There are plenty of charts on the internet and in books about financial planning that suggest how much someone needs to save to retire with millions of dollars but theres not as much explanation as to how that money will grow.

Calculating future savings requires numerous factors, including current age and predicted retirement age, any current assets, how the portfolio is invested and at what rate a person can realistically expect that money to grow. The latter, known as a rate of return, includes inflation, interest and dividend payments, and many experts disagree on what individuals can anticipate that rate to be.

Conservative advisers will argue individuals should bank on 4% or 5%, while some advisers track indexes and say 7% or 8% is reasonable. There are also established financial authors who occasionally tout the 12% rate of return, as Suze Orman did when she suggested a daily to-go coffee habit could deter Americans from having $1 million in retirement. Financial advisers argued then, and now, that such a return is unreasonable and far too idealistic.

See: Youd save more for retirement if only you had this

How the rate of return is calculated and used can be a bit complex, as there are two ways the rate is often expressed: either as a nominal rate of return or a real rate of return. A nominal rate of return does not include inflation, whereas the real rate of return does (which would make the real rate of return lower than the nominal rate). With a real rate of return, if a person is talking about current dollars and future dollars, the value of those dollars is the same. Ignoring inflation could result in thousands of dollars or more lost in purchasing power.

A higher rate of return may also be assumed for portfolios comprised entirely of equities, which is usually not the case for 401(k) and similar retirement accounts even for young investors, who are typically advised to invest more in stocks than bonds. The average historical return, since 1987, for the total U.S. stock market is around 11.2%, whereas the total U.S. bond market is approximately 5.9%, said Bijan Ramirez, a financial consultant at SVA Financial. Most peoples retirement accounts will be a mix of all of these asset classes, giving them returns between 5.9% and 11.2% depending on weighting in this example, he said.

Also see: 4 critical questions to ask during a market downturn and how financial advisers answer them

Analysts have their own projected return rates for various types of assets as well, such as short-term or long-term bonds and large cap or mid cap value stocks. Projections also vary if they are based on historical returns versus current market data, said Benjamin Yeung, lead adviser of FAI Wealth in Columbia, Md.

Gregory Hart, founder and managing director of Haddon Wealth Management in Haddonfield, N.J., said he looks at the past 10 or more years of average rates of return for various asset classes when he builds a financial plan for clients that looks 10 to 30 years into the future.

As with most other facets of retirement planning, an assumed rate of return can be different from one person to the next, said Eric Reich, an adviser at Reich Asset Management in Marmora, N.J. The reality is that it is almost entirely dependent upon your own personal allocation, he said. Many advisers also have their own way of creating projections, and will show clients a few estimates from conservative to aggressive when making a financial plan. There is no one perfect number to use, Hart said.

Still, investors may want to err on the conservative side, as its better to save too much than end up in retirement with too little, Yeung said. And investors, especially younger ones, should not be chasing returns.

Participating in the plan is the number one most important factor, said Jeffrey Edwards, president of Atlas Financial Plans in Irvine, Calif. The second would be to invest those contributions according to their time horizon and risk tolerance. Do that and the returns will follow.

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If you want to have enough money when you retire, you need to know this - MarketWatch

Walser Asset Management President Rebecca Walser on the state of the U.S. economy and markets and the outlook for Federal Reserve policy.

Chocolate or vanilla? Coke or Pepsi? Cheeseburger happy meal or chicken nuggets, and so on. We Americans love choices.

Retirement is no different. As we head into unchartered waters, as a tax attorney, its clear that our tax choices in building our retirement are the most important.

With designated retirement accounts, we really have two tracks the employer-platform track and the individual track. Most typically, these break down into the 401(k) and the IRA (Individual Retirement Account).

IRAs were created in 1974, the 401(k) in 1978, but we didnt get options within them until the late Senator Roth spurred the creation of the Roth IRA, some 20+ years later in 1997. And the Roth 401(k) is the newest kid on the block, just available in 2006.

Traditional IRAs and 401(k)s are pre-tax meaning that your contribution is made with current earnings that escape present income taxation, deferring those taxes until you withdraw the funds in retirement.

(If you withdraw funds before 59 years old, you pay the tax plus a 10 percent tax penalty, unless you have separated from your employer at age 55 or older and withdraw the funds directly from a 401(k) not an IRA.)

With the Roth versions, your contributions are made with after tax funds, where you pay the income taxes first and the net amount is invested.Although less goes in upfront, your original investment plus all of its earnings come out tax free.

Americans have gotten addicted to kicking the can down the road by paying taxes later now is the BEST time since the Reagan years to pay taxes, because President Trumps tax reform lowered rates and widened brackets.

THAT IS HUGE as the CBO reported in 2008 that tax rates will need to rise enormously as the Baby Boomers retire en masse, which really starts in 2022. And while Americans have gotten addicted to kicking the can down the road by paying taxes later now is the BEST time since the Reagan years to pay taxes, because President Trumps tax reform lowered rates and widened brackets.

The Roth has some special rules like you cannot access growth tax free until you have had a Roth for at least five years and your 401(k) employer match, if you get one, will still go into the traditional 401(k).

There are also income limits on utilizing an IRA, although increased in 2019, but there are no income limits on a Roth 401(k) so you cannot be income phased-out like you can with a Roth IRA.

And the Roth, because the tax has already been paid, eliminates the requirement of RMDs (required minimum distributions) at age 70 - providing much more flexibility. And if you have already built your dollars in the traditional accounts, then a Roth conversion could be an excellent option if it fits your circumstances.

And Roth IRAs eliminate the requirement of RMDs at 70 - providing much more flexibility.

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The bottom line is retirement strategy now goes well beyond just making contributions.

We must especially prepare for the tax consequences well face once we are living off those funds in retirement and that means we should consider whether to leverage the beneficial Trump tax table now, or take our chances on where taxes are headed in the future, knowing the government has already told us that they must go up.

Rebecca Walser is a licensed tax attorney and certified financial planner and author of the bookWealth Unbroken, who specializes in the strategic planning of maximizing lifetime wealth while minimizing tax through her practice,Walser Wealth Management. She earned her juris doctor degree from the University of Florida and her Master of Law degree in taxation from New York University. She is a frequent national media contributor.

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The best retirement advice you've probably never heard - Fox Business

Heres why they are related

The financial advice industry is known for having strong opinions. Politics is like that too. Especially these days. To be clear, this is NOT a political commentary. I direct you to a zillion other locations on the internet for that.

Likewise, it seems to me that people within 10 years either side of retirement (hoping to retire within 10 years or retired within the last 10 years) are bombarded with confident (dare I say arrogant?) opinions from my industry. Whether it is the future direction of the stock market, the economy, political winds, etc., it is a lot to take in. And now, impeachment of a U.S. President is top of the news. What should we make of that?

Left, right and blue?

If you are right-leaning politically, you think impeachment is a hoax, or at least over-hyped. If you are left-leaning, you think its about time, and that it needs to happen. And, naturally, there are plenty of folks in the middle. I dont care about any of that here and now. What I care about is what you should as well. Specifically, to size up the potential impact on your retirement lifestyle of whatever happens.

This is not just an attitude I possess about impeachment, or politics in general. And, I am not a bull or a bear on markets. I am realist, and a historian of sorts. More than anything, I am determined to strike a balance. That balance is between the potential pursuit of growth and income (a.k.a. the good stuff) and the realistic risk of major loss in value (the bad stuff). The latter is what can ruin all the work you have done for decades to set yourself up to retire as you wish. So, with impeachment as the news topic de jour, here is my take on striking that balance. It is more deductive reasoning than shouting at whoever disagrees with me. I hope you find that refreshing.

Impeachment and market history

I will skip over the impeachment of Andrew Johnson. If you dont remember, he was the one who reluctantly replaced Abraham Lincoln after the tragic assassination of our 16th President. Markets are just a bit differenttoday, so well ignore what happened then.

Nixon

The impeachment of Richard Nixon is knowntodayas a case of a crime and a cover up. The latter is what did the damage. Back then, we had a functioning U.S. Congress. So once the information became available about what had actually happened, the process was followed, and Nixon resigned before he could be convicted. Gerald Ford became U.S. President, and the country slowly recovered from the psychological impact.

In 1974, the 10-year U.S. Treasury Bond yield was in the 7-8% range. As I write this, it is at 1.52%. So, bonds as a long-term retirement portfolio anchor are just not there.

The markets were roiled from that, and the threatening economic conditions that preceded it. The result was one of the worst stock bear markets in recorded history, from 1973-1974. Interest rates were much higher then, as was inflation. Still, I would say that one of the key long-term retirement cushions of that era does not existtoday.

Clinton

Then, there was the impeachment of Bill Clinton. That occurred in October, 1998. The S&P 500 was around 1,000. Short-term, the stock market went much higher. This was the late stages of the Dot-Com era. The peak around 1,500 occurred about 17 months later. However, as of the summer of 2010, nearly 12 years after Clintons impeachment, the S&P 500 was again around that same 1,000 level.

Naturally, a lot happened in between. But, my point is that if you are setting up for a long-term use of all the wealth you accumulated over decades, you cant just do it in a pot-shot manner. Its not impeachment, though that is one of many factors that can impact market psychology and confidence.

And that, after all, is what takes modest market moves in both directions, and turns them into major ones. So, we cant ignore impeachment, but we do have to account for it.

A short list of must care abouts for retirees

Here is where your focus should be right now:

Income investing: think differently

Growth investing: its a cyclical thing

I cringe whenever I see a buy and hold portfolio for a retiree or someone nearing retirement. I love the concept of buy and hold. But the current times make it many times riskier for those in the waning years of the primary career.

There is currently a unique combination at work to threaten retirees. We have an extended bull market on the back of cheap-money policies that have not been addressed, much less resolved. And the mountain of debt at the government, corporate and consumer levels that existstodayis potentially toxic to the wealth of those in the retirement/pre-retirement phase.

Business is cyclical, so are markets. The old recency effect is your enemy. That is, dont let recent strong returns in the stock market blind you to the reality that its easy to give it back. I think that many investors would benefit from learning more about hedging strategies, and about tactical approaches to equity investing. There are plenty out there, but they tend to get drowned out by the set it and forget it machine that istodays financial advisory business.

Turning the impeachment era into action

What I have done in this article is to help you identify the opportunities and threats to your accumulated wealth. Nothing here is a forecast. Instead, it is a call to action. Get more sensitized and less complacent. Or, if none of this balancing act mantra I speak of is new to you, congratulations! You are in good position to weather whatever investment climate results from impeachment and anything else that comes along.

Comments provided are informational only, not individual investment advice or recommendations. Sungarden provides Advisory Services through Dynamic Wealth Advisors

To read more, clickHERE

Link:
Impeachment And Your Retirement - Forbes

General Electric is pulling the plug on its pension plan, and thats a surefire way to derail workers retirement planning.

GE GE, +4.14% announced on Monday it was freezing pensions for 20,000 employees with salaried benefits in an attempt to reduce its $8 billion pension deficit, and that it would also freeze supplementary pension benefits for about 700 workers. Current retirees already receiving their pension payments will not be affected and no new hires have been enrolled in the pension plan since 2012.

When a pension is frozen, it is no longer earning benefits, but it is still federally insured and employees do receive whatever amount of money was already accrued. Still, it means potential earnings are lost and workers must scramble to create a plan to ensure they have enough money in the future for their retirements (usually by saving their own dollars, as opposed to relying on their company to do so).

Every time we see someone lose a defined-benefit plan, we see that theyve lost all of the sacrifices theyve made, Teresa Ghilarducci, a labor economist and director of The New Schools Schwartz Center for Economic Policy Analysis. Almost all workers in defined-benefit plans have given up a lot of raises in the past so not only do they lose a secure income for the rest of their lives they also lost all of those past wages theyll never get back.

See: Even people with pensions work into their retirement years

Many private companies have moved away from pension plans, known as defined-benefit plans, since the 1980s, especially after the introduction of 401(k) plans, which put the responsibility on employees to save for their own futures. There are different types of pensions, however, including single-employer plans (where just one company controls the pension), multiemployer plans (where numerous companies band together to offer its employees a pension) and public pensions, which are typically for teachers, law enforcement and other government workers.

Avery Dennison AVY, +1.86% was one of the last companies to terminate its pension plan last year, eight years after freezing the program. Other major corporations to freeze their plans in recent years include UPS UPS, +0.64%, IBM IBM, +1.15% and DuPont DD, +3.20%, according to the Pension Rights Center, a nonprofit consumer advocacy group.

The state of single-employer pensions are improving and moving away from a deficit, according to the Pension Benefit Guaranty Corporation, the federally-instated insurer of private pension plans, but multiemployer plans are in trouble. About 130 of these plans, which cover 1.3 million people, are at risk of running out of money within the next 20 years, and if nothing changes, the multiemployer branch of the PBGC that insures these plans will also be out of business by 2025.

This is how the GE pension freeze works: employees with these frozen pensions wont see any additional benefits nor have access to contribute to their plan, beginning Jan. 1, 2021. The company will, however, contribute 3% of those workers salaries to a 401(k) plan and provide a 50% matching contribution for up to 8% of employee contributions. The company is offering a lump-sum payment plan, for a limited time, to 100,000 former employees who have yet to start receiving their benefits.

Also see: Want a pension in retirement? Heres how to create one

GE employees, or those in similar situations, should look into their benefits to see how much theyve accrued, and how much more they may need to reach their retirement goals. Workers should also assess what other retirement income they can expect in retirement not just whatever payment theyd get from their pension if they decide not to take the lump sum, but also any 401(k) savings, Social Security and spouses benefits and savings.

Employees should consider discussing whether they should take monthly payments or choose a lump-sum with a financial professional, who can calculate how much more or less theyd get in total over their lifespan depending on which avenue they take.

If the companys financial situation is somewhat in question, it may make sense to take the money and run, said Nate Wenner, principal and senior financial adviser at Wipfli Financial in Missoula, Minn. If they do decide to take the lump sum, workers should consider rolling that money into an individual retirement account to avoid any tax surprises in April, he said. Doing so will keep the money tax-deferred until retirement, as would rolling that money into a company 401(k) plan.

And of course, employees should plan to save more between now and retirement, said Edward Snyder, a financial adviser at Oaktree Financial Advisors in Carmel, Ind. Workers should boost or max out their 401(k) contributions, if they can, and also stash more in health savings accounts, if possible. (Health savings accounts are a tax-friendly way to save and invest for current or future health expenses, although they are only available for people with high-deductible health plans, which can be expensive.)

Saving is imperative to ensuring a comfortable retirement. I always advise clients to try to plan with what you can definitely control, said Kashif Ahmed, president of American Private Wealth in Bedford, Mass. Sadly, most of those workers probably were only counting on this pension to survive retirement. They are now in a precarious, if not death sentence position.

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GE freezes worker pensions what to do if your employer changes the terms of your retirement plan - MarketWatch

Former participants in the AT&T Pension Benefit Plan have sued AT&T and the plan claiming their benefits were reduced because of the way benefits are calculated for those who retire before age 65.

According to the complaint, the plaintiffs and proposed class members are forced to forfeit accrued, vested pension benefits if they retire before age 65 and/or receive their pension benefit in the form of a Joint and Survivor Annuity. They say this is because the plans terms reduce these alternative forms of benefits using Early Retirement Factors and Joint and Survivor Annuity Factors, which result in plan participants receiving less than the actuarial equivalent of their vested accrued benefit, as required by the Employee Retirement Income Security Act (ERISA).

The plaintiffs explain that a participants pension benefit is expressed as a monthly pension payment beginning at normal retirement age, which is age 65 under the AT&T plan. This monthly payment is a single life annuity because it pays a monthly benefit to the participant for the participants entire life. Under ERISA, if an employees accrued benefit is to be determined as an amount other than an annual benefit commencing at normal retirement age [of 65] . . . the employees accrued benefit . . . shall be the actuarial equivalent of such benefit . . . .

Thus, the complaint says, ERISA requires that if a plan allows a participant to retire early with a reduced monthly pension, the value of his reduced monthly pension must be actuarially equivalent to the participants monthly pension benefit commencing at age 65. The case concerns two ways in which the AT&T plan improperly reduces pension benefits, in violation of ERISAs actuarial equivalence rules.

First, the plaintiffs allege the plans Early Retirement Factors reduce benefits to less than the actuarial equivalent amount of the participants monthly benefits commencing at age 65. The earlier the participant retires, the greater the reduction to his benefits. For example, under most programs of the plan, if a participants normal pension benefit beginning at age 65 is $10,000 per month, and he retires at age 60, his monthly benefit is reduced by a factor of 0.58. As a result, the value of his monthly benefit is 58% of $10,000, or $5,800 per month, when the actuarial equivalent benefit he is entitled to receive under ERISA is approximately $7,090 per month.

Second, the plaintiffs point to applicable Treasury regulations that say, A qualified joint and survivor annuity must be at least the actuarial equivalent of the [single life annuity]. Equivalence may be determined, on the basis of consistently applied reasonable actuarial factors. A joint and survivor annuity is expressed as a percentage of the benefit paid during the retirees life. For example, a 50% joint and survivor annuity provides a surviving spouse with 50% of the amount that was paid during the retirees life.

The plaintiffs allege that the plans Joint and Survivor Annuity Factors reduce benefits to less than the actuarial equivalent amount of a participants benefit expressed as a single life annuity. For example, if a participants single life annuity benefit is $10,000 per month, and he is married, his default form of benefit is a 50% joint and survivor annuity, which is reduced by a factor of 0.90 for most programs under the plan. As a result, the participants monthly benefit is 90% of $10,000 per month, or $9,000 per month, when the actuarial equivalent benefit he is entitled to receive under ERISA is approximately $9,200 per month.

The plaintiffs say the to the best of their knowledge based on the available information, the Early Retirement Factors and the Joint and Survivor Annuity Factors in the AT&T plan applicable to the class have not been updated in over a decade, despite dramatic increases in longevity. Because the Early Retirement and the Joint and Survivor Annuity Factors have not been updated to be in line with reasonable actuarial assumptions, they do not yield actuarially equivalent payments to Class members as required by ERISA. As a result, Defendants have improperly reduced Class members pension benefits in violation of ERISAs actuarial equivalence requirements, the complaint says.

In addition, the plaintiffs say, ERISA Section 203(a) provides that an employees right to his or her vested retirement benefits is non-forfeitable and states that paying a participant less than the actuarial equivalent value of his accrued benefit results in an illegal forfeiture of his benefits. Thus, the Plans terms that reduce participant benefits to less than their actuarial equivalent value violate ERISAs anti-forfeiture requirement set forth in [Section] 203(a).

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AT&T Sued Over Calculation of Early Retirement Benefits - PLANSPONSOR

A blue-chip dividend portfolio pays about 2% today. Put a million bucks into a bucket of these stocks and youll bank just $20,000 in yearly dividends. Thats barely extra changeon a million invested!

Theres a better way. I prefer to focus on stocks and funds that simply arent as familiar as the big names to most investors. They do offer growth potential. But most importantly, they dont sacrifice yield for perceived safety. In fact, they yield roughly 3x to 4x the blue-chip stocks, providing a lot more retirement-income cushion in years where the market stalls.

Most people love the idea of this Perfect Income Portfolio, yet millions of retirees across the country find themselves piled into the same group of overowned, overpriced blue chips because the traditional wisdom says thats what retirement is supposed to look like.

We can avoid that trap and indeed live on dividends for the rest of our lives.

Sure, retiring well isnt as easy as just finding any stock with a high yield and blindly buying with both hands. For example, first-level income investors thought they couldnt lose with Guess? (GES) a couple years ago. Its sinking share prices drove its yield to as high as 9%what a bargain!

But, had they looked past the first level, they wouldve seen the rapidly declining cash and terrible payout coverage figuresthen bolted for greener pastures and avoided a 25% payout cut.

The key is sustainability, and a dividend payment (blue line above) thats higher than the cash flows that fund it (orange line above) is not built to last.

Thats exactly what Contrarian Income Report subscribers got with Cohen & Steers Infrastructure Fund (UTF), which I recommended in February 2016. This closed-end fundwhich focuses on energy, water, transportation and other infrastructure-related companieswas distributing a whopping 8.8% at the time. That hefty yield propelled 70% in total returns in just three years!

Today, lets explore some high-dividend picks doling out fat yields ranging from 7.5% to 12.2%. Well highlight a couple of near-perfect retirement dividends, and two more flawed payouts to avoid.

Altria (MO)

Dividend Yield: 8.2%

Tobacco stocks have traditionally been high yielders, but Altrias (MO) sudden ascendency to 8% territory truly grabs my attention.

Too bad this isnt a screaming dividend growth story.

Altria has long had to deal with mounting pressures in the U.S.: greater health-consciousness, governmental anti-smoking campaigns, escalating taxation of its products. But now it has a new anchor strapped to its ankle.

Back in March, when I highlighted MO as a clearly cheap high-dividend stock, I pointed out Altrias efforts to stem the tide by taking a $12.8 billion, 35% stake in e-cigarette company Juul. I also pointed out that Altria still could be in long-term jeopardy regardless because Juul is increasingly finding itself in a similar regulatory pickle.

Juul isnt immune from the same pressures. The company faces class-action lawsuits in Philadelphia and New York federal courts over the companys marketing tactics and over its disclosure of nicotine levels. Juul also temporarily halted sales of most of its flavored nicotine pods in November in hopes of getting out in front of aggressive federal regulators worried about spiking e-cigarette use.

It has gotten worse since then.

Reports of vaping-related illnesses have sprung up across the country. The Centers for Disease Control says 12 deaths and 805 cases of lung injury have been linked to vaping. The CDC has warned against e-cigarette use while it investigates. Several states have either banned or are working on bans of flavored vaping products. The upheaval essentially forced Altria to scuttle merger discussions with Philip Morris International (PM).

Altria has lost a quarter of its value since my warning, and its possible this gets much worse before it gets better.

New Mountain Finance (NMFC)

Dividend Yield: 10.0%

Business development companies (BDCs) were created by Congress to provide capital to small- and midsize companies. Its a noble cause, but a difficult trade to ply. In fact, its one of the few industries I advise against investing in via funds, because all the duds tend to drown out the handful of stars in the space.

New Mountain Finance (NMFC) is one of the few BDCs that inspire a little confidence.

The quick hits on its business: It invests between $10 million to $50 million by issuing debt all across the capital structure and most of that is floating-rate. Its target businesses generate annual EBITDA of $10 million to $200 million. Portfolio companies tend to have barriers to competitive entry, recurring revenues and strong free cash flow.

These businesses provide strong profits to help fund NFMCs payouts. And its not every day you can get a double-digit dividend at a discount, but here we are. NMFC has a net asset value of $13.41, and at last check, it traded at $13.30 per share.

So while recession worries are going to rattle BDCs of all stripes, New Mountains high credit quality makes it a safer bet than most.

Armour Residential (ARR)

Dividend Yield: 12.2%

I quipped in a June 12 column that ARMOUR Residential REIT (ARR) is taking a rare multi-year break from cutting its dividend.

Not so fast, my dividend friend.

On June 24, the company tucked this into a press release: The Company also announced today the expected July 2019 cash dividend rate for the Companys Common Stock of $0.17 per common share with an anticipated record date of July 15, 2019, and anticipated payment date of July 29, 2019.

Thats how you tell investors you just cut the dividend without actually telling them you cut the dividend.

Ill keep this quick. Through a long series of dividend cuts, this mortgage real estate investment trust (mREIT) has reduced its monthly payout by 82% since 2011. Ive mentioned before that stock prices typically chase dividends higher. Well, the same goes for the other direction.

Armour even boasted in its most recent quarterly report that Core Income exceeded dividends paid for the twelfth straight quarter, referring to its non-GAAP measure of profitability.

Thats not much to crow about when youre OK with adjusting the dividend lower. Also, heres what Core Income has been up to over the past few years.

Contrarian Outlook

Lets move on.

New America High Income Fund (HYB)

Dividend Yield: 7.5%

New America High Income Fund (HYB), a closed-end fund (CEF) focused on junk debt, isnt immune from the occasional downtick in its distributions, either. But its a far more common (expected, even) issue in debt funds, which serve at the whims of the debt market.

Whats important is that HYB maintains a fairly high yield level, and that active management has proven its worth over time by walloping the indexes.

New America High Income is a primarily U.S.-focused junk bond fund. But it does offer a little international diversification, investing a little less than 20% of its portfolio in countries such as Canada, Luxembourg and Brazil.

Credit quality is middlingabout 40% of its bonds are in the higher tiers of non-investment-grade debt. But here, youre trusting managements judgment to not only spy values in this kind of debt, but to properly use leverage to make the most of its bets.

Its not a smooth ride, for sure. HYBs ebbs and flows are far more exaggerated than index funds such as the iShares iBoxx $ High Yield Corporate Bond ETF (HYG), thanks in part to that leverage.

But its hard to argue with the results. Theyre certainly better than its junk bond ETF counterparts!

Brett Owens is chief investment strategist for Contrarian Outlook. For more great income ideas, click here for his latest report How To Live Off $500,000 Forever: 9 Diversified Plays For 7%+ Income.

Disclosure: none

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How To Build The Perfect Retirement Income Portfolio - Forbes

Some people will do anything to escape the rat race.

Just ask Daniel, 36, a Manhattan corporate lawyer earning $270,000 a year, who told Suzy Weiss of the New York Post that he lives in New Jersey to avoid city taxes, lives on rice and beans, owns one patched-together suit per weekday for work, and layers up during the winter instead of turning the heat on all so he can save 70% of his salary and retire early.

It's working: He's saved more than $400,000 and is set to retire in three years, Weiss wrote.

Other six-figure earners Weiss talked to have similar goals and are pulling out all the stops to reach them, from banning buying drinks out to wearing shoes that are falling apart.

They all hope to join the "Financial Independence, Retire Early" movement that was popularized when "Your Money or Your Life" was published 20 years ago. It's nothing new but more millennials are becoming interested in the community, according to Weiss.

Read more: What 8 people wish they knew before retiring in their 20s and 30s

Being content with less and refusing to succumb to lifestyle inflation are the tickets to staying on track to retire early.

J.P. Livingston, who runs a personal-finance blog called The Money Habit, built a nest egg of more than $2 million before retiring at 28. Livingston worked in Manhattan's finance industry and earned $100,000 in her first post-grad job, she previously told Business Insider.

But determined to retire early, she tucked away 70% of her take-home pay. In an effort to be more frugal, she bought furniture from Craigslist and chose a living situation more modest than one she could have afforded with a roommate in a three-floor walk-up on the Upper East Side for $1,050 a month (reasonable rent in a New Yorker's eyes).

Even those not working in traditional high-salaried careers make do with a frugal lifestyle. Consider Joe and Ali Olson, who quit their jobs as public-school teachers in their early 30s with $1 million in the bank. They saved 75% of their income and lived in a 400-square-foot home, keeping their annual expenses to about $20,000, Business Insider previously reported.

Read more: A day in the life of a 34-year-old early retiree who lives in NYC, grew his net worth to $1.25 million in just 5 years, and wakes up at 7:30 a.m.

Regardless of early-retirement goals, frugality is the key to building wealth.

Look no further than Warren Buffett, who still lives in the modest home in Omaha, Nebraska, that he bought for $276,700 (in today's dollars), or Richard Branson, who is famously frugal when it comes to buying luxury items.

Frugal lifestyles help millionaires get rich in the first place, according to Sarah Stanley Fallaw, the director of research for the Affluent Market Institute and an author of "The Next Millionaire Next Door: Enduring Strategies for Building Wealth," in which she surveyed more than 600 millionaires in America.

She studied the characteristics most predictive of net worth and found that six behaviors, which she called "wealth factors," were related to net-worth potential, regardless of age or income. One of those is frugality: a commitment to saving, spending less, and sticking to a budget.

"Spending above your means, spending instead of saving for retirement, spending in anticipation of becoming wealthy makes you a slave to the paycheck, even with a stellar level of income," she wrote.

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A 36-year-old New York lawyer who makes $270000 says he lives off rice and beans so he can save 70% of his salary. He's part of a growing movement of...

Alabama is suffering a serious teacher shortage.

Nearly every district---its easy to say every district---has been impacted by this shortage, Alabama Deputy Superintendent Jeff Langham told state school board members Thursday in Montgomery.

A statewide task force composed of 18 education officialsmostly superintendentshas been working since January to make recommendations on how to deal with the shortage.

Langham presented the board with 33 recommendations23 for recruiting teachers and 10 for retaining them. The group's suggestions deal with everything from raising teacher pay to extending temporary teaching certificates to revamping retirement benefits.

Everything seemed important, so it was hard to prioritize, Langham told board members during the work session. Getting new teachers in the pipeline isnt the only problem. Keeping them in teaching is difficult, too. According to the task force, 8% of teachers leave the profession every year.

Roanoke Superintendent Chuck Marcum chaired the task force and told AL.com the set of recommendations is a tool kit and a variety of steps are needed. I dont think theres a silver bullet, Marcum said.

State board member Dr. Cynthia McCarty, R-Jacksonville, said the problem has grown.

When she joined the board in 2014, she said, (the shortage) was primarily upper-level math teachers, physics and chemistry teachers and special education.

Now, its not just those teachers, McCarty said. Its even elementary school teachers.

We see these critical shortages just kind of expanding every year, Langham said, and Alabama isnt the only place shortages are a problem. Its really of epidemic proportions nationwide.

Traditional paths to becoming a teacherthrough a college-level teacher preparation programarent providing enough teachers to replace those leaving, Marcum said.

A lot of teachers are going to have to come from alternative routes, Marcum said, like those who want to become teachers after working in a different field. The task force recommended easing the path somewhat for those on alternative pathways.

Marcum said the task force isnt trying to make it easier to be a teacher but removing barriers for those who want to teach is important with a dwindling pool of candidates.

You dont just want a warm body, he said. But you still have to have someone at the head of the class.

Recommendations also include improving the public image of teachers. Sometimes were our own worst enemy, Marcum said, because we dont do a good job promoting the good things teachers do."

The committee also suggested recruiting students while theyre in high school through dual enrollment, allowing them to earn college credit toward becoming a teacher.

The full report with all recommendations can be seen at the end of this article.

Marcum said his district in Roanoke is feeling the shortage, too. Were at the tipping point because of the age of our faculty, he said. Of the 100 certified people working in the districts schools, he said, 19 have enough years under their belt to retire. If they all retire, hed be hard-pressed to replace them, he said.

Another problem, Langham said, is the number of teachers teaching a subject they dont have a major or minor in themselves, known as teaching out of field.

According to state data, during the 2017-18 school year, nearly 2,800 teachers were teaching out of field. Thats nearly 6% of the states 46,565 teachers. Male teachers are more than twice as likely to be teaching out of field as female teachers. Statewide, 9.5% of male teachers are teaching out of field, while 4.4% of female teachers are.

However, in 36 schools across the state, more than one out of every three teachers is teaching out of field.

More evidence of the shortage, Langham said, is that nearly every Alabama school district has hired teachers who are working under provisional or emergency certificates, meaning they arent certified but are working toward full certification.

Such provisional or emergency certificates can be used to help find teachers for hard-to-fill subjects, like chemistry or foreign languages, or remote geographic areas.

In the 2017-18 school year, 441 teachers were teaching through an emergency certificate, and 665 were using provisional certificates. Thats 2.4% of all teachers in Alabama.

The 70 schools where 10% or more of the teachers were using emergency or provisional certificates during the 2017-18 school year were all middle and high schools, according to state data.

Marcum said one of the task forces recommendations was to extend the length of time a teacher could work under an emergency certificate. Lawmakers did that last spring while the task forces work was underway, allowing an emergency certificate to be held for up to four years.

Low salaries and a cut in retirement benefits during the recession a decade ago added to the problem, Langham said. The creation of a new set of retirement benefits, called Tier 3, was rejected by the Senate as too costly, but Marcum said theyll be back at the table during the next legislative session.

Lawmakers raised the starting salary for Alabama teachers above $40,000 for the first time this year. The task force didnt recommend any specific amount by which to raise teacher salaries.

If the board votes in November to accept the recommendations, a new group, the Teacher Quantity and Quality Roundtable, will consider how to put the recommendations into action, Marcum said.

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More pay, better retirement part of pitch to solve Alabama teacher shortage - AL.com

About a dozen seniors at the Carlisle Naples have been taking harmonica lessons with Glenn Basham, concertmaster for the Naples Philharmonic, which helps with breath control and expanding breathing capacity, especially for those with COPD. Alex Driehaus, Naples Daily News

Heads up millennials and other future retirees.

Naples has been named as the "best place to retire" again.

After recently ranking No. 1 on a list of 'best cities for early retirement' in the United States, Naples has once again clinched the title of the best place to retire in Florida and the country.

The newest ranking comes from SmartAsset,a New York financialtechnology firm.The study is based on three factors: tax-friendliness, medical care and social life.

More: Naples named No. 1 on list of 'best cities for early retirement' in United States

Naples earned the top ranking for 2018 when SmartAsset did the same type of study.

"We have ranked the best places to retire in Florida for five years," said Alyssa Annunziato, a spokeswoman for SmartAsset, in an email."Naples has been ranked in the top 10 every year, as well as being ranked No. 1 nationally for the past three years."

Lana Butsky, center left, and Connie Leon, center right, enjoy the sunrise during an Easter Sunday service hosted by the First United Methodist Church at the Naples Pier on April 21, 2019. (Photo: Jon Austria/Naples Daily News USA TODAY NETWORK - FLORIDA)

To determine the rankings, SmartAsset looksat state and local tax ratesand calculatesthe number of doctors' offices, recreation centers and retirement centers for every 1,000 residents, as well asdeterminesthe amount of seniors already living in each area included in its study.

Naples ranked high in all areas of the study, earninga score of 100 on SmartAsset's retirement index.

New Port Richey took second place for the best place to retire in Florida, with a score of 64.13.

These are the other cities rankings in the top fivefor the state, along with their scores:

As for the national rankings, the other four cities making the top fiveare: Cumming, Georgia (93.67), Beverly Hills, California(78.51), Gig Harbor, Washington (70.64) and Wasilla, Alaska (70.17).

FortMyersranked 37 out of 208 cities statewide and stood at No. 141 nationally.

Also,FortMyersBeach ranked 26th in the state and 90th nationally.

Meanwhile, another personal finance site, Magnify Money, recently listed Naplesamong the top 20 for a FIRE retirement an acronym for "financially independent, retire early."

Community members gather at the Naples Pier for an Easter sunrise service hosted by the First United Methodist Church on Sunday, April 21, 2019.(Photo: Jon Austria/Naples Daily News USA TODAY NETWORK - FLORIDA)

According to theMagnify Money article, "The FIRE approach to retirement has become popular among many younger, millennial savers in recent years. In a nutshell, practitioners of FIRE aim to retire as early as they can, but only once they have achieved a level of financial independence that would free them from conventional employment. The core strategy for building a nest egg that would allow one to retire early is to adopt extremely frugal saving and spending habits."

Not surprisingly, half of the top 20 cities that made Magnify Money'slist are in Florida, well-known for its retirement and snowbird-friendly reputation. Fort Myers ranked No. 9.

To determine the rankings, the firmcompiled data on 171 cities across America and scored them on cost of living and quality of life. The values were combined to produce an overall ranking of the best cities for a FIRE retirement.

More: What were the top 5 things we tasted in September at Naples restaurants?

For those wondering,New York City ranked dead last in Magnify Money's report because of its high cost of living.

Asked if the top rankings bySmartAsset and Magnify money have helped the local real estate market, Phil Wood, president and CEO of John R. Wood Realtors in Naples, answered "absolutely," followed by a exclamation point, in an email.

"We use that type of thing in our website blog," he said. "And any other place that is appropriate.The fact that Naples does so well in several different rankings each year is definitely helpful in our sales efforts."

Jennifer Sangalang, a social media strategist for USA TODAY Network-Florida, contributed to this story.

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Naples does it again, ranks as No. 1 spot to retire in the country - Naples Daily News

Spending and saving are inversely related.

To that end, the best way to save more is to simply spend less, says Rob Berger, a deputy editor at Forbes, in his new book, "Retire Before Mom and Dad."

Berger, who founded the personal-finance site DoughRoller.net, retired at age 49 from his career as a lawyer. He had socked away an amount equal to 25 years' worth of his annual expenses the magic number for reaching financial independence, he writes.

Berger says our spending and saving rates act like levers adjusting them will increase or decrease the time it takes to reach financial freedom. Importantly, income has less to do with it than you might think. Ultimately it depends on the share of income you spend and, by extension, the share of income you save, not necessarily the dollar amounts.

To help readers visualize the numbers, Berger created a spreadsheet that calculates how many years you need to save depending on your spending rate and the return rate on your investments.

Let's say you're starting with zero savings. If you make $100,000 a year, after taxes, and spend $80,000, that leaves $20,000 left over to save.

Put another way, you have a spending rate of 80% and a saving rate of 20%.

If you plan to continue spending $80,000 annually in early retirement, you'll need $2 million in the bank before you leave work ($80,000 x 25). That'll take nearly 30 years if your spending and savings rates remain constant and your investments earn a 7% return.

But if you spend just 50% of your $100,000 income and plan to keep it that way in retirement and thereby save 50%, then you'll need only $1.25 million banked before you retire ($50,000 x 25), which would take about half the time.

Here are a few more examples, courtesy of Berger's spreadsheet calculator (note that these figures assume that you begin with $0 in savings, earn 5% to 9% annually on your investments, and plan to withdraw 4% of your nest egg each year in retirement):

As you can see, for every additional 15 percentage points of your income that you save, the number of years until early retirement is reduced by about five. The exactitude of this will depend on the return on your investments each year.

These calculations also don't take into account any increases in income. Say your take-home pay increases by 10% one year and you keep your level of spending the same by directing that extra 10% into savings, you can reduce the time it takes to reach financial independence by a few years.

Also consider that your annual spending may go down after paying off debt, for instance, so your target number may decrease along the way as well.

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Exactly how much income to save if you want to retire early - Business Insider