The Blog

The Hard Times Guide to Retirement

This post was published on the now-closed HuffPost Contributor platform. Contributors control their own work and posted freely to our site. If you need to flag this entry as abusive, send us an email.

The most common personal finance question I'm hearing from people of a surprising array of ages is this: "Is it possible for my golden years... to really be golden?"

The one, two, three punch of the housing, stock, and job markets has left millions reeling. Thankfully, there is some good news. And here to deliver it is Mark Miller, author of the newly released book, The Hard Times Guide to Retirement.

Mark, what prompted you to write The Hard Times Guide to Retirement?

I've been covering retirement and aging for more than five years. Before the economy crashed, I was struck often by the lack of planning, preparation and thought that my generation--baby boom boomers--has given to retirement. Now, the Great Recession has made the planning gap much more critical. I wrote the book hoping to give people looking ahead to the next part of their lives the first examination of retirement issues in the post-crash economy. I wanted to show how strategies for money, work and living can be interwoven and leveraged for retirement security-even in tough times. I also hope to help readers boost their retirement I.Q.s by showcasing the best thinking I've been able to find in my reporting on retirement and aging.

What was the most surprising thing you learned in researching this book on retirement?

One of my major themes is that the traditional notion of retirement--hanging it up at age 65--will be discarded, and not only for economic reasons. But I was surprised--and really amused--to learn where that notion of age 65 came from. Otto Von Bismarck, the chancellor of Germany, started the first system of social security in the 19th Century. He initially set the German retirement age at 70, and later adjusted it to 65. When FDR started the American Social Security system in the 1930s, he looked to the German program as a model. That's where the idea of retirement at age 65 got its start, and it has stuck with us ever since. Of course, people didn't live nearly as long then as they do now, and 65 has really become somewhat irrelevant, I think.

If a reader could just take away one concept from The Hard Times Guide to Retirement, what would you want that to be?

There are no magic bullets or easy solutions to the problems we face with retirement security. But there are many solid ways to achieve a satisfying, secure retirement, even in difficult times. These aren't get-rich-quick investment gimmicks or schemes to make millions working part-time from your kitchen table. I think the best ideas focus on basic blocking and tackling--getting the most from the financial tools already at hand, and making smart decisions about work and lifestyle. Also, I want my readers to focus on the definition of retirement security. It's not just about what happens this year or next, but finding a way to reliably generate income to support a retirement that could well last 25 years or more for you or your spouse. Boomers are going to need to start focusing on what lies ahead--and get smarter about retirement--quickly!

What is your favorite free online retirement calculator?

Actually, I'm not a big fan of most free retirement calculators. A recent study by actuarial experts on retirement calculators shows that many of the free online tools have serious flaws that can lead to serious miscalculations when you're plotting your retirement. The Society of Actuaries analyzed 12 retirement calculators created by financial services firms, software companies, nonprofits, and government for consumers and financial planning pros. All but one of the six consumer calculators was free-and they had a lot of problems. For example, most of the free calculators do a poor job projecting your Social Security benefits. They also use questionable rate-of-return assumptions on investments. And they don't handle longevity questions or inflation very well.

One exception is ESPlanner, which was developed by Larry Kotlikoff, an economist at Boston University. There are free and premium versions of this tool available to consumers. Unlike many of the freebies, ESPlanner gathers more detailed data, and experts on this have indicated to me that it can give you a more reliable forecast. Outside of that, I wouldn't use the free tools for anything beyond getting a very general idea of where you stand with your retirement planning. Making a precise plan requires one of the more sophisticated software programs that you pay for, building your own spreadsheet or hiring a financial planner.

Did you find any of your own personal financial habits (or attitudes) changing as a result of writing this book?

Well, speaking of financial planners . . .The biggest change for me came from writing the chapter "How to Hire a Financial Adviser." This chapter sorts through the alphabet soup of the myriad designations you can find for different types of advisers, and also the different ways that they are compensated. I'm in my mid-fifties, and my wife and I have been diligent retirement savers over the years--but we never really had a retirement plan. Writing this chapter pushed me into action, and we hired an adviser this year to help us build a plan. My research convinced me that the best way to go in this area is to hire a fee-only planner. Unlike advisers who work on commission, fee-only advisers aren't registered reps for any particular financial services company. Usually, they are self-employed Registered Investment Advisers or work for a firm of independent planners. You pay all the fees, but the planner has no bias toward any one product or solution. I've been really pleased with the process, and it's given me much more confidence that we can meet our goals.

Which was your favorite chapter to write and why?

I had the most fun writing the chapter titled "Making a Difference: Encore Careers." It examines how mid-life Americans are reinventing their careers with a social purpose in mind. The Encore Career concept comes from Civic Ventures, a not-for-profit think tank and incubator for social entrepreneurship co-founded by Marc Freedman and John Gardner in the late 1990s. Gardner, who died in 2002 at age 89, was a visionary thinker and leader on civic engagement, civil rights, and social reform. He wrote extensively on leadership and self-renewal, and he co founded Experience Corps, the national organization that promotes and enables volunteer work for older Americans. Freedman is one of the country's leading thinkers on how Americans can redefine the second half of life with a sense of social and individual renewal.

This chapter was really fun to write because I had a chance to interview and profile a number of people who have created Encore Careers for themselves--an aerospace exec who transitioned to teaching in gang-ridden Los Angles high school, an auditor who went to work for the IRS, and a college teacher who now runs a non-profit that helps refugee immigrants adjust to life in the U.S. I found their stories fascinating and inspiring. I also really enjoyed writing the chapters on doing volunteer work and lifelong learning for similar reasons--I really love telling the stories of people who are taking action and getting things done!

If you could give a woman in her 30s or 40s just one piece of "retirement advice" what would you say?

I'd urge younger women to confront the fact that they are greater risk of retirement insecurity than men--and take steps to fight back. Unfortunately--and outrageously--women earn less over the course of their lifetimes than men. That reduces their contributions to Social Security and retirement savings plans. Caregiving for aged parents or children often interrupts their careers. And women are less comfortable dealing with their finances than men, which makes them more conservative investors at a younger age--at a time when they should be investing aggressively.

Even for middle-class or affluent women, the risks are high. Single elderly women are the largest segment of Americans living in poverty. In 2007, 20.5 percent of unmarried women age 65 and older had income below 100 percent of the federal government's definition of poverty--far higher than rates experienced by men or married couples, according to Census Bureau data. I urge younger women to get educated about retirement security, and to build a plan at the earliest possible date. When you're job-hunting, be sure to pay attention to retirement benefits, and crank that into your decision-making about what job to accept. It's also important to start saving for retirement at the earliest possible date, either in a tax-deferred account like a 401(k) or a Roth IRA. I think Roths can be especially beneficial for younger investors.

Finally, focus on debt management, not just investing! In particular, try to avoid building up big credit card balances, because they can eat even the best retirement plan alive.

How do you plan to spend your retirement?

I don't anticipate having a traditional retirement. I hope to do a mixture of work and leisure as long as possible. I'm already in my own Encore Career, which should make that possible--after working for years at large media companies, I'm now an independent writer, and I also do some consulting work helping non-profit organizations with their online strategies and websites. When I decide that I want more down time, I expect to simply adjust that mix. My areas of interest outside of work include distance bicycling, tennis, playing guitar, traveling and doing volunteer work in the non-profit sector.

To get more wisdom from Mark, follow him on Twitter at @RetireRevised