Wal-Mart (WMT) has had a rough year, as has just about any company in the grocery business besides Whole Foods (NASDAQ:WFM). With Amazons (NASDAQ:AMZN) purchase of Whole Foods, the entire grocery industry is shaking in their boots.

But Wal-Mart is no ordinary grocer. In many ways, they are already Amazon and Whole Foods wrapped into one. It may have gone unnoticed by some, but Wal-Marts website and web presence in general has improved dramatically over the years.

Wal-Mart has worked very hard to establish their online presence and it is finally beginning to pay big dividends for them. They purchased online retailer Jet.com for $3 billion, which shows their commitment to the online retail world. And of course they already have their stores all over the country, which gives them the distribution they need to compete against the Amazon and Whole Foods merger.

If you believe Wal-Mart will survive and even thrive in what is becoming a new era in online shopping, then read on and find out how Wal-Mart might save your retirement portfolio.

Running out of money in retirement is something so many people dread. If you dont believe me, take a look at the charts below.

Many people approaching retirement have reason to be concerned. With interest rates so low and probably low for years to come, there is very little income to be had from bonds these days. Many retirees just ten years ago lived off of bond interest payments alone.

Its hard to believe, but in 2007 when interest rates were more than double the level they are today, many people could retire on 100% treasury bonds. Lets take a look at an example of this. I ran a retirement scenario in the WealthTrace Planner and my assumptions are below:

Inflation (CPI)

2.3%

Current Age of Both People

55

Age Of Retirement

65

Age When Both People Have Passed Away

85

Social Security at age 67 (combined)

$34,000 per year

Average Savings Rate

20% on Income of $150,000

Total Investment Balance Today

$600,000

Recurring Annual Expenses in Retirement

$54,000

Investment Mix

70% U.S. Value Stocks, 30% Treasuries. Changes to 100% Treasuries at Retirement

Investment Location

40% in taxable accounts, 60% in IRAs

Return Assumption Value Stocks

6.8% per year

Standard Deviation Value Stocks

16.20%

Return Assumption Treasuries

5% per year

Standard Deviation Treasuries

7.20%

The chart below shows this couples retirement income vs. expenses through time. Notice how they cover their expenses in every single year with just their social security and bond income. That would be impossible today.

How would this couple fair today with ten-year treasury yields at 2.2%? See the chart below for the answer.

The best alternative to treasuries for retirement, in my opinion, is now solid dividend-growth stocks. I believe most investors, both pre-retirement and in retirement, should have a healthy dose of strong dividend-growth stocks in their retirement portfolio. Wal-Mart fits perfectly for this.

Wal-Marts dividend yield is currently 2.6%. The five-year growth rate of its dividend is 6.5%. They have also never cut their dividend, and even increased it during the last recession.

Keep in mind that I am not recommending that investors put all of their money into one stock. We want to find a basket of stocks similar to Wal-Mart in order to diversify. Others that I have recommended before are Altria (MO), Exxon (XOM), and Procter & Gamble (PG).

Lets see what happens to this couples retirement plan today if we put them into a basket of dividend payers that have characteristics similar to Wal-Marts.

The income being thrown off by these dividend payers has saved this couples retirement plan. They now have enough income to cover their expenses.

Anybody approaching or in retirement needs to think long and hard about how they will generate enough income in order to meet their expenses. It should be their number one priority in terms of their retirement plan. With some diligent research, there are still great companies that can be found who pay a decent dividend along with solid dividend growth over time.

Disclosure: I am/we are long WMT, XOM, PG, MO.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Look To Wal-Mart To Help Your Retirement Portfolio - Seeking Alpha

Chelsea boss Antonio Conte is a little wary of Eden Hazard being called up for Belgium as he recovers from injury.

Radja Nainggolan insists he has yet to make a decision over his retirement from the Belgium national team, despite reportedly saying that he had quit after disagreements withcoach Roberto Martinez.

Nainggolan, 29, took to Twitter to denounce an interview given toNieuwsblad, claiming: "If something official is to be said, you will hear it from me. I'm just disappointed. I have not decided anything at all."

However, the Roma midfielder did not deny the interview took place.

Nainggolan had been quoted as saying that his retirement was down to a breakdown in his relationship with Martinez after the former Everton manager hit out at him ahead of the Estonia game.

"He called me at 11.00 (one hour before the squad announcement) and said he had the impression I was not focused enough on playing for the Red Devils during the World Cup matches in June. I was about to explode when I heard that," Nainggolan told Nieuwsblad.

"He didn't mention it, but we only talked for a minute, no more than that. As for Estonia, I was waiting for the lift for 37 seconds and was late. Other players were late too, I was not alone. It's always something.

"I am going to stop international football now. It makes no sense. He calls Youri Tielemans who is sitting on the bench and playing only a few minutes at Monaco.

"When he was appointed, Martinez said that the Red Devils must play in top competitions. Now that Axel Witsel is in China, suddenly that doesn't apply anymore. That's all fine, but I have to step up my game? Come on.

"Actually, I was in the same restaurant as Martinez in Ibiza. He did not say hello or goodbye, neither did I. How can you work together like that?"

Nainggolan has made 161 appearances for Roma since arriving from Cagliari in January 2014 and signed a new contract this summerafter links with Chelsea.

He continued: "It makes no sense to continue with international football. I played 52 games for Roma, who were second in Serie A last season. I always do my best, work with the team, still there is always something, some reason to leave me out.

"I won't do this anymore. I quit. I am 29 years old and they won't let me go any further than this. I'm sorry, but that's just how it is. I'm being pushed into this situation, so fine, now everything I do is for Roma."

Follow @ESPNFC on Twitter to keep up with the latest football updates.

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Radja Nainggolan: No decision taken over Belgium retirement yet - ESPN FC

During the past decade, however, that narrative has fallen by the wayside for many. More than 6 million Americans age 65 and older are carrying a mortgage, according to a study by the Census Bureau. Some remain "underwater" on their mortgages--that is, their loan principal is more than what their home is worth. Or they simply are not able to pay off their mortgage because of a mountain of other bills or career setbacks. They may even have college loans they're still making payments on.For many, the "debt-free" retirement seems much more difficult to achieve. And that has led some to consider selling their primary residence and renting as a viable alternative. Indeed, changing economics and a growing flexibility in housing choices has made renting a more likely choice for many retirees. Is it the right choice for you?The Economic Argument for RentingThe stark reality is that despite a housing bust in 2007-08 and low inflation since, homeownership today is expensive. The average monthly U.S. mortgage payment as a percentage of income hit a seven-year high earlier this year according to Zillow, the real estate Web site. The average homeowner pays $758 a month (as of the end of 2016), up from $690 in 2015.That has pushed even more Americans with falling or static incomes into renting. In a survey of renters aged 55 to 65, Credit Sesame, a debt management company, found that 51% of those surveyed rent because they cannot afford to buy where they live. Of those surveyed who can afford to buy, more than one-third nevertheless chose to rent due to the costs of home ownership (including not just mortgage but also upkeep and taxes), or the flexibility that renting affords. The most surprising finding from the Credit Sesame study, however, is that nearly half of those polled simply couldn't afford to buy a home due to paltry retirement income."About half of seniors rely on Social Security as their main source of income," the Credit Sesame study noted. "The average Social Security monthly payment is just $1,360, and if a person budgets the recommended 30% for housing expenses, that's a paltry $408 per month. That won't buy much even in a great housing market."Renting Means FlexibilityOne upside to choosing renting over buying: You can move to a number of places without the financial anxiety of selling or the prospect of not being able to sell for more than your purchase price. That opens up a number of possibilities for seniors. You don't have to worry whether you'll make money when you sell--that is, if you can recoup your investment minus a raft of closing expenses plus a broker's commission.Renting can open other doors, too. For instance, if you're willing to rent, you may be able to live in an expensive coastal area, where home prices are sky-high. Although rents are rarely bargains in premium areas, for most who can't afford million-dollar-plus properties, renting is still much more affordable.Or you may be able to move overseas to "try out" a country before you commit to living there. You could sample several locales as a renter. Thousands of retirees are relocating overseas to enjoy a higher standard of living, a hospitable climate, a low-stress lifestyle, and lower housing costs. Countries like Mexico, Ecuador, Colombia, and Malaysia regularly top the list of International Living magazine's annual "World's Best Places to Retire" list. The magazine also compiles a "retirement living index" that rates nations on things like lifestyle, healthcare, climate, and cost of living.Where Renting Makes the Most SenseIt's not difficult to tell where renting is a smarter choice, financially. Any search of real estate sites will give you a pretty good idea. Housing affordability, of course, is a prime factor, although taxes and local services are also part of the picture.In terms of local living costs, a recent survey by WalletHub found that six of the 10 "worst places to retire" were in high-priced California. The least expensive locales were in places like Laredo, Texas, and Orlando, Tampa, and Miami. The survey "compared the 150 largest U.S. cities across 40 key measures of affordability, quality of life, health care and availability of recreational activities."With housing, however, everything is relative. It wouldn't be fair to compare Akron, Ohio, with any coastal city in the Northeast or West. But you do need some benchmarks. Laredo, Texas, for example, "has the lowest adjusted cost-of-living index for retirees (76.93),which is 2.6 times lower than in New York, the city with the highest at196.26," WalletHub found.As with any relocation decision in retirement, you'll need to look at a wide range of expenses. Does the area have adequate healthcare services? What about long-term care services such as home and assisted living? Amenities like cultural institutions such as colleges, museums, and the arts are also important. You have to consider the big picture in living somewhere new--and what it costs--before you make a move.How to Gauge Your Rental ProfileWhen you're deciding whether to rent or buy, the first question is whether you want to be bothered with the expense and responsibility of homeownership. When you buy a house, there are local property taxes, maintenance expenses, and financing, unless you're paying cash. You also need some idea of how much your property will appreciate."It makes sense to buy in areas where your total monthly mortgage plushomeowner assessments and tax is less than the rent paid," said Hanson So with Credit Sesame."In high-growth metropolitan areas like New York, the San Francisco Bay Area, and other major cities, I find this is never the case, and it seems that monthly costs of owning a homearehigher than paying rent. That's why it's not automatically intuitive that it's best to own a home."Your time horizon is also important in the rent versus buy decision. You may want to spend a finite amount of time in an area, especially if you're not committed to the locale or just sampling."It makes sense to rent if you have a short-term three- to five-year horizon, but if you are committed to a 10-plus year horizon, then buying would likely be the better option in many cases," So adds.No matter which route you choose, you'll need to vet your finances and credit. How much rent can you afford? How solid is your credit record? Like banks, landlords may scrutinize your ability to pay rent on time.You'll also want to choose a rental unit with your needs in mind. Do you need an elevator or first-floor unit? Is the location close to shopping, healthcare, work, and amenities? Is the neighborhood safe? Is the landlord responsive to maintenance concerns? While many of these variables won't be known unless you live in a unit for a while, it doesn't hurt to ask local renters. Don't be afraid to knock on doors to find out.It also makes sense to pull your credit report and see if there are blotches on your credit rating. The higher your FICO number, the better your chances for obtaining credit--and being offered a lease (or low finance rates if buying). For a free copy of your credit report, click here. John F. Wasik is a freelance columnist for Morningstar.com and author of 16 books, including Lightning Strikes: Timeless Lessons in Creativity from the Life and Work of Nikola Tesla.The views expressed in this article do not necessarily reflect the views of Morningstar.com.

Read the original post:
Renting in Retirement May Be a Good Idea After All - Morningstar.com

Hows this for putting a dent in your retirement savings plan? A 65-year-old couple retiring today will need an estimated $275,000 in todays dollars to cover anticipated health care expenses, according to Fidelity.

And if that wasnt shocking enough, consider this:

The 2017 estimate is 6% greater than last years figure of $260,000 (general inflation in 2016 was just 2% and health care inflation was 3.7% ). That means next years estimate all things being equal would be $291,500 and the year after that would be $308,990. It also means that health care costs for retirees are rising faster than for population at large.

The Fidelity estimate is a 70% increase since Fidelitys initial retiree health care cost estimate in 2002 of about $161,000. That works out to an average increase of $7,600 a year.

And three, some firms estimate the amount a 65-year-old couple would need earmarked for health care expenses in retirement to be even greater than $275,000.

Read the 2017 retirement health care data costs report

By way of background, Fidelitys 2017 estimate represents the present value of month expenses for Medicare premiums, Medicare copayments and deductibles and prescription drug out-of-pocket expenses. It assumes enrollment in Medicare health coverage but didnt include the added expenses of nursing home or long-term care, which could make the $275,000 number even higher.

So, what should preretirees make of Fidelitys estimate?

Most pay for health care as they go

Most retirees today dont have a pile of money socked earmarked specifically for health care expenses. Instead, they tend to pay for such expenses as incurred from a mix of income, including Social Security, personal assets, and earned income.

Recurring health care costs remain stable throughout retirement

Usage and expenses of recurring health care services remain stable throughout retirement, while usage of nonrecurring ones increase with age and tend to be more expensive, according to a report published by the Employee Benefit Research Institute (EBRI), a nonpartisan research institute based in Washington, D.C.

For instance, in 2011, average annual out-of-pocket health care cost for a household between 6574 years old was $4,383, which accounted for 11% of total household expenses. But that shoots up for households ages 85 and above to $6,603 a year, or 19% of total household expenses.

And its those nonrecurring unpredictable expenses such as surgery, hospitalizations and nursing home care that, in the absence of a plan to manage those costs, can wreak havoc on a households finances, according to EBRI.

By way of comparison, the EBRI report also suggests that a person with a life expectancy of 90 would require $40,798 not including expenses for any insurance premiums or over-the-counter medications at age 65 to fund his or her recurring health care expenses. And that number, call it $82,000 for a couple.

In another report, one that lumped all premiums for Medicare Parts B and D, premiums for Medigap Plan F, and out-of-pocket spending for outpatient prescription drugs, EBRI suggested that a couple with median prescription drug expenses would need $165,000 if they had a goal of having a 50% chance of having enough savings to cover health care expenses in retirement. And, if they wanted a 90% chance of having enough savings, they would need $265,000, according to an EBRI report.

Earmark Social Security to pay for health care

For some, it might make sense to use your entire Social Security benefit to pay for health care expenses, and use other assets and income to pay for all other living expenses in retirement. Consider, for instance, a report published by Michael Kitces, publisher of the Nerds Eye View in 2015 estimated the lump sum value of Social Security. And what he found was this: Given an average Social Security retirement benefit of $1,294/month (in 2014), a 10-year Treasury rate hovering somewhere around 2% (at the time of Kitces writing), assumed inflation of 3%, and a life expectancy (according to Social Securitys own 2010 Period Life Table) for someone whos already reached age 66 (full retirement age (FRA) for todays retirees) of approximately 17 years for a male and 20 years for a female, the average lump sum value of Social Security is about $280,000 for males and $335,000 for females. At a maximum Social Security benefit of $2,642/month (for those who maxxed out the Social Security wage base for 35 years), the value of Social Security amounts to about $572,000 for men and $683,000 for women.

In other words, the lump sum value of Social Security for a couple retiring at FRA would be $615,000, which is more than enough to cover the $275,000 Fidelity estimates that couple needs to pay for health care in retirement.

Of course, the trouble with this plan is that couples would need to make sure they have enough assets and income to cover all other expenditures in retirement, such as housing, food, transportation and the like. And that might be a push given that many even those who have been saving 30 years dont have enough saved to fund their desired standard of living.

Consider someone in their 60s who had participated in a 401(k) plan for 30 years had, at year-end 2015, an average account balance of more than $280,000 among participants in their 60s with more than 30 years of tenure, an amount that could be earmarked entirely for a couples health care costs. And the average 401(k) balance for someone in their 60s was $123,000, which is roughly what one person would need set aside to pay for health care costs in retirement.

Consider using an HSA

Some workers might have the luxury of using their health savings account (HSA) to fund health care expenses in retirement. HSAs are paired with high-deductible health plans (HDHP), which often have lower monthly insurance premiums than traditional health plan offerings, and, according to Fidelitys release, include these key tax benefits: contributions go in tax-free, balances and savings can be withdrawn tax-free for medical costs.

Read: Health care costs in retirement are only going up heres how to save

What else is worth knowing about Fidelitys study?

Most workers forget how much health care costs

Corporate employees are largely unaware of the costs they and their employers are paying for health care, said Michael Lonier, a retirement-income planner with Lonier Financial Advisory.

Much of the cost is hidden in their payroll deductions, he said.

Indeed, in 2015, the average company-provided health insurance policy totaled $6,251 a year for single coverage, according to ZaneBenefits. On average, employers paid 83% of the premium, or $5,179 a year. Employees paid the remaining 17%, or $1,071 a year.

For family coverage, the average policy totaled $17,545 a year with employers contributing, on average, 72% or $12,591. Employees paid the remaining 28% or $4,955 a year.

The first inkling some may get that health care is far more expensive than they were aware of is the COBRA notice they receive if they are laid off and now have to pay the full cost for their health insurance premiums, said Lonier. The period after corporate coverage but before Medicare eligibility for those who suffer a job loss can be a budget killer.

Medicare Part B can be expensive

Although Medicare part B premiums are a magnitude smaller than other insurance premiums, costs can still be high for those enrolled in Medicare who use health care services frequently, said Lonier.

For instance, you generally have to pay your deductible, coinsurance, and copayments. Plus, some of the items and services that Medicare doesnt cover include: long-term care (also called custodial care); most dental care; eye examinations related to prescribing glasses; dentures; cosmetic surgery; acupuncture; hearing aids and exams for fitting them; and routine foot care.

Read more about what Medicare doesnt cover

Whats more, even with a $0 premium Medicare Advantage policy, which, not surprisingly, are increasingly popular, the policy deductible/out-of-pocket limit plus part B premiums can be more than $8,000 a year per spouse, or over $16,000 a year for the household, said Lonier.

Over 20 years, even without the high inflation that has been persistent in health care for decades, that can reach a $320,000 lifetime total for those who spend the max out-of-pocket every year, said Lonier. With typical higher than CPI health care inflation, the number could easily double over the next 20 years.

Adopt a healthy lifestyle

No one gets to choose their DNA, and so for some, poor health comes with a high cost they cant avoid, said Lonier.

For everyone, it clearly pays to adopt a healthy lifestyle dont smoke, drink moderately, exercise, eat a very healthy diet, and actively manage stress, he said. Cut your out-of-pocket costs in half, and a $16,000 a year per household expenses becomes $8,000 a year or less. Just as mom always said, your health is your most valuable asset never truer.

One planners approach

So, how does one financial planner who has to build retirement plans for his clients, incorporate Fidelitys estimate into his practice, in real life?

The Fidelity estimate is a good reminder that there is a lot that we do not know about our future expenses, says Steven Schwartz, president of Wealth Design Services. I have tried to incorporate a published number such has the Fidelity estimate in my planning models, but I always end up feeling that I am imposing a spending constraint that is too artificial. The reason is that we really have no way of knowing whether those expenses will materialize for any particular individual or when those expenses will materialize.

Ultimately, the way Schwartz has come to think about health care costs is to frame the problem around the structure of insurance.

Most insurance policies create a choice around how we share expenses, he said. We can choose to pay a higher premium, higher copays, deductibles or co-insurances or higher maximum out-of-pocket costs. We do cash flow planning in our firm rather than goals-based planning and build these short-term known costs into our plans rather than trying to think about the overall long-term costs that are possible. We probably get to the same place because I think that those costs are what make up the Fidelity number. However, at least for me, this is a more concrete way to approach the problem.

Visit link:
How to plan for health care in retirement without going broke - MarketWatch

Its the question that keeps older people up at night: Will the recommended$1 million in retirement savings actually be enough?

The answer depends in part on where you live, according toa new GOBankingRates study.

The $1 million figure is thrown around by AARP and others as the amount of savings needed to replace between 70 percent and 80 percent of a persons work income. But thats a rough estimate and there are a lot of variables in retirement planning: How large is that income you hope to replace? How long will you live? Should you count your home equity as part of your savings if youre not planning on selling your home? How will taxes and investment returns affect your retirement income? How will inflation affect your expenses? What happens if you suffer a sudden or long-term incapacitating illness?

The reality is that few retirees have saved anything close to $1 million. A 2016 BlackRock survey found that the average baby boomer between the ages of 55 and 65 had saved only $136,000 for retirement.

That means many people will need to stretch their savings and maybe relocate to the states where their money could last the longest.

GOBankingRates, a personal finance website, pegged Mississippi at the top of the list: In that state, $1 million could cover the needs of the average retiree for 26 years, 4 months. Hawaii is where youre likely to blow through those savings the fastest in 11 years, 11 months.

The website determined the average total annual expenses for people 65 and older (counting groceries, housing, utilities,transportation and health care) and then multiplied total expenses by each states cost-of-living index to calculate the state-specific yearly cost.Housing is generally the big ticket item.

The U.S. Census putsthe average retirement age at 63. At age 65, Americansaverage life expectancy is about 19 more years. So that leaves you with two decades during which savings, pensions, home equity and Social Security become your principal means of financial support.

If youve managed to sock away$1 million, here are the five states where GOBankingRates says it will last the longest:

Mississippi (26 years, 4 months)

Arkansas (25 years, 6 months)

Oklahoma (25 years, 2 months)

Michigan (25 years)

Tennessee (25 years)

And the seven states where it will disappear the fastest:

Hawaii (11 years, 11 months)

California (16 years, 5 months)

Alaska(17 years)

New York(17 years, 1 month)

Connecticut (17 years, 4 months)

Maryland (17 years, 4 months)

Massachusetts(17 years, 4 months)

How did your state fare? Check it out on the map below.

Read this article:
Here's How Long $1 Million In Retirement Savings Will Last In Your State - HuffPost

This research report was produced by Colorado Wealth Management Fund with assistance from Big Dog Investments.

Future retirees need to understand lifestyles play a major role in retiring. While some retirees may be just fine pulling in $30,000, others may be looking for significantly more. Here are a few things to consider when looking toward retirement:

These are very important questions when figuring out how to plan for retirement.

Maybe youre retired and only need to take into account your personal costs. If not, keep in mind any expenses which may occur:

These are all important questions and there are many more. Some retirees make it to retirement and haven't accounted for all the costs they would be taking on. Planning for retirement is essential for success.

Planning can be the difference between a $2,000,000 portfolio and having nothing. The number of people who arent investing in their future is heart-breaking. This isnt because they dont have the money to put aside. More often than not, its because they havent been taught to plan for their future, or in this case retirement. An investor who saves early and lives below their means may live lavishly in retirement, while someone making $120,000 a year before retirement may have nothing.

Trying to save for retirement and ordering pizza once a week? Stop it. Heres a chart from the University of Illinois:

Debt. That thing you shouldnt have in retirement. Find me someone who says they cant put money aside, and in almost every case Ill show you someone who is overspending (exclude single parents). Consequently, they are not saving as much money as they could. Credit card debt is an epidemic and retiring with it is generally a terrible idea. Pay off the highest interest rate and work down. Its sad to see so many people in debt and just ignoring massive interest rates. If a loan has an interest rate of 0.5% its a different story. High interest rate loans will eat into retirement income like cockroaches feasting during the middle of the night in a garbage can.

Planning on retiring at some point? It would be a good idea to take a year and pretend you are retired. During that year, track all your expenses. This should give a future retiree a good reference point for what income is needed. Also, make sure to be realistic about the returns you will get in a portfolio. Its much better to base your retirement on 3% to 4% a year according to the Trinity study. There is nothing wrong with targeting higher returns, but investors should build a suitable margin of safety.

But CWMF, you say 3% to 4% when the S&P 500 has seen massively higher annualized returns since inception. That is correct and should be a view for investors who are planning decades down the road. Once retired, retirees often cant sustain a significant drawdown. If youre retiring in 20 years, volatility is a smaller concern. If youre a retiree, you need to be more vigilant.

There will be some cases where portfolios are built around living off sustainable dividends. Most dividend champions will not see a cut to their dividend even in the event of a serious market panic.

There are several things to keep in mind when managing a portfolio. Here are a few:

Vanguard suggests investors consider long-term care insurance:

While you're considering your retirement health care coverage, give some serious thought to your needs 20 or 30 years down the road. There may come a time when you need ongoing care in a facility or at home.

Medicaid will only pay for long-term care once you've exhausted most of your financial resources. So if you hope to leave a legacy for your children or other loved ones, look into long-term care insurance.

The costs for these policies will increase as you get older, and you may not qualify at all if your health declinesso it's smart to consider buying a policy now.

Retirees could maximize their lifetime benefits from social security if they knew how long they would live. Generally speaking, retirees should wait as long as possible to claim if they believe they will live past 80. If they do not expect to reach 80, then they should file early. All of the complicated math can be boiled down to those simple estimates. However, investors should not delay Social Security payments while making payments on high interest rate loans. The growth rate for Social Security payments is generally in the 6% to 9% range for each additional year the benefits are delayed.

Colorado Wealth Management Fund and Big Dog Investments built two strong portfolios in this dividend stocks article. Given the criteria was that the companies must pay a dividend, these are good options for most retirees and investors with a long-time horizon.

Here are the portfolios:

Big Dog Investments

CWMF

1

(PM)

Philip Morris International Inc

(MO)

Altria Group, Inc.

3

(KO)

Coca-Cola Company

(TGT)

Target Corporation

4

(WMT)

Wal-Mart Stores, Inc.

(NNN)

National Retail Properties

5

(O)

Realty Income Corporation

(STOR)

STORE Capital Corporation

6

(JNJ)

Johnson & Johnson

(SKT)

Tanger Factory Outlet Centers,

7

(HD)

Home Depot, Inc. (The)

(TAP)

Molson Coors Brewing

8

(IBM)

International Business Machines

(VZ)

Verizon Communications Inc.

9

(T)

AT&T Inc.

(XOM)

Exxon Mobil Corporation

10

(AAPL)

Apple Inc.

(CVX)

Chevron Corporation

11

(ABBV)

AbbVie Inc.

(GD)

General Dynamics Corporation

12

(V)

Visa Inc.

(MA)

MasterCard Incorporated

13

(MMM)

3M Company

(LMT)

Lockheed Martin Corporation

14

(GM)

General Motors Company

(TSN)

Tyson Foods, Inc.

15

(KHC)

The Kraft Heinz Company

(GIS)

General Mills, Inc.

16

(DG)

Dollar General Corporation

(K)

Kellogg Company

17

(CSCO)

Cisco Systems, Inc.

See the article here:
How To Retire Early With Money - Seeking Alpha

An American couple retiring this year should expect to spend $275,000 in health care costs throughout retirement a number that has risen 6% since last year, and will continue to rise indefinitely.

The number assumes the individuals are enrolled in Medicare, but does not include expenses associated with a nursing home or long-term care, according to Fidelity Investments, the Boston-based financial services firm that analyzed these health care costs. Instead, the $275,000 includes monthly expenses that come with health coverage premiums, copayments and deductibles and out-of-pocket expenses for prescription drugs. The expected cost of health care has grown 70% since Fidelity first started tracking health care costs in 2002, and will continue to rise in the future, Adam Stavisky, senior vice president of Fidelity Benefits Consulting. Medicare is wonderful, but by design it doesnt cover everything, Stavisky said.

See: Whats the matter with health care?

Americans are anxious as it is for retirement the image of those golden years has shifted considerably in recent decades, where people are relying on their own savings instead of a pension plan, and many are choosing to work part or full time in their older years. Almost half of Americans are not confident about reaching their retirement goals, partially because of how expensive health care is: 71% of the more than 1,000 adults in a survey by the American Institute of Certified Public Accountants said they were anxious about health care costs, and another 68% said their concern was over the uncertainty around health care costs.

On top of how expensive health care is, and the pressure to save for it, many Americans dont understand the details of various plans and insurances. Health care is unfortunately complex and most people will shut down before they try to unravel the complexity, Stavisky said. Health care legislation is also in limbo Senate Republicans failed to agree on a reformed health care bill, which would have reduced Medicaid spending (the health care plan for low-income families and those with disabilities or few resources), and both parties are fighting over the fate of the Affordable Care Act, also known as Obamacare. For now, however, the ACA is still in tact.

See also: Heres how Republicans and Democrats can come together to fix health care

In the meantime, its on Americans to ensure their security in retirement, and that means funding health care costs. We may not want to talk about it, but the obligation exists nonetheless, Stavisky said. One increasingly popular way to do that is by funding a health savings account (HSA), where assets are deposited, invested and withdrawn tax-free and help Americans pay for qualified medical expenses. HSAs accounted for about $37 billion in assets at the end of 2016, and to more than $41 billion in January, according to Devenir, a Minneapolis-based HSA adviser and consultancy firm. The average investment account holder has a balance of almost $15,000, and overall the number of HSA accounts has grown 20% between December 31, 2015 and December 31, 2016.

HSAs are attached to a high-deductible health insurance plan, and have a contribution limit in 2017 of $3,400 for individuals and $6,750 for families. In 2018, those limits will increase to $3,450 and $6,900, respectively. There is an additional catch-up contribution of $1,000 allowed per year for individuals 55 and older. Alternatively, Americans can use a Flex Spending Account to accompany their health care coverage, but must spend it all or lose any remaining money in the account at the end of the year. Though they can be beneficial, and many experts recommend them, individuals interested in opening an HSA should consider fees and initial costs associated with the plans, and understand their nuances for example, once someone signs up for Medicare, contributing to an HSA is no longer an option. Alternatives to an HSA would be a traditional employer-sponsored retirement plan, such as a 401(k) plan, or a traditional or Roth Individual Retirement Account.

The money contributed each year into an HSA doesnt have to be used in that year, and unspent money will roll over year after year to become another nest-egg in retirement, if the individual chooses, said Chad Wilkins, president of HSA Bank, a Milwaukee-based health savings account administrator.

Some experts suggest paying all health care expenses out of pocket and saving HSA funds for health care costs in retirement (or, for whatever purpose after turning 65, when those assets are no longer only for medical expenses and the account is treated like a 401(k) plan nonmedical expenses will incur income taxes, though). Individuals can also use the money to reimburse themselves for a medical expense (with a receipt) from years prior, Wilkins added.

Original post:
Health care costs in retirement will only grow here's how to save - MarketWatch

Trustees for the Employees Retirement System of Texas voted Wednesday to decrease earnings assumptions for its $26 billion trust fund, a rare move that could have major implications for the state budget and the retirement systems beneficiaries.

In a 4-2 vote, the board cut the funds expected annual rate of return from 8 percent to 7.5 percent, reflecting gloomier market conditions and other factors straining the system. The board also voted to revisit the rate in two years.

Agency staffers and some trustees had pushed for a rate as low as 7 or 7.25 percent, but the board settled on the slightly higher projection.

Retirees and advocates fear the Legislature will respond by shifting more financial burdens onto the systems beneficiaries, either by forcing current employees to chip in more for their future pensions, cutting benefits or closing off the fund to future retirees.

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The Employees Retirement System handles benefits for about 240,000 active and retired state employees, elected officials, law enforcement and prison officers and judges. On average, beneficiaries receive $1,600 per month, a figure that hasnt been adjusted for the soaring cost of living since 2001.

Lowering the expected rate of return will not affect how much money flows into the retirement system, but it will dramatically alter its long-term balance sheet.

Under current assumptions, the fund is projected to grow large enough tocover its liabilities within 35 years.Under a 7.5 percent expected rate of return, the fund would never be expected to grow large enough to provide full benefits to retirees into the future, and without intervention, would be depleted by 2070.

Retirees in recent weeks flooded trustees with emails expressing anxieties about their future benefits and urging trustees to protect the status quo on expected rates of return. Several voiced their concerns in public comments ahead of Wednesdays vote.

I have nothing to lose but retirement money, said Pamela Scott, a retiree who spent 17 years working for the formerly named Texas Commission for the Blind and saw her salary peak at $31,000.We were promised when I went to work: Yes, our salaries are low, but youd have good benefits and good retirement.

Trustees said they understood retirees concerns, and they were only lowering expectations to protect the long-term health of the system.

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Craig Hester, an investment manager and the boards chair, described a perfect storm of factors putting pressure on the retirement system over the past two decades, including a national recession, an aging workforce, benefits changes and chronic legislative underfunding.

A host of other states have recently lowered their predicted rates of return for public pension funds, a change some financial analysts say is needed, largely because low interest rates have limited earnings for the type of low-risk investments that pension funds generally favor.

Hester and other trustees agreed that the Legislature had shortchanged the retirement systems fund and Texas workers more broadly over the years and could struggle to recruit talent if they fail to boost salaries or benefits.

We would all agree that the people who have sacrificed for the state have never been fairly compensated, said Cydney Donnell, a trustee. You need to be at the Legislature voicing concerns.

Donnell said she doubted that current retirees would be affected by any looming adjustments to benefits.

I think their anxiety should be reduced, she said. I think most people who are really going to be impacted by it are in the longer term.

Texas tended to fully fund the Employees Retirement System throughout the 1990s. But a turn-of-the-century recession triggered a long streak of chronic legislative underfunding that strained the system. In 2015, lawmakers sought to shore up the retirement systemby increasing state and employee contributions by roughly 2 percent each.

Texas law says state pension funds cant adjust for cost of living unless the funds are actuarially sound that is, they have enough money available to cover all liabilities even after increasing retiree payments. Even under an earnings projection of 8 percent, that wouldnt have happened for 35 years.

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Labor advocates have pushing for a lump-sum cash infusion that could more backfill plug the funding gap and potentially allow for the cost-of-living adjustment. But even that could be tricky.

The Texas Constitution says the state's contributions to pension funds cant eclipse 10 percent, and the state is near that threshold. Legal experts disagree about whether such an infusion would count toward pushing Texas over that cap, and the idea is a nonstarter around the Capitol.

There is one other option: Gov.Greg Abbottcould declare the unfunded liability an emergency, giving lawmakers clear permission to chip in more money.

Donnell said suggested lawmakers would be wise to chip in resources sooner than later, so they could grow over time.

Small check now, big check later, she said. If they dont put money into the system now, it doesnt earn anything.

Read related Tribune coverage:

The Employees Retirement System of Texas is considering lowering its earnings assumption for the $26 billion trust fund. Labor advocates fear the move would push lawmakers to cut benefits or require current workers to chip in more. [Full story]

Advocates for state employees hope that lawmakers approve substantial pay raises including for state workers who don't work at an agency that's facing a high-profile crisis. [Full story]

The House unanimously approved a Dallas pension bill aimed at preventing first responders' retirement fund from becoming insolvent within a decade. [Full story]

Read more here:
Employees Retirement System of Texas lowers expectations, worrying workers - Texas Tribune

A bear market just as you enter retirement couldnt come at a worse time if youre forced to sell securities after prices have plunged. Certainly, many investors today worry about how long the bull market can keep running.

That's where the bucket system can help. Basically, you divide your money among different kinds of investments based on when you'll need it.

Jason L. Smith, a financial adviser in Westlake, Ohio, and author of The Bucket Plan, uses the system with clients, splitting their assets among three buckets: Now, Soon and Later.

The Now bucket holds what you'll need in the short term. Smith recommends setting aside enough so that, when added to Social Security or a pension, it will cover your basic expenses for up to a year.

It should also have enough for major expenses that are likely to crop up over the next couple of years, such as paying for a new roof or that once-in-a-lifetime trip around the world, plus cash for unexpected emergencies.

Money in the Soon bucket will be your source of income for the next 10 years. Smith recommends investing in a fixed annuity (not an immediate annuity, which locks you into monthly payments) or high-quality short-term bonds or bond funds. As the Now bucket is depleted, you withdraw money from the annuity or sell some of the fixed-income investments in the Soon bucket to replenish it.

The assets in the Later bucket aren't meant to be tapped for more than a decade into your retirement, so they may be invested more aggressively in stock funds, which provide greater growth potential, and alternative investments such as REITs. This bucket can also include life insurance or a deferred-income annuity, which pays income later in life.

Consider selling securities in the Later bucket to replenish the Soon bucket starting about five years before it runs out of money.

If the market is in a downward spiral, you can wait, knowing you still have a few years before the Soon bucket will be empty.

Eileen Ambrose is a senior editor at Kiplinger's Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com.

Read more from the original source:
Bucket plan could be lifesaver in retirement - Chicago Tribune

by Christy Bieber for The Motley Fool @CNNMoney August 21, 2017: 10:16 AM ET

Well, the bad news is Americans are woefully behind on saving for retirement. The good news is, you don't have to be one of the millions of retirees struggling to live on a bare bones budget.

By following just five steps, you'll set yourself up for a retirement spent traveling the world, spoiling your grandkids, or, at the very least, not losing sleep over money.

1. Invest as early and as aggressively as possible

Investing early is the best way to get rich, because you'll need to invest more later to catch up if you wait. No matter when you start investing, though, the amount you invest should increase with your salary.

If you invest a fixed percentage of your income, then your contributions will automatically increase along with your salary. The question is: What percentage of your income is appropriate? While many think 10% is enough, this is actually low.

Consider how much money you'd accumulate if your investments returned an average of 7% per year, you earned the median income for an American worker (about $45,000 a year recently), you got small annual raises, and you contributed 10% of your salary to a tax-deferred account.

Age 25-34

$3,362.67

$336.27

$58,156.00

Age 35-44

$4,229.33

$422.93

$189,915.00

Age 45-54

$4,225.00

$422.50

$454,706.00

Age 55-64

$4,186.00

$418.60

$986,154.00

Your retirement income would be around $40,000, assuming you drew from your account for 25 years and continued to earn a conservative return of around 3.25% during retirement. That would put you far ahead of the average American retiree -- but you wouldn't quite be living in the lap of luxury.

These numbers also assume you started at 25, which many people don't. If you waited until 40, you'd need to save more than $1,200 a month -- about 35% of your wages -- to save up the same amount.

But what if you started early, invested aggressively (earning 7% per year), and saved 20% of your median income?

Age 25-34

$3,362.67

$672.53

$116,312.00

Age 35-44

$4,229.33

$845.87

$380,004.00

Age 45-54

$4,225.00

$845.00

$909,936.00

Age 55-64

$4,186.00

$837.20

$1,970,000.00

When you retired, your income will be around $81,000, which should be plenty -- especially when combined with Social Security -- to provide you with financial freedom.

If you've started later, you can still achieve a comparable income, but you'll need to save much more aggressively.

2. Automate your saving

When saving money takes effort, you're less likely to do it. In fact, one in six Americans responding to a survey weren't saving more because they hadn't gotten around to it.

Most people tend to stick with the status quo -- in fact, studies found participation rates in a 401(k) jump from 40% when employees must opt in to almost 100% when they must opt out. So use your natural inertia to your advantage: Automate investments by having a percentage of income diverted to your 401(k) or IRA. You're less likely to skip a contribution if it means having to submit paperwork.

3. Manage your risk appropriately

It's not just how much you invest that matters, but also what you invest in. If your portfolio is too conservative, your savings won't grow fast enough to provide you with a sizable retirement income. On the other hand, if you chase growth recklessly and ignore the inherent risks of your investments, you could be left with nothing.

Consider the difference between a conservatively invested traditional IRA and an aggressively invested IRA, assuming you contribute $5,500 per year to this tax-advantaged retirement account from age 25 to age 65:

If you invest in a conservative blend of stocks and bonds and earn 4%, your account will be worth $543,546.

If you earn a 7% return by investing primarily in stocks, your account will be worth $1,174,863.

Over time, that 3% difference in performance would more than double your money. Ironically, investing too much money in "safe" investments like bonds can be more risky than keeping most of your portfolio in stocks, because the stock market is much more likely to turn your small monthly investments into a livable income many years down the road.

You should tailor your investing strategy to your personal risk tolerance, but err on the side of being aggressive when you're young and still have time to recover from downturns. As you near retirement, you can gradually switch to safer investments in order to protect the capital you've built up.

4. Watch out for fees

Investing is typically not free. Some 401(k) accounts have fees, and mutual funds generally charge both annual fees and transaction fees. While you can't entirely escape these costs, you should know what you're paying and do everything you can to minimize the fees you pay.

Lets say you start saving at age 25, invest $5,500 for 40 years until age 65, and earn a 7% return on your investments. How much could fees ding your savings?

If you paid a 0.25% fee, you'd end up with an account worth $1,099,175

If you paid a 1% fee, you'd end up with an account worth $902,262

If you paid a 1.5% fee, you'd end up with an account worth $792,654

Over the course of 40 years, paying a 1.5% fee instead of a 0.25% fee would cost you $306,500 -- enough to cover expensive healthcare or a few nice trips around the world.

If you're investing through a 401(k), then your options are somewhat limited, and most of the mutual funds you can choose from will likely charge around 1%. However, if you invest through an IRA, your choices are almost limitless. There are plenty of low-cost exchange-traded funds that charge 0.25% or less for a diversified basket of stocks. A fund that tracks an index is a great choice for an investor who wants to benefit from the stock market's growth without assuming the risk and work involved in picking individual stocks.

5. Stick to the plan

Once you've carefully laid your plan for retiring rich, you need to adhere to it religiously. Even a slight and temporary deviation from the plan -- say, suspending your contributions for a few months, tapping your retirement account to cover unrelated expenses, or selling a holding early in an attempt to reap short-term gains -- could set you back big-time.

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If you put your contributions on hold, you'll lose out on both the money you should have contributed and the compound interest it would have achieved. If you make an early withdrawal from a tax-advantaged retirement account, not only will you cost your future self far more than you're withdrawing, but you may also incur income tax and penalties on the amount you distribute. It's not worth giving up your future financial security for anything you'd do today. When you're retired and living in comfort and financial security, you'll thank your former self for the years of discipline and sacrifice.

CNNMoney (New York) First published August 21, 2017: 10:16 AM ET

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5 simple steps to retiring rich - CNNMoney