I also hired someone to make the comment link appear even when there are no comments. I know some people complained before that it was difficult to figure out how to leave comments. This should cure that problem. If there are any other blog features you would like to see let me know and I might implement them.

Of course the most important thing on a blog is content. I have been neglecting this blog lately but I plan to rectify that. Now that the site is back up and running there should be at least two posts a week. Feel free to suggest any topics that you would like to see covered.

The random winner of my giveaway of the book, Retirement Breakthrough: The Safe, Secure Way to Guaranteed Income You Can’t Outlive–in Any Economy, is Steve.

There will not be a giveaway next week but I plan on having more giveaways next month. The upcoming week should feature a couple of substantive posts.

This book focuses on what it considers to be safe investments and also makes tax savings a priority. The author recommends investing in life insurance and annuities. He also discusses how to get the most out of your IRA or QP and your house. Information on how to protect your assets from claimants is included as well.

The author does a good job of describing the different types of cash value life insurance and annuities. I’m still not convinced that life insurance is a good retirement investment due to its high cost and low returns but I could see some situations in which it would be a reasonable purchase. Annuities could be a good addition to your retirement portfolio but you need to choose your annuity carefully to avoid paying to much in fees and receiving a below average return. This book seems to be targeted at high earners who need investments that will save them money on taxes and keep their money protected from claimants.

If you would like to win a copy of this book just leave a comment on this post. A winner will be drawn at random this Friday. One entry per person and entrants must have a U.S. mailing address. This post does include affiliate links.

For years we have been told to defer our income from our working years because we’d be in a lower tax bracket during retirement.  That strategy may have worked for people that retired in the last decade.  However, if you’re going to be retiring in the next decade, you may want to reconsider that strategy.  The national debt is over $13 trillion already with future budget deficits expected to push that number over $20 trillion in just a few short years.  How will this debt be repaid?  Or more importantly, who will be stuck repaying that debt?

The 2009 US Retirement Market Report issued by the Investment Company Institute says there is over $16 trillion of untaxed assets sitting in retirement accounts.  If the IRS could get their hands on just a third of those funds, it would take a huge bite out of the national debt.  Retirees could be facing much higher taxes on retirement plan withdrawals in the future.  Upper income retirees may even see excise taxes on their retirement funds.

It is not my intention to speculate on future tax policy or scare you into pulling your money out of retirement accounts.  My goal is to urge people to take a balanced approach to planning for retirement.  The old adage of “not putting all your eggs into one basket” as a warning to diversify should certainly apply to retirement planning today.  I don’t think you want to end up at the end of your working years with all of your savings held in a 401(k) account.  Every time you try to spend a dollar in retirement it will be subject to tax.  And if you draw too much in any one year your Social Security benefits will become taxable and you’ll start to lose your itemized deductions.  Even Medicare premiums are higher for those with incomes over certain levels.

A more prudent approach would be to diversify your retirement savings into 1) taxable accounts – brokerage accounts, mutual funds, savings that have already been taxed, 2) tax-free accounts – your Roth IRA or Roth 401(k) where the money is saved after-tax and the withdrawals are tax fee, and 3) tax-deferred accounts – 401(k), 457, 403(b), Traditional IRAs.  These accounts still have their place and are useful tools for controlling taxes while working.  You want to have some of your funds held in all three types of accounts.  Think of the three places to save as legs of a stool to balance your retirement.

The person that enters retirement with all three legs in place will be able to determine how much they want to pay in income taxes (if any).  This is achieved by choosing how the funds are withdrawn.  They could pull some money from the 401(k) account but not so much that their Social Security benefits are taxed.  The rest of their income could be taken from the Roth or after-tax accounts.  The amounts withdrawn can be varied each year as their tax situation changes.

Implementing this new way of savings will require a little more effort on your part.  You will need to determine how much should be put into each account based on tax implications.  In 2010, a joint filer enters the 25% tax bracket when taxable income exceeds $68,000.  Personal exemptions are $3,650 each and the standard deduction is $11,400.  This taxpayer should only defer enough income to get their gross taxable income to $87,000.  If they make $100,000 they should defer $13,000 into the 401(k) and put additional savings into a Roth IRA.  This same approach can be used for staying below the Medicare premium increase ($85,000 in 2010) and the levels for losing itemized deductions.

There is no better time to be taking a balanced approach to savings.  The last few months of 2010 may very well be the lowest income tax rates we see for some time, especially for higher income taxpayers.  Act now while tax rates are still low to make sure you have all three legs for your retirement.

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Rick Rodgers, CFP®, is President of Rodgers & Associates in Lancaster, PA and author of “The New Three-Legged Stool™  A Tax Efficient Approach To Retirement”.

This book is aimed at those who lost a lot of their investments in the recent bear market or who just haven’t saved enough for retirement. I have read a lot of retirement books lately and there are many similarities between most retirement books. This book did have some fresh perspective. They offered advice on various scenarios from 20 years away from retirement all the way to post retirement. The authors have solid financial credentials and offered reasonable investment advice based on their various scenarios. They offer information on the following subjects,where to move your savings, how to recalculate what you’ll really need to retire, how to assess when you can now afford to retire, how to change your approach to investing, how to use the federal tax system to save more, and what to expect from Social Security now.  This book offers good advice on retirement in general and would be especially helpful to those who are behind in saving for retirement.  If you want to find out more about the book just click on the affiliate link below.

Save Your Retirement: What to Do If You Haven’t Saved Enough or If Your Investments Were Devastated by the Market Meltdown

The most common reason for retiring abroad is to reduce living costs but it seems that many of the countries on this list would not be much cheaper than the United States. Even Panama which is often touted as a low cost destination did not seem especially cheap to me when I visited there last year.

Of course there are many factors in choosing where to retire besides just cost of living. Some of those include residency, taxation, health care, safety and stability, weather, and how convenient it is to visit friends and family still living in the U.S. If you are considering retiring abroad you might want to check out the article on “10 Questions to ask before you retire abroad.”

Work Less, Live More: The Way to Semi-Retirement
The subtitle of this book is, “The Way to Semi-Retirement” although I read an earlier edition which was subtitled, “The New Way to Retire Early.” From reading the editorial reviews it appears the second edition contains more information for late bloomers and more about health care but is otherwise the same.

This book deals a lot with the psychological side or retiring early as well as the financial aspects of early retirement. The author has advice on living below your means, putting your investing on autopilot, how to take 4% forever, and stop worrying about taxes. This is mostly standard personal financial advice with a few small twists but it is good advice and helpful for those who don’t already know it.

The chapters that focus on the psychological aspect of retiring early will probably be more beneficial for those who are already knowledgeable about personal finance. Chapter titles include, figuring out why you want to retire early, do anything you want but do something, don’t blow it, and make your life matter. That gives you a pretty good idea of the subjects covered.

Personally I didn’t find this book all that helpful but that might be because I was already have the early retirement mindset and am knowledgeable about the personal finance topics covered. Judging from the reviews many people have found this book very helpful to their early retirement planning. If you are looking for a “how-to” type of early retirement book than this is probably not the book for you. However, if you are looking for a “why” and “what” type of early retirement book than this book is probably what you are looking for.

I’m not joking.

I recently authored a Google Knol with an exceedingly strange title — “The First Retirement Calculator That Gets the Numbers Right.” It’s about a calculator that I developed the contains something that no existing calculator does — an adjustment for the valuation level that applies on the day the retirement begins.

We better figure out whether that is necessary or not. If it is, there are millions of people who are going to be suffering failed retirements in days to come because they relied on retirement calculators that get all the numbers wrong. If it isn’t, I sure would like to learn that before making an even bigger fool of myself.

There are a good number of people who think I am wrong. In fact, I have been banned from a good number of popular investing boards and blogs for letting people know about the bad retirement numbers. Morningstar said that I was being “inflammatory” by doing this. A poster at the Financial WebRing Forum said that he found me polite but also “irritating.”

But others have encouraged me in my belief that valuations matter. Rahiv Sethie, an economics professor at Columbia University, said that my analysis is consistent with the findings of Yale Professor Robert Shiller (author of Irrational Exuberance) and “could be true.” Maryland Financial Planner Michael Kitces described my retirement calculator as “fascinating.” And Carl Richards, owner of Clearwater Asset Management, said that the work I have done in the investing field is “of huge value.”

So which is it? Am I a nutcase? Or am I kinda, sorta on the right track? It would be nice to know for sure one way or the other.

I never went to investing school. I never managed a big fund. It shouldn’t be possible for me to be the first person to develop a retirement calculator that gets the numbers right. I mean, come on! But the numbers generated by my retirement calculator are very different from the numbers generated by all the other retirement calculators. That much is clear. And the reason for the difference is that mine contains a valuations adjustment and the others do not. And big names in the field like William Bernstein have said that valuations affect long-term returns as a matter of “mathematical certainty.” So….

The difference is that the other calculators say that a retiree can safely take out 4 percent of the inflation-adjusted value of his portfolio each year and be sure that his retirement will not fail for 30 years. My calculator says that at times of low valuations it would be safe to take out 9 percent but that at times of high valuations it would not be entirely safe to take out more than 2 percent. For a retiree with a portfolio of $1 million, that’s the difference between living on $90,000 per year, $40,000 per year or $20,000 per year. It’s no small thing.

I’d be grateful if you would take a look at the Google Knol explaining the thinking that went into development of the calculator. If you think I am wrong, please let me know why. If you think I’m right, please let me know why you think that (you might want to let some of the people with the retirement calculators that get the numbers wrong know too). It would be nice to get to the bottom of this.

I have spent eight years of my life studying these questions and I believe strongly that I am right. Every bit of evidence that I have looked at tells me that I am. But the last thing in the world that I want to do is to steer people wrong on the numbers they are using to plan their retirements. It creeps me out that I am the only one out there today saying that the safe withdrawal rate is a number that changes.

Could it be that it is only everything that Rob Bennett believes about retirement planning that is wrong? If so. I hope that someone will soon be able to set me straight.

Rob Bennett developed The Retirement Risk Evaluator, the retirement calculator discussed in this blog entry.