Boomer retirement strategy on an index card

Given the financial challenges facing most boomers, you'll need to be resilient and resourceful to make every dollar count during retirement and to live well during your later years. But if retirement planning seems too complicated to you, here's an effective strategy that's simple enough to be written on an index card.

This approach was inspired by a recent article in the Washington Post that claimed to be able to provide readers with all the financial advice they'd ever need on an index card. The tips were short and to the point, though not all-inclusive: All the advice offered was about saving and investing and didn't cover any other financial issues.

And although the retirement strategy I'm proposing is fairly easy to understand, it may be hard to put into practice. But at least you'll have some guidelines that offer smart tips for making your retirement work.

Of course, each brief step has details that can't be squeezed onto an index card, so I'm including some additional information here about each step to help you understand exactly what you need to do.

Start Social Security at age 70. For most people, this will maximize their lifetime payout, and it's a great way to protect surviving spouses, who are typically women. If you're married, it might pay to start Social Security earlier for one spouse, often the wife. Take the time to figure out the best claiming strategy if you're married.

Don't spend your retirement savings. One of the worst things you can do is to start spending your 401(k) and IRA balances without a strategy for making that money last for life. Instead, choose a method (or methods) for using your savings to generate a monthly paycheck that lasts for the rest of your life, and then spend just that paycheck. You can increase the amount of that paycheck if you can wait until age 70 to begin drawing down your retirement savings.

Buy only what you need and what truly makes you happy. The magic formula for financial security before and during retirement is to keep your income greater than your expenses. This will help you save more for retirement while you're working. So, determine what amount is just enough to meet your living expenses and make you happy. Don't fall prey to persuasive advertising that claims you need to spend money to be happy.

Find work you like. Be creative and continue until age 70. If you wait until age 70 to start Social Security and begin drawing down your savings, then you'll most likely need to work until then to support yourself. But that doesn't need to feel like a jail sentence. Seek work that you enjoy, and try to find time to do more of the things that make you happy, so you experience less of the grind of work and more of the joy of downtime.

It might be possible for you to work just enough to cover your living expenses, so you can let your Social Security and savings grow until age 70. Do the math to see if that's possible.

While working, save enough and invest in low-cost target-date or balanced mutual funds. For most people, that will mean saving from 10 percent to 20 percent of pay, including employer matching contributions, and investing in funds with investment expenses below 0.50 percent per year. By the way, the saving and investing advice mentioned on the Washington Post's index card is great. If you want to get more sophisticated, use an online retirement calculator to figure how much you should save to meet your goals, and learn more about smart investing.

Take care of your health to reduce medical bills. Good health will enable you to enjoy life and has the potential to reduce your bills for medical and long-term care. Eating healthy foods and getting enough exercise is a no-brainer. You'll also be able to do more of the things that give you pleasure -- and reduce your medical bills -- if you keep your weight at a healthy level. And you'll need good health if you want or need to continuing working.

Find the best place for you to retire. The best place will be different for everybody, but don't automatically assume that the best place is where you're living now. You can downsize, move closer to friends and family, find a community that's supportive for older citizens and so on. Decide on the best use of your home equity -- many boomers have more wealth in their home than in their 401(k) accounts.

Shop for medical insurance. Medicare starts at age 65, but it doesn't cover all your medical expenses. So, you'll most likely need supplemental coverage. And don't even think about retiring before age 65 without medical insurance -- that's a bad move. There are many different types of medical insurance policies, so it pays to shop for one that best meets your needs and circumstances.

Have a strategy for long-term care. These expenses aren't covered by Medicare or medical insurance plans, so you'll need a strategy to avoid wiping out your retirement savings in your later years if you should need long-term care. This might involve buying long-term care insurance or keeping your home equity as a financial reserve in case you need expensive care near the end of life.

Make lots of friends, and be on good terms with family. Not only will this help you enjoy life more, but you might have people who can pitch in and help you in an emergency or when you're frail and need more support.

Is this index card advice perfect? No! In fact, you might do better if you take even more time to plan your retirement. For example, you could follow my free, online retirement planning guide that provides a step-by-step program of planning steps you can take each week for 16 weeks.

Are there exceptions to this advice? You betcha! It won't apply to everybody because there can be individual extenuating circumstances, but it should work for most people. If you don't like any aspect of the advice, don't just ignore it. Instead, find a strategy that works better for you.

Many people don't have a clue about how to begin planning their retirement. This index card strategy is a good place to start. Focus on how you'll finance happiness in your later years, and how you can work and still be satisfied with life. Happiness and fulfillment may be more realistic goals than leaving the workforce for good.

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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.

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