Kiplinger and Norhill Financial Present

You’re right! B. 25% is correct.

Choosing when to begin receiving Social Security benefits can have a huge impact on your cash flow. If you start collecting as soon as you are eligible at 62, your retirement benefit will be reduced by 25% for the rest of your life. For those born in 1960 and thereafter, the normal retirement age will gradually increase to 67. For this group, starting Social Security five years early at age 62 will cut their benefits by 30%.

You’re right! True is correct.

Be aware that if you collect Social Security benefits and continue to work, your benefits will be subject to an earnings test. In 2013, you lose $1 in benefits for every $2 you earn over the $15,120 annual limit. Say you’re 62 and earn $40,000 in 2013 while collecting Social Security benefits. Your earnings are $24,880 more than the limit, so you’ll forfeit half of that amount — $12,440 — in Social Security benefits for the year. Once you reach your normal retirement age, however, the earnings test disappears. Note: Those forfeited benefits aren’t lost forever. At full retirement age, your benefit will increase to take into account those months in which benefits were withheld.

You’re right!  All of the above. is correct.

Working longer, even part-time, can help stretch your nest egg by giving it more time to grow and reducing the time you’ll have to rely on it for income. Working longer also lets you postpone collecting Social Security benefits until they are worth more later. (If you were born between 1943 and 1954 and you wait until age 70 to collect, you will receive 132% of the Social Security benefit you would have received at normal retirement age.) Once you reach your normal retirement age, the earnings test disappears, too, so you can collect Social Security without forfeiting any of your benefits, regardless of income.

You’re right! More than half. is correct.

Twenty five years from now, you would need about $2,100 to match the purchasing power of what $1,000 would buy today. The threat of inflation is why you need to keep some of your nest egg invested in stocks so that you can maintain your buying power over a retirement that could last 20 years or more.

The right answer is 50%.

Unfortunately, many people severely underestimate how much money they will need for the rest of their lives. You may be surprised to learn that life expectancy is not the estimated number of years most people live. It is the midpoint, or median. That means 50% of the population will die before they reach their life expectancy, and the other 50% will live beyond it. While a 65-year-old man has a life expectancy — that is, a 50% chance — of living past the age of 85, for a 65-year-old couple, the chances are 50% that one member will live beyond the age of 92. Some people will spend more time in retirement than they did working. So it’s important to plan how to make your nest egg last a lifetime.

You’re right! Restrict your withdrawals to 4% of your nest egg during the first year of retirement, then increase your withdrawals to keep pace with inflation in future years. is correct.

By following the conservative 4% withdrawal rule and investing in a diversified portfolio of 60% stocks and 40% bonds, your money should last the rest of your life. But if you retire during a severe bear market, like the one new retirees encountered in 2008, you may want to reduce your initial withdrawals or skip the inflation-adjusted increase in your withdrawals in subsequent years until the market recovers. If you withdraw too much from a shrinking nest egg during the early years, there may not be enough principal left to benefit from the market rebound, and you could outlive your money.

You’re right!  You might talk to Warren to see if this type of annuity is right for you.

The right answer is $23,000.

If you’re age 50 or older by the end of 2013, you can contribute up to $23,000 to your 401(k), 403(b) or 457 plan. That’s $5,500 more than the maximum amount that younger workers can stash in their retirement plan. Contributing to a traditional 401(k) will reduce your taxes now. If you have a Roth 401(k) option at work, there’s no upfront tax break on contributions, but all your withdrawals will be tax-free in retirement. You can also contribute up to $6,500 to an IRA if you are 50 or older; younger workers and spouses are limited to a $5,500 contribution in 2013. And don’t feel bad: A majority of Americans say they are behind in saving for retirement because they got off to a late savings start, according to a survey by TD Ameritrade.

The correct answer is $240,000. When estimating your
retirement income needs, don’t forget to factor in health-care costs. A study
by Fidelity Investments calculates that a 65-year-old couple with no access to
retiree health benefits would need nearly a quarter of a million dollars to
cover their out-of-pocket medical costs, including Medicare and supplemental
medical insurance premiums (but not including nursing-home expenses) over a
20-year retirement.

You do, unless you have special long-term-care insurance.

Most long-term care requires help with the activities of daily living, such as bathing, dressing and eating — not medical care. Consequently, health insurance does not cover most long-term-care costs. Neither does Medicare. Once you run out of money — and a year or two of paying for a nursing home, assisted living or even care in your own home can wipe out a nest egg — you can turn to the government for help. But Medicaid will pay your long-term-care bills only if you are poor enough to qualify for assistance. There is another option: You can purchase long-term-care insurance, which can pay your bills wherever you receive care and preserve your retirement savings for your spouse or heirs.