Index A. Balance sheet. See Personal balance sheet Bank statements, 21 BNA Tax Planner, 294 Bond ladder, 100 Budgeting software, 23

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1 I A Accessible Savings/Investments, 21 Adjusted gross income (AGI), 169 Advisor credentials CFA, 285 CFP, 284 and complaint record verification, 286 PFS designation, 285 RMA, 286 Affordable Health Care Act, 249 Alternative minimum tax (AMT), 169 American Association for Long Term Care Insurance (AALTCI), 261 Annuitize, 215 Annuity, 100 fixed annuities, 216 immediate annuities, 101, 212 indexed annuities, 217 inflation-adjusted immediate annuity, basics, 102 low and high interest rates, retirement, 103 IRA-owned, 221 non-inflation adjusted annuity, 103 retirement income, 104 social security plan, 103 tax planning, 171 term-certain annuity, 101 variable annuity, 219 Average ed Monthly Earnings, 53 B Balance sheet. See Personal balance sheet Bank statements, 21 BNA Tax Planner, 294 Bond ladder, 100 Budgeting software, 23 C Cash value life insurance, 22 Certificate of deposit (CD), 8 Certified Financial Planner (CFP), 284 Chartered Financial Analyst (CFA), 274, 285 Company benefits employee stock, 207 pension (see Pension) 401(k) plan (see 401(k) plan) rollover (see Rollover) Computerized investing, 91 Control box, Cost-of-living adjustment (COLA), 50 Coverage ratio, 43, Credit/debit cards, 38 D Delayed retirement credits, 53 Desired gross income, 28 Dimensional fund advisors (DFA), 110

2 304 Disability insurance disability awareness quiz, 188 disability statistics, 188 employer plans and individual policies, 189 event probability, 188 income replacement, 188 odds calculation, 187 personal disability quotient, , 190 probability and severity, 179 social security, 189 E Early Retirement Extreme, 274 Employee stock, 207 Employee stock ownership plan (ESOP), 208 Employee stock purchase plan (ESPP), 208 Equity-indexed annuity. See ed annuity ESPlanner Basic, 23 Excel spreadsheet, 24 F Federal Housing Administration (FHA), 241 Fee-only life-insurance advisor, 186 Finance Logix, 294 Finances inflation risk, 9 12 longevity risk (see also Longevity risk) life expectancy probabilities, 5 retirement planning, 6 overspending risk, sequence risk, 6 9 Financial advice avoiding fraud appealing to ego, 296 Aunt B, 298 family friend, 297 outright lie, 295 red flags, 298 Snakes in Suits, 300 true returns, 296 confusion with products, 281 industry, 280 municipal bonds, 279 tax-free interest, 280 Financial advisor, compensation model, 291 compensation structures commissions, 287 fee-based, 290 fee-only methods, 288 credentials (see Advisor credentials) interviewing, 292 Oblivious Investor, 283 Social Security benefits, 283 tax planning, 283 Financial capital, 120 Financial resources, 12 Fixed annuity blended rate, 217 indexed annuities (see ed annuity) interest rate, 216 retirement plan, 217 surrender penalty, 216 tax-deferred interest, 216 withdrawals at age 59 1/2, 217 Fixed expenses, 32 Fixed indexed annuity (FIA). See ed annuity Fixed sources of income, 28 Flex expenses, 32 Flexible savings account (FSA), 174 Full retirement age (FRA) claim benefits after, 57 claim benefits before, 56 normal retirement age, 55 Social Security benefit, 56 working and collecting benefits, G Government Pension Offset (GPO), 55, 83 Guaranteed insurance contract (GIC), 201 Guaranteed living benefits (GLBs), 222 Guaranteed minimum withdrawal benefits (GMWBs), 223

3 305 H Health care cost management after age 65 (see Medicare) early retirement and health insurance, 249 estimation, pre-65 age, 249 HAS, 266 long-term care insurance, 263 John and Cathy case, 259 situation, 261 total medical costs, 248 Health care expenditures, 11 Health insurance, 249 Health Savings Account (HSA), 266 High Risk Pool section, 249 Human capital, 120 Chuck, 272 Dr. Barry, 271 Ed, 272 Kolbe A certification class, 270 financial planning, 270 instinctive approach, 270 software packages, 270 using, 271 utilitarian approach, 270 mercenary approach, 273 plan alignment, retirement date, 278 thriving work, 274 working in retirement earnings limit, 277 self-employment, 277 Steve and Carol s plan, 276 supplement income, 276 HVS Financial, 37 I, J Immediate annuity, 101 client who need, 214 death benefit, 212 financial assets preservation, 213 inflation-adjusted spending money, 212 life-long income, 212 longevity risk, 212 overspending risk, 212 payout rate, 214 and retirement plan, 214 stagger your purchases, 215 stock index funds, 213 wait-and-see approach for couples, 215 Incentive stock option (ISO), 208 Income timeline business world, 23 Excel spreadsheet, 24 pension option, 31 Social Security, 31 Steve and Carol s (see Steve and Carol, income timeline) tax-efficient way, 32 Incorporates taxes, 14 ed annuity vs. CD returns, 218 and outcomes, 217 participation rates and cap rates, 219 retirement plan, 219 stock market index, 217 withdrawals at age 59 1/2, 217 funds dimensional fund advisors, 110 low fees, 110 past performance allocation model, 116 annualized return averages, 112 investors expectations, 112 large-cap stocks, 116 lost decade, 114 rate-of-return expectations, 112 stock mutual funds, 110, 112 withdrawals fund choices, allocation and amount, 116 inflation-adjusted annuity, 119 noninflation-adjusted annuity, retiree s withdrawals, 118 Inflation risk, 9 12 In-home care, 260 Insurance disability (see Disability insurance) life (see Life insurance) risk identification and quantification death, 178 home insurance, 178

4 306 Insurance Company guarantees, 223 Internal rate of return (IRR), 127 Investment account statements, 21 Investment calculator vs. loan payoff calculator, 237 vs. Pay Down Mortgage, 237 vs. prepay calculator, 237 Investment strategy alternative investments, 137 asset allocation accumulation phase, 135 bond funds, 131 cash reserves, 131 index funds, 131 net withdrawals, 131 non retirement account mutual funds, 131 risk management, 122, 124 safe withdrawal rate, 135 systematic withdrawal strategy, 134 tax-smart management, 136 time segmentation, 132, 134 benchmarking, 94 annuity (see Annuity) I Bonds, 95, 98 individual bonds vs. bond fund, 98, 100 TIPS, 98 big investment lie, 104 computerized investing, 91 coverage ratio annuity, 128 financial advisor, 127 internal rate of return, 127 Social Security claiming plan, 124 financial advisor, financial capital, 120 human capital, 120 index funds (see funds) investment fees, 120 longevity insurance, 128 rate of return, 120 REAL inflation-adjusted investment return, 121 risk measurement averages, 93 definition, 93 financial capital, 94 inflation risk, 93 losing money, 92 retirement planning, risk scale, 93 sequence risk, 93 Simple Investment Risk Scale, 92 volatility risk, risk scale, risk choices, social capital, 120 IRA consolidating retirement assets, 208 creditor protection, 195 inherited IRA, 200 IRA-owned annuity, 221 rollover (see Rollover) K Kauffman Foundation, 275 Kitces Report, 56 Kolbe A certification class, 270 financial planning, 270 instinctive approach, 270 software packages, 270 using, 271 utilitarian approach, 270 L Life insurance blended families, 186 fee-only life insurance advisor, 186 financial dependency, 179 older husband/younger wife, 183 permanent life, 180 retirement, 185 single mom, 181 term life, 180 Lifetime withdrawal benefits (LWBs), 223 Longevity insurance, 128 Longevity risk definition, 3 life expectancy probabilities, 5 road trip, 2

5 307 Social Security, 4 Tom and Tara, Real life, 4 tools, 4 Long-term care AALTCI, 261 Cadillac policy, 262 Cost page, 262 four-year policy, 261 in-home care services, 261 insurance features, 263 Partnership policy, 264 quotes, 263 unlimited benefits, 264 John and Cathy case, 259 living expenses, 262 paying without insurance, 265 M Married couples file and suspend, 61 higher earner, 60 restricted application file, 61 spousal benefits, 60 rules, 63 Steve and Carol (see Steve and Carol) Steve and Carol s situation, 63 Steve and Carol s case, 60 widow/widowers benefits, 60 after FRA, 71 before FRA, 71 Beth claims benefits, 72 delayed retirement credits, 72 relative benefits to Carol, 73 started benefits, 73 Mary s Social Security claiming options, 77 Medicare ancillary benefits, 257 annual health and drug cost estimation, 256 applying for card, 258 employer-provided health plans, 258 online, 258 begins, 14 benefit structure, 254 choice of provider, 257 eligibility, 255 extended hospital stay coverage, 257 financial decisions, 252 Gaps, 252 HealthView Services comment, 252 open enrollment period, 257 Part B, 254 Part B and Medigap policies, 258 Part C, 255 Part D, 255 Parts A, 254 Plan Finder, 256 plan structure, 257 surtax on investment income, 169 transition, 258 Medicare Advantage Plan, 255 Medigap and Medicare Supplement plans, 255 Modified adjusted gross income (MAGI), 171 MoneyOver55, 49 Mortgages, 173 Mortgage statements, 21 N National Bureau of Economic Research (NBER), 282 Net unrealized appreciation, 175 Non-qualified stock option (NQ), 208 Normal retirement age, 55 O Overspending risk, Own retirement planning BNA Tax Planner, 294 Excel worksheets, 293 Finance Logix, 294 free online retirement calculators, 294 Social Security timing, 294 spreadsheet models, 293 tax-projection software, 293

6 308 P, Q Payout rate, 214 Pension benefits, 203 categories, 201 investment choices and risk, 206 lump sum/annuity, 201 Pension Benefit Guarantee Corporation (PBGC), 206 Permanent life insurance, 180 Personal balance sheet accessible savings/investments, 21 assets and liabilities, 19 automobile loans, 22 automobiles, 22 bank statements, 21 Budgeting software, 23 cash value life insurance, 22 ESPlanner Basic, 23 homes, 22 investment account statements, 21 iphone/android smartphone, 23 liability, 21 mortgage statements, 21 real estate, 21 retirement accounts, 21 retirement account statements, 21 Steve and Carol, total assets, 21 Personal Disability Quotient, 190 Personal Financial Specialist (PFS), (k) plan age-related rules withdrawals at age 55, 195 withdrawals at age 59 1/2, 196 withdrawals at age 70 1/2, 196 creditor protection, 194 household investment, 197 inherited 401(K) plan, 200 retirement goals, 196 Pre- and post-work spending, 40 Pre-Existing Condition Insurance Plan (PCIP), 249 Present Value vs. Simple Sum, 29 R 1099-R, 200 Real estate and mortgages equity/potential income, 234 financial decisions, 234 home equity lines of credit, 240 inflation protection, 234 investment property expenses, 232 guru rankings, 233 planning, 233 retirement income, 232 payoff analytical benefit, 235 assumptions, 238 individual circumstances, 238 invest calculators, 237 psychological/values benefit, 236 retirement saving, 235 refinancing, 239 retirement lifestyle support, 234 reverse (see Reverse mortgages) Required minimum distribution, 15 Restricted stock unit (RSU), 208 Retirement accounts, 21 Retirement account statements, 21 Retirement Income Industry Association (RIIA), 286 Retirement Management Analyst (RMA), 286 Reverse mortgages age of borrower, 243 calculator, 243 eligibility, 242 equity access tool, 241 FHA, 241 foreclosing, 243 non-recourse loans, 241 plan B, 244 reason to avoid, 245 receiving proceeds, 242 risk management, 244 Social Security, 243 tax management, 244 type, 243

7 309 value of property, 243 without monthly repayment agreement, 242 Riders, 222 Rollover company retirement accounts, 199 investment options, 201 rules, 199 S Salary Deferral Limits, 143 Sequence risk, 6 9 Single premium immediate annuity (SPIA), 213 Social capital, 120 Social Security, 254, 258, 276 Average ed Monthly Earnings, 53 benefits, 50 52, 277, 283 claiming plan, 124 delayed retirement credits, 53 dependent, 83 disability, 189 ex-spouses, 76, 78 FRA (see Full retirement age (FRA)) go back to work, 84 income taxes, 53 married couples (see Married couples) pay back, 84 pension GPO, 83 pre-retirement income, 80 WEP, 82 plan, 103 reading and writing, 50 single people, software and calculators, statement, statistics, 50 taxes, 88 timing, 294 voluntarily suspend, 85 Spending plan annual expense, 38 budget, 32 conspicuously go missing, 39 credit/debit cards, 38 fixed expenses, 32 fixed vs. flux expenses, 38 flex expenses, 32 habits, 33 health care expenses, 37 monthly expenses, 38 mortgage, 36 pre- and post-work, 40 Steve and Carol s, 34, 36 Spending timeline, 40, 43 Stand-alone living benefits (SALB), 227 Step-up, 225 Steve and Carol income timeline desired gross income, 28 discount rate, 29 fixed source, 28 present values, 29 savings, 28 Simple Sum, 29 Social Security, 28 married couples, 63 mortgage, 46 personal balance sheet, revised income timeline, social security benefits, 51 spending plan, 34, 36 spending timeline, spousal benefits claiming benefits, 66 Claiming Social Security, 65 discount rate, 64 income timeline, investment product, 70 Sub-accounts, 219 Surrender charges, 216 T Target date fund, 197 Tax management, 14 Tax-planning, 278 active tax management, 140 annuities, 171 asset allocation and location after-tax basis, 167 capital gains management, 168

8 310 Tax-planning (cont.) long-term capital gains rates, 167 tax-deferred account, 167 tax-efficiency, 167 traditional IRA and non-ira mutual fund, 166 conventional wisdom, 139 health saving accounts vs. flexible savings account, 174 vs. IRAs, 175 net unrealized appreciation, 175 high-income tax filers after-tax yield, 170 alternative minimum tax, 170 deductions and exemptions phaseout, 169 medicare premiums, 170 medicare surtax on investment income, 169 itemized deductions, 142 LifeYield s methodology, 140 mortgages, 173 personal exemption, 142 retirement income, 139 Roth contributions, 143 Roth conversions features, 146 tax-deferred account, 145 tax projection, 145 withdrawal before official retirement, 147 salary deferral limits, 143 standard deduction, 142 Steve and Carol s plan annual taxes comparison, 163 annual tax liability, 164 cumulative taxes comparison, 163 cumulative tax minimization, inflation rate, social security, 154 projected future balances, 155 required minimum distribution, 162 tax code, 155 terminal value, 164 withdrawal planning, 162 year-end financial account values, 164 tax-deferred accounts, 141 traditional contributions, 142 triggering events, 144 U.S federal tax brackets, 141 withdrawal (see Withdrawal strategy) Term-certain annuity, 101 Term life insurance, 180 TIAA-CREF, 201 Traditional retirement planning, 11 Treasury inflation-adjusted securities (TIPS), 98 U U.S. Bureau of Labor s consumer expenditure data, 11 V Variable annuity death benefit guarantees, 219 existing contract, 228 fees on income riders, 226 income guarantees death benefits, 225 deferral phase, 224 income base, 225 income phase, 224 for income use, 225 riders, 223 sub-accounts, 219 tax deferral, 219 Administrative expenses, 222 after-tax investments, 221 high-fee annuity, 221 investment expense ratio, 222 long-term gains and dividends, 220 mortality expenses, 221 riders, 222 stock and bond accounts, 220 surrender charges, 222 taxable bond funds, 220 withdrawals at age 59 1/2, 217

9 311 W, X, Y, Z Windfall Elimination Provision (WEP), 55, 82 Withdrawal strategy required minimum distributions joint and last survivor table, 153 large retirement account balances, 153 retirement plans, 154 single life expectancy table, 153 uniform lifetime table, 153 Roth and traditional IRA, 148 social security benefits claiming options, after-tax basis, 151 combined income, 149 taxable income and liability, tax minimization, 152 three-part test, threshold amounts, 149