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March 14, 2016 Know How

Four ways to prep for retirement in Mass.

A decade ago, a retiree or pre-retiree living in our state could plow a significant portion of their investible assets into a municipal bond or some other kind of fixed-income vehicle and reasonably expect to earn 4- to 5-percent returns year after year. However, thanks to the financial crisis and the accommodative Federal Reserve policies that have followed, interest rates are no longer supportive of such a simple approach.

While Massachusetts fares better than most states, it's percentage of near-retirement aged residents at risk of poverty is still estimated at more than 20 percent, according to data compiled by the SIPP 2008 and the U.S. Department of Health and Human Services. Add in rapidly escalating healthcare costs, rising life expectancies and the tepid short-term outlook – which is muddled by poor global growth prospects and a strengthening U.S. dollar – and retirement is fast becoming a complex dilemma.

1) Reset your expectations. You've worked hard for decades and planned methodically for retirement, and now the way you envisioned spending it – whether it's as grandiose as buying a new house in a warm-weather spot like Florida or as simple as spending more time with your spouse and grandchildren – has been challenged. Because of the current landscape, many will have to change their expectations for retirement.

2) Be honest with your children, provide tough love. It's commonplace today to see a 60-year old nearing retirement continuing to provide their adult children with financial assistance, from everything to giving them a place to live, to paying bills, to even doling out an allowance. This needs to stop. Save for yourself first, and then focus on your child. Your kids have a much longer runway to recover.

3) Consider working longer. Many pre-retirees, even after the financial crisis, are operating under the assumption that they can and should retire at 62, once they are eligible to collect Social Security benefits. Massachusetts workers tend to retire a bit later than most, around age 65, in part because housing costs in our state are among the highest in the country, according to analysis by SmartAsset. If you're healthy, a better approach is to work until 70.5, the age at which you are required to take a required minimum distribution from your IRA.

4) Be more patient. Despite equities being up dramatically from their crisis-driven lows, millions of American retail investors have spent the last six years plus running in place. That's because when the equity markets cratered in early 2009, fear took over and many got out, only to return when the environment seemed 'safe' again a few years later. In between, they missed one of the greatest market escalations in history, as the Dow soared 52 percent from March 2009 to the end of 2010.

This is not your parents' retirement, meaning the days of generating consistent, steady returns from relatively safe and secure fixed income assets are over. With a little expectation-setting and some healthy comprehensive planning, it's still possible to live out your twilight years in relative comfort.n

David Borden is a partner at CCR Wealth Management (, an independently managed wealth management firm with over $1 billion in client assets in Westborough.

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