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Thursday, Dec. 15, 2016 01:04 am

Retirement planning SOS

It’s not too late to make the most out of your savings

Emily Brandon, 34, a senior editor at U.S. News & World Report, knows far more about retirement issues than most people twice her age.

She has spent the past 10 years writing about retirement programs, savings and related topics for the magazine. She began such coverage when working for Consumer Reports during the launch of the Medicare Part D prescription drug program. Brandon’s recently published book, Pensionless: The 10-Step Solution for a Stress-Free Retirement, describes the many complex rules that face seniors in navigating Social Security, Medicare, retirement investment plans and other government programs and private financial options.

We turned to her for insights about some of the most common decisions people need to make and pitfalls they should avoid when it comes to retirement and finances.

Why should anyone be relying on retirement advice from a 34-year-old journalist?

I’ve interviewed a lot of financial experts, planners, researchers who study retirement for a living. I try to write about it in a way that’s very easy for people to understand, so they can make better decisions about retirement. I actually went through this recently with my parents in their mid-60s, helping them to make transitions, and there’s so much you need to know to make good decisions. My dad is a retired journalist and my mom’s a retired teacher, but even if you are educated and fairly knowledgeable about these topics, there’s a lot to know about signing up for Social Security and Medicare.

What should people in their 50s and early 60s be focused on, if they’re still working while retirement looms?

It’s your last chance to get the most money you can into retirement accounts and get the tax breaks of saving for retirement. It’s also time to think a lot about Medicare and Social Security. You need to think about what age to begin collecting Social Security benefits that might work best for getting the most you can out of Social Security over your lifetime. And you need to think about Medicare in terms of signing up for it at 65 to avoid the late enrollment penalty.

And for people once they retire?

There are quite a few things. You want to make sure you’re not spending down your retirement savings too quickly. You also want to pay attention to minimizing taxes while taking savings out. Paying attention to when and how you withdraw money from traditional 401(k) or IRA accounts will help reduce your tax bill. If you’ve done some savings in a Roth account you’ve added diversification to your portfolio, because with a Roth, you don’t need to pay taxes on the earnings when you make withdrawals. If you can take some money from there and some from a traditional retirement account, you can try to stay in a low tax level.

But many more people opt to save just with traditional accounts, right?

With the traditional 401(k) you get the immediate tax break, and it’s hard to give that up. Saving in a Roth means you have to think about the future and your lifetime tax bills.

What are the most common pitfalls people need to avoid?

It’s important to sign up for Medicare on time, which is three months on each side of your 65th birthday. If you don’t sign up in the initial enrollment period, it means you could have to pay higher premiums for the rest of your life. If you’re already getting Social Security, Medicare enrollment happens automatically, but with the age of full retirement for Social Security going up to 66, it’s more likely to become a problem, and you really have to take care to sign up during this initial window. I would also think carefully about when you should be signing up to receive Social Security. If you sign up early, at age 62, you get lower monthly payments for the rest of your life. It’s important to think about that, in terms of what you expect your lifetime to be, and it’s also important to think about your spouse and coordinating benefits with your spouse, because when the higher-earning spouse passes away the other one can inherit that benefit.

Are there any savings people can make on retirement investments if they’re diligent consumers?

It’s important to minimize the fees you pay on investments, and one document that can help is the 401(k) fee disclosure statement sent to you each year. Every fund within a 401(k) plan will charge different fees, and the disclosure statement lists them all. You may be able to switch into other funds with much lower fees.

So when I’ve been getting that statement every year and tossing it aside, I’ve been costing myself money?

Most of us don’t have traditional pensions anymore, so it’s up to us to figure these things out for ourselves. My parents doing their retirement planning would often call me with questions after doing research on their own. It’s very confusing to sign up for all these things, and there’s a lot you need to know to make the very best decision, but there are things within our control.

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