Quinn on how to preserve your nest egg

By Elliot Raphaelson
Posted on March 02, 2016

Making your money last through retirement is harder than it used to be. We are living much longer, the rate of return for conservative investments is very low, and there is a great deal of volatility in the stock and bond markets.

An excellent guide to help you reach your objectives is Jane Bryant Quinn’s new book, How to Make Your Money Last (Simon and Schuster). Like her other books, this one is up to date, well researched, comprehensive and understandable.

Quinn assembles the wisdom of many reliable sources: Ed Slott (retirement plans), Michael Kitces (investment withdrawals), Moshe Milevsky (annuities), James Hunt (insurance), William Bernstein (investments), and the authors ofGet What’s Yours (Social Security).

Here are some highlights:

• Social Security: Quinn discusses optimal claiming strategies for individuals, spouses, ex-spouses, widow(er)s and disabled workers — including the pros and cons of filing early and waiting until 70 to file for benefits. These are among the most confusing choices facing retirees, and Quinn gives a solid grounding.

• Health insurance: Quinn covers the fundamentals of Medicare, and offers sound advice. For example, if you use Part D (drug plan), you should shop for a new plan at every open enrollment period. Plans continually raise and lower their drug prices. By checking the prices of the drugs you expect to use in the next year, you can determine which plan is best for you.

There is an excellent section on long-term care (LTC) insurance. Quinn points out that one of the problems in this industry is that some companies sometimes raise premiums by 10 to 20 percent. However, she identified three companies — Mass Mutual, New York Life and Northwestern Mutual — that have never raised prices to existing policyholders. She recommends that you don’t spend more than 5 percent of your retirement income on LTC premiums.

• Your home: Quinn discusses many options, such as downsizing, renting rather than buying a house, and continuing-care retirement communities.

On reverse mortgages, a controversial topic among personal finance writers, she admits she’s changed her mind. She used to think they entailed more risk than reward, but she acknowledges that the recent federal regulations have diminished the risk, and that “new cash-flow strategies make them interesting for people in their early 60s and 70s.”

This refers to the effective use of a Home Equity Conversion Mortgage (HECM). If you apply for an HECM but don’t immediately use it, the amount of available credit grows each year. (If you do consider a reverse mortgage, you must comparison shop. Some lenders offer them with low or no closing costs.)

• Retirement spending: Is a 4 percent withdrawal rate safe? In order to maintain even a relatively low withdrawal rate, you need to devote a significant percentage of your portfolio to equities.

Quinn lists a wide variety of excellent sources you can use to help you structure a workable portfolio of equities and bonds in retirement, as well as tools to determine when to modify your withdrawal rate so your assets will last through retirement.

• Annuities: Quinn points out, as I have in many of my columns, that immediate-pay annuities (aka SPIAs), which guarantee lifetime income, are easy to understand and are cost-effective. Her excellent advice: When you consider annuities, use an adviser — “not a salesperson” — when you seek advice.

• Investing for income: This chapter provides many common-sense approaches in order to structure a well-balanced portfolio, avoid risky alternatives, re-balance regularly, and avoid costly alternatives.

Quinn’s book will help you make reasonable choices in every important aspect of retirement planning.