A simple guide to help your money last

By Elliot Raphaelson
Posted on October 08, 2020

Steve Vernon has a great deal of expertise in retirement planning, having written six books on the subject. His latest, Don’t Go Broke in Retirement: A Simple Plan to Build Lifetime Retirement Income (Rest-of-Life Communications), is an excellent source for middle-income people who want a straightforward plan to build a lifetime of retirement income.

I believe the book will be very helpful to those close to retirement who want to make sure they make the right decisions about Social Security, investments and establishing withdrawal plans from savings/retirement accounts to ensure that their assets/income will last their lifetime.

The book is organized in several concise chapters that cover all the basics of security-minded financial planning. In chapter one, Vernon establishes a baseline Spend Safely Strategy consisting of three key steps.

In step one, you establish reliable monthly paychecks that will last the rest of your life, regardless of stock market fluctuations. Elements of this “paycheck” would be Social Security and recurring income from employer retirement plans.

In step two, you establish a retirement savings source that will deliver a stream of lifetime income to supplement your reliable monthly paychecks if you need additional funds. This stream would be used for discretionary purchases such as traveling, hobbies and gifts.

This income could be from retirement accounts such as IRAs and/or 401(k)s. Vernon recommends a systematic withdrawal from these accounts so that you will have money coming on a regular basis.

The third step is to establish an emergency fund at your bank or credit union to be used for predictable future expenses, such as home and car maintenance, updated appliances and furniture, as well as unforeseen emergencies.

Postpone Social Security

In an early chapter, Vernon discusses the importance of maximizing Social Security benefits. As I have indicated in many of my columns, there are significant advantages to postponing applying for benefits as long as possible.

Vernon believes that starting Social Security benefits as soon as possible “is a big mistake for most people.” He believes it is smart to maximize your lifetime Social Security benefits because they are the best source of risk-protected retirement income for most workers.

He provides examples of strategies to maximize these benefits by delaying the start of benefits. One approach is to continue working; a second is to establish a bridge payment fund with a portion of your existing retirement savings.

Many resources for further reading on Social Security are identified, including the excellent book by Andy Landis, Social Security: The Inside Story.

In another chapter of Don’t Go Broke, Vernon discusses using your savings to generate lifetime retirement income. He recommends using the IRS required minimum distribution (RMD) tables to calculate the amount to withdraw each year as a simple, effective way to make your savings last for the rest of your life.

He includes a chapter on investing for growth, in which he recommends that, after you have covered most of your basic living expenses, you can take calculated risks by investing some of your savings in low-cost, conservative equity alternatives. He recommends target-date funds, balanced funds and stock index funds. I agree, as I have indicated in my columns.

He also addresses issues such as minimizing taxes, health considerations and part-time work. Also useful are his checklist that summarizes the action steps you should be taking to meet your objectives and his bibliography of useful books and websites.

Don’t Go Broke in Retirement is easy to read, and it covers all the important decisions to develop a plan that will allow you to retire safely and never run out of income and assets in retirement.