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4 RETIREMENT PLANNING 2019
CONTENTS
The big picTure
8 ready, Set, retire What to do when you are 10 years, five years and one year out.
16 Make Sure You’re Saving enough Use our worksheet to see if you’re in the ballpark—or if you need to up your game.
20 You Can retire a Millionaire How much you need to put away each month to reach the magic milestone, whether you’ve saved a little or a lot.
40 Safeguard Your portfolio With the bull market a mature 10 years old, it makes sense to play defense so your investments don’t get mauled when the market turns bearish.
48 great Funds for every Season Use the Kiplinger 25, the list of our favorite actively managed funds, to reach your retirement goals. plus: Key performance data and model portfolios.
52 Aim for the right Target-Date Fund These all-in-one funds do the heavy lifting of retirement investing. We help you choose one that’s right for you.
54 100 biggest Funds in 401(k) plans We outline three steps to help you decide which mutual funds are worth owning in your retirement savings account. plus: Total returns for the 100 biggest 401(k) funds.
The righT inveSTMenTS
74a
shle
y bl
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56 Make Your Money Last How to turn your savings into a stream of
reTireMenT incoMe
27 Super early retirement Inside the Financial Freedom, Retire Early (FIRE) movement.
31 budget for State Taxes Our tax map shows the 10 most friendly and 10 least friendly states for retirees.
34 Strategies for Singles How to plan for a secure retirement on your own.
37 Find great Advice at the right price You don’t have to commit a lot of money to find a planner who will put your best interest first.
Click here to order
Click here to order
RETIREMENT PLANNING 2019 5
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82 Five Awesome places to retire These small cities offer a gentle pace, moderate cost of living and lots of amenities—and they are close to high-quality health care.
88 A guide for Snowbirds Before you make good your escape to a warmer clime, make use of our tips to winter-ize your year-round home while you’re gone, handle finances and more.
91 Age-Friendly remodeling If you’re ready to update your house, these suggestions will let you age in place comfortably and stylishly.
96 Travel in Style for Less
Living weLL
70 navigating the Medicare Maze Congratulations! You’re 65 and qualify for Medicare. But Medicare has many moving parts, and in some cases you could be better off delaying some coverage.
74 paying for Long-Term care The cost can be daunting, but so is the cost of coverage. Take advantage of ways to slice premiums, or consider other options to cover the cost.
A heALThY reTireMenT
48
income that lasts as long as you do.
62 Social Security: now or Later? You can claim reduced benefits at 62, full benefits at 66 or 67, or wait until 70 for an even bigger monthly check. We help you decide when to pull the trigger.
66 on the Menu: Annuities A “free” dinner could come with a pitch for some complicated investments.
79 health insurance for early retirees Used to be, if you didn’t have employer health benefits, getting coverage before Medicare kicked in was challenging. The Affordable Care Act changed all that.
Click here to order
6 RETIREMENT PLANNING 2019
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CONTENTS
Kiplinger.com free, trusted retirement planning advice at your fingertips year-round
retirement Savings calculator Determine how much you need to save each month to meet your goals.
■ kiplinger.com/links/ retirementcalculator
Social Security retirement Age Determine when you’re eligible to collect full Social Security benefits.
■ kiplinger.com/links/age
rMD calculator Compute your required minimum distributions from a traditional IRA.
■ kiplinger.com/links/rmd
when Your First rMD is Due Pinpoint when you must take your first IRA required minimum distribution.
■ kiplinger.com/links/firstrmd
Listen to our Your Money’s Worth podcast every week for insights on saving for retirement, investing for income, cutting your tax bill, and much more.
■ kiplinger.com/links/podcasts
boost Your cash Yield
Kiplinger’s Investing for Income will show you how to generate steady income with moderate growth and manageable risk, no matter what the market is doing.
■ kiplinger.com/go/investing
retire on Your TermsWhether you’re almost there or have a few years to go, Kiplinger’s Retirement Report will show you how to retire on your schedule.
■ kiplinger.com/go/ retirementreport
RetiRee tax Map Our state-by-state guide helps you choose the right home for you and your nest egg. See how states tax various forms of retirement income, which ones offer property tax breaks for retirees and how states ultimately ding your estate.
■ kiplinger.com/links/retireetaxmap
podcast
MoRe HeLp FoR YoUR RetiReMeNt
tooLs
staY coNNected!■ twitteR: @Kiplingerretire
■ Facebook: Facebook.com/Kiplingersretirementreport
Copyright 2019 • The Kiplinger Washington Editors, Inc. • 1100 13th Street NW • Washington, DC 20005-4051 • www.kiplingerincome.com
Investing for Income
Everybody loves U.S.
bonds, gushed the Bank of
America in a star-spangled
testimonial it issued in February.
And since our September 2015
“USA! USA!” cover story, our
anthem to an all-American invest-
ment mix, most dollar-denomi-
nated investments, stocks and real
estate investment trusts, as well as
bonds, have returned substantially
more to an American investor in
dollars than international alterna-
tives have. But bonds have been
the real revelation. (We’ll examine
global high-dividend stocks in the
next newsletter.)
Now, we didn’t command
readers to cut off the entire outside
world. As a practical matter, that’s
difficult. But the contrast between
robust U.S. and insipid foreign
performance endures. Over the
past five years, Standard & Poor’s
index of international “sovereign,”
or government, bonds from rich
countries has returned an annual-
ized negative 0.4%. International
investment-grade corporate bonds
lost 0.3% a year. Every broad
American bond index is ahead 2%
to 4% annually over that interval.
The one-year gap is even wider.
Why? One reason is that
more than $9 trillion of debt still
circulates with negative interest
rates, and none of it was born in
the U.S. Germany builds incompa-
rable automobiles, but if you test-
drive a five-year German “bund,”
a Deutschland federal bond, you’ll
take home minus 0.3%. Japanese
debt is also pointless. Even Austra-
lia, which from 2000 to 2018 paid
higher rates than Uncle Sam, now
borrows for less; its 10-year gov-
bution, a payout in obvious peril.
We might re-recommend FAX in
the future, but not yet.
A mild opening. In fact, in March
we repeated our preference for
domestic over international
bonds, all things being equal.
Rich Asia’s puny rates are a big
reason. But after some fresh
dialogue with several experts,
and after watching the world’s
bond and monetary action, we’re
willing to lighten up and endorse
a small, gradual drift into high-
yielding global credits. We’re
talking about a sliver of your sav-
ings—maybe 5% of your entire
bond bucket. And we don’t mean
pursuing miserly yields from
Germany, Japan or the U.K. A
developed-markets fund such as
IGOV, the iShares International
Treasury Bond exchange-traded
fund, serves up the terrifying
combination of an 8.4 duration,
In Search of Respectable Global Bond Yields
ernment bonds are at 1.99%. We
once loved Aberdeen Asia-Pacific
Income Fund (FAX) because its
largest concentration is customarily
Aussie bonds; Australia has a tri-
ple-A credit rating and hasn’t seen
a recession since 1991. But after
yields plunged in Australia and in
key regional countries Hong Kong,
South Korea and Taiwan, FAX
now returns considerable capital to
meet its high fixed monthly distri-
We’re willing to lighten up
and endorse a small drift
into global credits.
continued on next page ...
APRIL 2019, VOL. 8, NO. 4
Inside This Issue... Unless otherwise noted, prices and data are as of March 15, 2019
Ask Jeff 6
Can too many bonds spoil the fund? Also,
what to do with a troubled fund, and the
assessment of a proposed portfolio.
What’s New in Cash 7
New preferreds are sprouting like mad,
the college scandal has an impact, and
cannabis-created “REITer madness.”
Rates and Yields 7
Model Portfolio: Dividend-a-Month 8
There’s no compelling reason to kick any
of these off the schedule.
Are REITs Overvalued? We Don’t Think So 3
REITs keep rolling, but detractors still
circle. Still, only an economic earthquake
will make us skittish.
The Mad Rush Into Tax-Free Bonds 4
As the tax-exempt bond boom continues,
munis provide relief from pricing drama.
Timely Tactic of the Month 4
This REIT benefits from the growth of
“yieldcos,” as well as new opportunities.
Kiplinger’s 25 for Income 5
We have cause to celebrate as pluses for
the 25 are everywhere.
Strategies to Boost Your Cash Yield
KII_Vol8_No4.indd 1
3/22/19 12:59 PM
Your Guide to a Richer Retirement VOLUME 26 | NUMBER 2 | FEBRUARY 2019 | $5.00
how he’d spend his days in retirement: gardening,
reading, playing with his grandkids and working on
his stamp collection.
But all that preparation didn’t make the transition
easy. Since his November 2018 retirement, he has fo-
cused on staying busy, getting involved with his home-
owners association, joining a senior community center
and taking tai chi
classes. But “it’s not
fun yet,” he says.
“I feel tired, not
retired.” And the
recent market down-
turn has further un-
dermined his confi-
dence. “I’m sitting
here thinking, ‘How
long will it take to
recover from this?’ ”
he says. “Did I pick
the wrong time to
retire?” Even with years
of preparation, re-
tirement can be a
daunting prospect.
Can your portfolio
withstand a market
crash in your early
retirement years? Will you still have a sense of purpose
when you’re no longer heading to the office every day?
How do you know that you’re really ready—both finan-
cially and mentally?
For those on the brink of retirement, such questions
LAST YEAR, NICK CRISCI FELT MORE THAN READY TO
retire. After working nonstop for 46 years, the
69-year-old feared the stress of his information
technology job was affecting his health. Crisci, who
lives in Pflugerville, Tex., prepared for retirement by
whipping his finances into shape—paying off his mort-
gage and shifting some of his investments into Trea-
sury bills to create a cash cushion. He also envisioned
Are You Really
Ready to Retire?
RETIREMENT REPORT
JOH
N W
. TO
MA
C
IN THIS ISSUE
INVESTING
6 | Stock Fund Picks for 2019
MANAGING YOUR FINANCES
8 | Consolidating Accounts
9 | Variable Annuity Basics
11 | Handling Market Volatility
12 | Information to Act On
14 | Your Questions Answered
TAXES
15 | Start 2019 Tax Planning
THEN & NOW
16 | Looking Back Over 25 Years
RETIREMENT LIVING
18 | Become a ‘Super Ager’
2 | FEBRUARY
days in retirement: gardening,
h his grandkids and working on
Y 2019 ||| $5.00