Retirement Is Simple (But Not Always Easy)
Editor's note: U.S. markets and our offices will be closed next Friday in celebration of Juneteenth. Your next Top Stocks issue will publish Friday, June 26. Enjoy the holiday!
For a lot of folks, buying stocks with huge upside isn't the goal... Retirement is.
Everyone who invests in the market does so to make money. But that's really only one piece of the puzzle. What are you making money for?
The main objective, for many of us, is to sock away cash and grow wealth for retirement. But if you're investing for retirement, the challenge isn't just "buying stocks that go up."
It's planning for future costs, allocating your assets, hiring experts and advisers to help manage your wealth, and having a clear vision of what your life will be like five, 10, or 20 years from now.
That sounds complicated.
But the basic rules to put you on the right path may not be so difficult...
This week, I spoke with my longtime colleague, Dr. David "Doc" Eifrig.
Doc's a former investment banker from Goldman Sachs, who retired to become a board-eligible eye surgeon... and then retired from that career to help teach everyday folks how to maximize their health and wealth.
Today, Doc is the CEO of our parent company MarketWise.
But that hasn't stopped him from finding ways to help readers earn more from their investments and to simply live better.
Doc still publishes monthly advisories like Retirement Millionaire, Income Intelligence, and Prosperity Investor, as well as his Retirement Trader service on the second and fourth Fridays of every month. He even has a free Health & Wealth Bulletin that he publishes daily.
During this week's Top Stocks episode, Doc and I sat down to discuss precisely which decisions will make or break your retirement... and how to make sure you do it right.
Three Big Ideas About Retirement
Retirement Doesn't Kill You – Boredom Does
The old model of retirement – the gold watch, the golf course, the slow fade into a life of leisure – has a dirty secret... There's a real chance it kills you.
According to Doc, people who retire without a plan to stay active experience a rapid physical and cognitive decline. It's in the data... and it's a pattern he has watched play out with friends and family.
If you don't have a plan for how your days will be filled before you retire, you're not really planning retirement at all – you're planning a slow stop.
Don't wait until you leave your job to figure out what comes next. Plan your retirement the same way you would plan a portfolio: with intention.
The physical side matters just as much as the mental. Doc's top health advice for anyone over the age of 50 is deceptively simple: walk every day, one to three miles, no exceptions.
This free, simple habit maintains the muscle strength that keeps you mobile and independent well into your 70s and 80s.
As he puts it, if you're not moving, you're dead.
Your Nest Egg Needs a Floor, Not Just a Ceiling
Most people approaching retirement are watching the ceiling of their savings...
How high can this go?
But you need to worry about the floor as well. You don't want to end up scrimping when you should be enjoying your retirement.
Doc says you should consider taking a meaningful chunk of your savings – say, $300,000 out of a $2 million pile – and move it into 10-year Treasurys.
At a yield of about 4.5% today, that generates $1,200 a month in guaranteed income. It doesn't touch the rest of your nest egg. It doesn't require market timing. It just creates a floor.
That floor changes everything psychologically. When you know a certain amount is coming in regardless of what the market does, you can afford to stay invested in the remaining $1.7 million without panicking. You've separated the money you need from the money you're growing.
He extends this idea with a bond ladder. Rather than piling everything into one maturity, spread it across two-year, seven-year, and 15-year Treasurys. Your blended yield rises and you always have something maturing and available without having to sell equities at the wrong moment.
Social Security Is a Political Issue That Can Be Solved
People have been predicting the end of Social Security since at least the late 1970s.
Politicians have been promising to fix certain issues with it for just as long.
Doc says it's not going away.
Voters won't allow it. If fixes are needed – higher taxes, modestly trimmed benefits – those will come. But the program itself will survive.
What matters for most people isn't whether Social Security exists – it's when to take it.
And that's a math problem...
Start with your family medical history and average your biological parents' ages at death. That number is your baseline estimate for your own lifespan.
From there, the arithmetic is straightforward.
You can start collecting as early as 62, but at a reduced amount. Your full retirement age today is around 66 and a half. If you wait, the benefit grows at roughly 8.5% per year until it maxes out at 72. The longer you wait, the higher the monthly check... But the fewer years you'll collect those checks.
All you have to do is compare the monthly payments with your lifespan and find the maximum amount you can collect... and you'll know when to start.
Watch to Learn More
To hear more of Doc's thoughts on retirement, and his ideas to help you retire like a millionaire, check out this week's Top Stocks episode. Doc goes over how to stay healthy and wealthy in a world of rising costs and ripping markets...
You can watch the entire episode on our YouTube page by clicking the image above. Be sure to like and subscribe to get more of our videos.
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Straight to the Source
- Learn more by watching Doc's presentation right here.
Until next week,
Matt Weinschenk
Publisher and Director of Research
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