood.
Consider the annual “wellness” visit, during which
a doctor will assess your health risks, take your blood
pressure and other routine measurements, check for
cognitive impairment, and offer personalized health
advice. It’s free. Yet less than 11% of Medicare benefi-
7 Ways to Maximize
Medicare Benefits
RETIREMENT REPORT
Your Guide to a Richer Retirement
VOLUME 25 | NUMBER 3 | MARCH 2018 | $5.00
JOH
N W
. TO
MA
C
IN THIS ISSUE
INVESTING
6 | Sizzling Health Care Funds
TAXES
8 | Tips to Cut 2017 Tax Tab
10 | State Death Taxes
MANAGING YOUR FINANCES
11 | Income Spike, Medicare Hike
12 | Information to Act On
14 | Your Questions Answered
FRAUD
15 | Danger of Undue Influence
TRAVEL
16 | Girlfriend Getaways
YOUR HEALTH
18 | Strengthen Your Memory