Life beyond paid work can be fulfilling, but getting there requires planning, self-control

San Antonio is a popular choice for retirement because of its low cost of living, sunny weather, quality health care and urban amenities. But when planning for retirement, the first question you may need to ask yourself is: “Do you really want to retire?”

Studies show that people who continue to work late in life and remain engaged in community service tend to live longer lives. And with average life expectancy climbing into the 80s for most Americans, retirement can last for decades past the traditional retirement age of 65.

San Antonio businessman G.P. Singh, who sold the company he created, Karta Technologies Inc., for nearly $65 million in 2007, says he doesn’t even like the word “retirement.”

“It makes it sound like you’re quitting life,” Singh says. “I think we should call it ‘engagement.’ You can continue to be engaged with work and you have more time to serve your community and to be with your family. When planning how to spend the rest of your life, I think you should focus on what you really want to do with your time. I’m serving on the boards of about a half dozen local non-profit groups, traveling more with my family and reading about subjects that truly interest me.

“Of course, you have to be concerned about having enough money, and the turmoil in the markets is a problem for everyone, but retirement is the time when you should figure out what makes you happy and then get reengaged with life.”

Genetic longevity

George P. Becknell III of Sapient Financial Group says that when retirement planning with couples, he makes sure that their money will last until the youngest will be 100.

“You have to look at your family history and take into account the improvements in health care,” Becknell says. “I can trace my family history back to the American Revolution, and the youngest age one of my relatives died at was 76 of cancer. Most of my other relatives lived to be in their 80s and 90s.”

With genes like that, making money last is essential.

“One of the biggest risks in retirement now is outliving your assets. Most people should plan on working as long as they can, but not everyone continues to work because they need to money,” Becknell says. “A lot of my clients are small business owners, doctors, lawyers and other professionals who continue to work because they enjoy it.”

Continuing work, however, doesn’t mean you shouldn’t plan for the worst.

“It’s important to acquire long-term care insurance while you’re in your 50s to be prepared for future health care costs, which are rising at a much faster rate than inflation,” Becknell urges

Cracked nest egg

Having enough in savings, investments and other sources of income is much tougher since defined pension plans are now a rarity and the future of Social Security is uncertain, especially for workers younger than 50.

“We see people retiring now making a lot of miscalculations in how much they need and what they can take out on an annual basis,” Ben Gurwitz of Financial Life Advisors says. “They assume they can draw 7 to 10 percent from their investments, and we see men taking Social Security early at age 62.

‘In reality, the basic rule of thumb is to take only 4 percent from your investments annually, although everyone is different and we do extensive planning with our clients to make sure the money is withdrawn in the most tax-advantageous way. And we recommend that you wait until age 70 to take Social Security, which has tax advantages and is most protective for the spouse.”

At a 4 percent withdrawal rate, $100,000 in savings will generate only about $4,000 in annual income.

While Texas does not have an income tax, it does have higher property taxes than most other states. Although property taxes can be frozen at age 65 in Texas, having a big house is not always desirable in retirement because maintenance costs will continue to rise. Being dependent on a car also can become more burdensome as you grow older. And health costs, which have greatly outpaced inflation over the past 10 years, are likely to increase substantially as you age. Some analysts recommend you have to plan on accumulating $250,000 just to cover health costs in retirement.

“Preparing a budget for retirement can be daunting because there are so many variables,” Eric Weissgarber of Alamo Asset Advisors says. “I tell people to divide their budget into three categories: needs, wants and wishes. And then to figure out what is ideal and what is acceptable. If you put everything into one big, gnarly ball, it’s difficult to see what you really need and what can be more flexible.

“Then I tell clients to put their investments in ‘silos’ for each category: first for certainty, money you will definitely need; second for more riskier investments to outpace inflation; and third for assets you want to pass on or give to charity.”

Current federal economic policy is holding inflation rates artificially low,Michael Clark, Aspect Wealth Management president, says, and investors may need to look beyond stocks and bonds since the stock market, despite its booms and busts, has been essentially flat for the past decade.

“As far as inflation goes, we have to plan on a day of reckoning once the free market begins to determine the rate once again and government policies are less important,” Clark says. “That means you should plan on at least the historic 3 to 4 percent inflation rate, although costs for college, energy and medical care have shot up much more than that in the past decade. We’ve been advising clients to consider investing in managed futures and commodities, which have done as well or better than stocks for the past 30 years.”

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DAN R. GODDARD is a San Antonio freelance writer.

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