Latest news with #DecodingRetirement
Yahoo
a day ago
- Business
- Yahoo
Inside the silver tsunami: 4.2M Americans turning 65
Are you part of the record-breaking cohort of people reaching retirement age this year? On this episode of "Decoding Retirement," Robert 'Bob' Powell speaks with Fiona Greig, global head of investor research and policy at Vanguard. Fiona discusses how to generate steady income to last through your golden years, and sheds light on helpful tools like auto-enrollment in company retirement plans and asset calculators to give your retirement a boost. Yahoo Finance's Decoding Retirement is hosted by Robert Powell. Find more episodes of Decoding Retirement at
Yahoo
3 days ago
- Business
- Yahoo
A 529 account can make saving for your child's future go farther
Listen and subscribe to Decoding Retirement on Apple Podcasts, Spotify, or wherever you find your favorite podcasts. The cost of college has more than doubled in the past 20 years, and as a result, families are struggling to plan appropriately for their child's higher education goals. According to research by the Society of Actuaries, 6 in 10 Americans have said they delayed their retirement to plan for a family member's education. Though a lot of important factors determine the most realistic and cost-effective plan to pay for college, Tricia Scarlata, head of education planning at JPMorgan Asset Management, spoke on Yahoo Finance's Decoding Retirement podcast about how essential a 529 account can be in ensuring capital goals are met. "My goal is to always talk about how if you're not investing and you're not potentially leveraging a 529 account, you're missing out on that tax-free growth and compounding over time," Scarlata said (see video above or listen below). "Cash is just not going to get you there. And so investing and leveraging that tax-free benefit is really what we try to encourage people to do." This embedded content is not available in your region. A 529 plan is a tax-advantaged savings account dedicated specifically to saving for future education expenses. It's not just for college — these accounts can also be used to pay for trade schools or tuition for K-12 education, offering tax-free withdrawals for qualifying expenses. The money in the account is then invested, compounding with tax-deferred earnings to be used by the designated beneficiary. "If you just look at the two accounts side by side, a taxable and a nontaxable account, all things being equal, you make a $10,000 contribution upfront, and then you subsequently put in $500 a month — at the end of 18 years, you have almost $42,000 more in the tax-free account," Scarlata explained, breaking down the difference a 529 account can make when saving for education. "That's a big amount." Read more: How much should I save before going to college? By adding education plans to your long-term savings goals, you can also avoid the temptation of borrowing against your own 401(k) to pay for a child's tuition. "What we do find is a lot of [parents] are borrowing against their retirement to pay those tuition bills," Scarlata said. "And that's where I always get concerned, because when you start to borrow against your retirement or your 401(k), what we see is that most people then don't contribute. A lot of times they're missing out on that company's match, and that's free money." She also explained that it's a common misconception that the money in the account won't be useful should the designated beneficiary decide not to go to college. As long as the account has been open for 15 years, up to $7,000 can be rolled over into a Roth IRA for the beneficiary per year, with a lifetime rollover cap of $35,000. "If you're able to do that $35,000 over five years, and starting when the adult is 23 — at 65, it's almost $400,000," she said. Read more: How to open a savings account for a child Though it may seem restrictive to plan in advance for a child's education, Scarlata emphasized that it's ultimately more effective for everyone in the long run to do so. "It's a family decision," she said. "And what we have found is that parents do not jeopardize their college savings fund. They almost never take those dollars out early — they wait till that child goes to college and then they withdraw." Each Tuesday, retirement expert and financial educator Robert Powell gives you the tools to plan for your future on Decoding Retirement. You can find more episodes on our video hub or watch on your preferred streaming service.
Yahoo
6 days ago
- Business
- Yahoo
Retirement expert: What I learned after becoming my mother's financial caretaker
Listen and subscribe to Decoding Retirement on Apple Podcasts, Spotify, or wherever you find your favorite podcasts. Many don't factor in taking care of aging parents when making long-term financial plans — and this could be preventing seniors from getting the care they need. On Yahoo Finance's Decoding Retirement, Bank of America's head of retirement, Chris Herman, shared a personal anecdote about how his own mother's divorce and eventual need for a caregiver forced him and his siblings to have some serious talks about money. 'When my parents divorced, my mom was not in a good position financially,' Herman said (see video above or listen below). 'She was very concerned about her ability to continue her lifestyle, let alone retire, at some point in the future. And I took it as my role for her to be [her] financial caregiver.' This embedded content is not available in your region. Herman admitted he wasn't aware of his parents' financial situation before their divorce, which meant that they had to sit down and take stock of all of his mother's assets to get an idea of where she was starting. 'Maybe just in finding the place where you are, you'll find some comfort,' he recalled telling her before they made a financial plan. Herman said he worked with his mother as her financial caretaker 'over the span of 25 years,' constantly checking in with her on her financial situation. This included factoring in what kind of care she would get if she were no longer able to live on her own. 'Ultimately, when my mom was not able to live by herself anymore, she moved in with my oldest sister,' he shared, noting that it was a decision made with his sister. 'It was my mom's choice. That's where she wanted to be." But while their years of financial planning had made that move possible, they didn't consider what would happen if Herman's older sister could no longer take care of their mother. 'Eventually, my sister's ability to care for my mother deteriorated as well,' Herman said. 'As she got older, ... for my mom's safety, for my sister's safety, we needed to put her into an assisted living facility.' Herman admitted that was one place they could've done a better job planning. Though assisted living or additional care was not their ideal situation, he noted that planning for that possibility would've helped everyone in the long run. 'Having that conversation with the person you expect is potentially going to need long-term care — it's a difficult conversation to have,' Herman said. 'Oftentimes, the elder person will not want to engage in that. They'll be adamant in terms of, 'I'm not going to be a burden on you, and I'm never going to live in assisted living.'' 'But just know in the back of your mind that one of those two is likely to come to pass if they live [long] enough,' he added. Even if your loved one resists the conversation, he reiterated that asking them which potential option they would prefer is still a necessary topic of discussion. It's also important for the child to know where they stand and what they're willing and able to do to care for their loved one as they age. 'It's OK to say, 'I would not be in the position to care for you myself personally,'' he said. 'Then what can you do? Are there other options available to you? Having that conversation and then laying out some options … Don't wait until you're in the moment to have those conversations.' For those who don't feel confident taking the reins fully, Herman recommended looking into a trusted individual to work with as you plan, whether that be a well-informed friend or a professional. 'There are burdens well beyond financial that are associated with caregiving that buying insurance doesn't necessarily cover,' he said. Each Tuesday, retirement expert and financial educator Robert Powell gives you the tools to plan for your future on Decoding Retirement. You can find more episodes on our video hub or watch on your preferred streaming service. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
27-05-2025
- Business
- Yahoo
College is pricier than ever– here's how you make it cheaper
College has long been seen as a ticket to the middle class, but does that still hold true when paying for college seems more and more out of reach for the average American family? On this episode of "Decoding Retirement," Robert 'Bob' Powell speaks with Tricia Scarlata, head of education savings for J.P. Morgan Asset Management. Both being parents of college-age children, Bob and Tricia talk about the importance of saving early in tax-advantaged accounts, being realistic about financial aid, and how retirement savings are often affected by paying for your child's education. Yahoo Finance's Decoding Retirement is hosted by Robert Powell. Find more episodes of Decoding Retirement at College matters. It can lead to higher income and lower unemployment, but tuition costs are rising and so knowledge of financial aid and 529 plans is essential to making college more affordable. And here to talk with me about that is Tricia Scarlatti. She's the head of education planning at JPMorgan Asset Management. Trisha, welcome. Thank you. So I want to start not with that so much, but with recent news, uh, right now wending its way through, uh, the House of called the Student Success and Taxpayer savings plan. There are two elements to it. One called the repayment assistance plan, and then there are some borrowing limits that are being proposed, not law yet, but can you provide any insight onto this? Sure. I mean, look, this administration said they were going to try to tackle financial aid, and so they are trying to tackle it, you know, they are simplifying it. This particular proposal is simplification, know, what does that mean? That means that some of the flexibility that was there before it would go away. So that would be like save and IBRs and public loan forgiveness. That's correct, yeah,yeah, and, and, and I think what they're also trying to do is they're trying to eliminate this, you know, ongoing debt that the debt keeps going on and on. I think that's what the goal is, you know, some say the goal is to, you know, help the and some say the goal is to make people more aware of exactly what they're getting into and really hopefully maybe trying to get these institutions to look at what they pay because you know it's like anything else the institution gets more expensive people take out more loans. Who knows what's going to happen. These things evolve. We saw it time and time again with forgiveness. I'm not sure that this is going to pass, but we'll see. We'll keep an eye on it, right? I mean, just on the topic of debt for those who go into of the cost and and the benefit of going to maybe a school where you incur that debt, is that problematic per se on the face of it, you know, I think it, look, I think that the standard or the school of thought, right, is that you really shouldn't take out more debt than you expect to earn in year one, you know, so if you think you're going to earn $50,000 or $60,000 in your first year, you really shouldn't be taking out more debt than if you start to look at the percentage, so you don't want to really go higher than 10 to 15% of your gross income, right, because that payment starts to get hefty. You're talking $500.06 $700 a month. You're just getting out of school. That's a lot of money, right? So that, decision has to be made when you're a senior in high school before you commit. I think you've got to be really starting to have that conversation a lot earlier, Bob. I think, you know, we just talked about there's so many options. You don't have to go to the most expensive school. I mean, these, there's, you know, state schools are a fraction of these private schools or, you know, in our college planning essentials guide, one page that we have in there is the community so you could reduce your total cost by almost half if you went to a community college for the 1st 2 years and then the last 2 years go to wherever and have that experience. Look, these conversations need to happen really early on because it's very hard for parents, and we know this to say no and that's when we get in trouble. It'shard, but I can tell you firsthand we have a cousin whoTo a community college for 2 years and then went to Columbia for 2 years and it worked out perfectly fine there, right? No one knows about that community school for the most part, you know, certainly when you, you do a job application, you have to say the schools you went to. But at the end of the day you're writing on that resume Columbia. I graduated from Columbia, so it's where you got that diploma. Yeah. So the other thing when my, we have 4 children in my case, triplet uh we had hired a consultant who ultimately said to us, you want to apply to schools where you'll be in the upper quartile of incoming freshmen based on your standardized scores and your GPA. That's where the most merit aid is not enough people know that. No, and, and I do talk to families about that quite often because if you look at what the averageFamily got last year in aid. It's about $12,000 not a ton, but the most money you can get, and that's averages and we know how averages work, right, but the most dollars you really can get are those merit dollars and so yes, if you have a child to, you know, if you have a Yale student, a Yale student, someone who could go to Yale, wonderful, that student applied to somewhere like Providence College, let's use that as an example, Providence is going to give that kid a lot of money and so I always encourage families to not just apply to a school that you think your kid's going to get into and schools that are a reach, but also apply to those schools. Same if you're if you're applying apply to a private school that you know is a guarantee get in because you can use that to help leverage and get potentially more money from some of the other institutions but then you can make an educated decision. Hey Bob, you're getting $30,000 from here you're getting nothing from here so do you want us, do you want to take on, you know, $50,000 of debt or do you want to take on 100?It's an educateddecision. Yeah, it's in a number of books that I've read, either they talk about it as paying either wholesale or retail or fully funded versus full price. Exactly. I mean, and and again, it's, it's really knowing what that number is going to be, and I encourage families to not only know the cost, what that number is. My son went to Fordham. I think Fordham's $92,000 now. Thankfully I do not pay $92,000. But then look at what could you potentially get in aid. So will your child get merit? My son got merit from Fordham, so got a very nice scholarship. Again, Fordham was not a reach for him. It was, you know, a target got that money and knowing that number is how you can begin to plan and so most people just kind of don't do that extra research and a good way to look at it is just go to the institution and go to their net cost calculator. So if you went in and Googled Fordham University net cost would be able to, you get right to their net cost calculator and you could quickly find out what that institution will cost for you based on a couple inputs. Yeah, you know, a lot of folks you recommend that I do because you can school, their high school, where were people previously that got in and ask that question at your high school. I remember, I, you know, I wanted my son to go to Villanova and I remember he would never have gotten in unless he ED'd. So I'm, I, you call that guidance counselor and you asked that guidance counselor last did the ED students that got in, what were their stats, and they can tell you that. They can't tell you the student's name, but they'll say, you know, one kid was a 92 GPA with a 1400, another kid was a 90, you know, whatever those stats are, you can find that out and you can also get it on Naviance. Yeah, look, you got to figure out a way to make yourself stand out. It's just like in a job. So if you'reApplying to a competitive school, you know, and your and your child's in high school, how can they stand out? You know, there's so many athletes, there's so many kids with goodgrades to Costa Rica. It's tough. It look, it's tough, but we both know as parents, they always wind up where they should be they should be and if they make the most of it, it doesn't really you go, absolutely that is 100% correct. 100% on where you go. The other thing that I think sometimes gets lost in the discussion is that people can appeal the aid that they're getting and maybe don't do that often enough. I have an anecdote where a friend of mine, his daughter got into UConn and Syracuse. Syracuse didn't offer a lot of money, so UConn seemed like the more affordable they appealed not once but twice and made it as affordable as UConn. Appeal, appeal, appeal. I did the same thing and it does work. Look, there's going to be a point where they're going to say no, that's it, but this is where you use leverage, you know, where, you know, I remember encouraging my son to apply to another private school that know, a tear down again just as I mentioned before. So let's use that as leverage because you can't, you can't use a private institution and a public institution. So you can't say my kid got into Binghamton and Binghamton's only going to be 25, and for them, I want you to be 25. They'll say that's not apples to apples, but you should absolutely appeal. What you want to do is for financial aid, true want to go to the financial aid office. If it's merit dollars, you want to go through admissions and don't just send an email. Hey, I need more money. We all need more money. Tell them what you specifically are looking for and be realistic. If you go in and say I need another $30,000 and they've given you 250, it's not happening. Be and go to the right, go down the right pathwaysto the right folks. This is really helpful. I, and I have to say it spans the gamut. My daughter ended up going to the University of Wisconsin in Madison, and you would say we live in Massachusetts. There's no way that she's going to get any sort of aid at all. But lo and behold, they have an alumni association that gives out, right, grants and undergrads and it was a surprise because otherwise my daughter would have ended up at not a bad choice. UMass Amherst, not a good school, but yeah, but it made UW Madison as affordable as UMass Amherst. So interesting, you know, and I tell families all the time, Bob, leverage your again, go to your guidance office. There's a lot of community-based, that kids can kids can be applying for. Some of it's just essays. Yeah, it takes a little bit of work. It takes a little bit of work. Talk about essays. So my wife does some coaching on essays, and in one case, a student that she worked with uh went to University of Rochester and in her, um, a letter of acceptance they actually which is the first time, right? So somehow, some way someone actually read the essay and it resonated. Wework very closely with a couple different private counseling firms, um, that counsel families on how to get into whatever the college of their dream is and, and, and sometimes we'll go and present on how to get in, or how to afford it, how to save and invest for it, but then also how to get in, right?And so they tell us that they read these essays, and that could be the deciding factor. I would take them very seriously. I really would. So when you think about helping kids with essays, does it matter that they get some help aside from their guidance counselor, that they go to outside help? Or look, I thinkyou need not, like, look, I think a lot of help. I will tell you, you know, I, I sent my son's essay to forward them around to not professionals but to colleagues, to friends, just take a look at.I think that's OK, but I think, look, the story needs to be realistic. They're no dummies. They know when somebody else is actually writing this, and I think the more authentic, exactly. Well today that that wasn't even an issue when he applied so much, but you know, I think the more authentic you can be, it's not that it has to be this, you know, far-fetching idea. You just need to be authentic in it and tie in something about that is that institution the place for you in your story? So, so I remember with him specifically he used sort of the the theme of the school, and I can't even remember what it was, but he tied that into the story that he was telling, and I think it was quite effective, you know, I hope it was, I guess it was, but I really do instruct people to make sure they're somehow tying into what they want to do somebody may be talking about, you know, I know somebody that's child talked about learning to ski and and doing sort of the, the, know, your French fries and pizza, French fries and pizza, and this particular child was applying for engineering and so tying that into engineering, sort of that thought around process, how do you learn being process oriented and achieving your goals. So think about that. How can you relate that essay back to what your degree is and what that institution provides? Yeah, I could talk about essays. I know, me too,me too. We're going to take a short break and when we come back I'll ask you all these questions. Tricia, don't go back to Decoding Retirement. Hi, talked to Trisha Scarlatta. She's the head of education planning at JPMorgan Asset Management. we would spent the whole first half talking about things that aren't even on my cheat sheet here. Get in isimportant, but I, I want to talk about the thing that I think troubles most parents when they think about saving for retirement and saving for their children's college education at the same time, which is to say two competing demands on your money and finiteresources. You know, I, I, and I know you know my colleague Mike Conrath talks about very similarly, you know, knowing that number, right? So, so your retirement number, what's your retirement number so what do you need to get to and how do you get there, but it's, it's kind of the same with college. So, so knowing what that number is and the number is going to be different for everybody because obviously schools costs are different but also not everybody's looking to 100%, so one family might only be able to pay for 50% or 25%. Another family is at 100%. So understand what that number is and not today's number, because you and I both know that tuition goes up 5 to 6% every year. So, so look at not where today's number is, but what, where, when your child goes, what that cost is going to year and then obviously you want to multiply it by 4 and then think about what part of that you want to cover is it 100%, is it 50% but also you know really be realistic about aid be very realistic about what you think you're gonna get. I mean I tell families all the time go to and and do the simulator. There's an estimator on there you can calculate what you may get as of today, um, and that know what that net number is, you know, look, families are doing a really good job saving. They are putting money away, but they're not necessarily planning and investing for college, which they are doing for retirement. With college they're not taking that next step, and you know my goal is to always talk about how if you're not investing and you're not potentially leveraging a 529 account, you're missing out on that tax and compounding over time and that ability to take that money out for qualified distributions or withdrawals tax free and cash is just not going to get you there. And so, you know, investing and leveraging that tax-free benefit is really what we try to encourage peopleto do, you know, it's we had Olivia Mitchell on from Wharton a little bit ago and then she had just published a paper on 529 plans and that theLack of knowledge that people had around 529 plans and choosing the wrong one made a big difference in how absolutely, absolutely. I mean, if you just look at the two accounts side by side.A taxable and a non-taxable account, all things being equal, you make a $10,000 contribution up front and then you subsequently put in $500 a the end of 18 years you have almost $42,000 more in the tax-free account. That's a big amount. That's in today that's almost 2 years of a public institution and so we've got to spread that word and 529 plans are very accessible. You know, you could some of them are $15 to get started and you have to think like I think people get discouraged because it's so expensive and they just feel like I'm not gonna do anything and and I'm not gonna take that next step, um.I encourage people to take the next step, leverage those benefits, because every dollar you put away today is less in debt in the future. Yeah, it's a great report, but one of the things that's mentioned in there is that 55% of families are delaying retirement by 5 years to pay for college costs. And, um, you know, I know there's been research that says, oh, it's worth delaying retirement by 2 years to make up for inadequate savings, but 5 years. 5 years is a long time. I mean, if you think about it, 65 to 70, 70 to 75, you know, those are meaningful years as we get older and I know I'm getting closer to those, those that age and, and so, you know, look, it's a family decision it's a family decision and what we have that parents do not jeopardize their college savings fund. They almost never take those dollars out early. They wait till that child goes to college and then they withdraw. What we do find is a lot of them are borrowing against their pay those tuition bills and that's where I always get concerned because when you start to borrow against your retirement or your 401k what we see is that most people then don't contribute and so a lot of times they're missing out on that company's that's free money, so you want to at least be doing up to that um and getting that, you know, that company match and, and, you know, to borrow against it, you know, isn't always and and and and and look we talk about in the guide for every $10,000 you borrow, you know, it winds up being $32,000 less. These parents are also taking out parent plus loans and retiring with those loans with those loans and, and look, those loans, the interest rates are high. You're looking over 9% for some of those, you know, so yes they are. I mean last year the average family graduated with about $55,000 in parents were, you know, closer to 30. The kid was about 25, so, you know, pretty split between the two. It's a lot of money to take on as you're inching towards retirement, and that's the age. I mean, I have a child that's graduating this this next weekend, you know, and you know, hopefully I'm getting closer to retirement. Yeah,exactly. Um, so the other thing that's new and different is I think it was secure at 2.0 where we had the ability to convert your 529 to a Roth IRA. There are all kinds of restrictions of course, of course, maybe talk about the opportunity that exists there. Sure. The one thing that this Roth IRA rollover has done is, I think opened more people's eyes to 529 plans because for whatever reason people think I'm so restricted. If I go into a 529 plan, my go to school. I'm stuck and so this is kind of giving folks a little bit of a comfort that I could always then roll it over to a Roth IRA. So let's talk about it. So the max amount that can be rolled over in a lifetime is $35,000 right? So, so it's $3,500,035,000. It you the account has to be open for 15 years, right? So they're, they're not letting you open this account and roll over. OK, so, so it has to be established for 15 years. The is the when you're rolling over that has to be the same beneficiary, so the Roth IRA has to be and so if I, if you were my beneficiary, your Roth IRA would be yours, not mine, um, and so, so the other thing to think about is you can't just roll over 35,000, right? So the max you can put into the IRA this year is 7. So if we use this year as an example, it would take you 5 years, right, to roll that over. But what a blessing, you know, I mean, so, so there are some around it, but we have another page in the guide that just shows like if you're able to do that $35,000 over 5 years, you know, and starting when the child is not child but the adult is 23, at 65 it's almost $400,000. What a blessing. What a blessing. I mean, otherwise the money would stay in the 529 plan and would have to either be given to next of kin or I mean there were beneficiaries. You can make yourself the beneficiary, so there's there's a lot of now you also have this, the ability to do that roll over and we are getting a lot of questions. I actually just got a question yesterday from an adviser just wanting to reach out to clients because they're, you know, all his clients whose children are graduating, letting hey, they, they have access in their account. You can roll it over now. So it's a, it's a true, it's a tremendous benefit. Yeah, so we have a little bit of time left, Trisha, and I'm curious, we've talked a lot about college. There are some high school students who won't go to college this year or perhaps ever. What advice do you have for them in terms of the skills and knowledge and abilities that they have to sort of enter the workforce andGet income and not be unemployed. Yeah, I mean, look, I, I, I speak, I go to Fordham a lot and talk to the students there, which I love, and they have the greatest questions and um it's so raw and real.I think a college degree matters, you know, I really believe that it matters and it's, it's $40,000 of more income versus, you know, a high school graduate versus a college graduate. So if you think about that $40,000 and you think about what the average family had in debt coming out of college, it's not that much more than that difference in income. So it's what, 15, we said $55,000 was the average family graduated with last year, the debt, but you're earning $40,000 more with that pretty powerful. So I still believe that a college degree is very important, and I think, look, today these kids have the world is the limit, much more so than you and I. We were told if I do AI. But we were told, you know, get a degree and go into a profession and that's what you have to do, be a lawyer, a doctor or whatever you and I are, um, these kids have so many options so but I still believe you need that degree. I'm a firm believer in the degree. Look, you mentioned earlier the unemployment rates are 50% for those who have a degree versus those who do not. So when it, when times get tough, you're better off having that degree. your human capital, right, your lifetime earnings will be all the greater, not all the greater, right, not just the and look, I have a child who I mentioned to you earlier, you know, I never thought he'd go to college and now he's a tremendous musician and he's going for music, you know, I don't know that my parents would have sent me for music, but these, there's so many degrees today. I mean there are so many different things out there. This, like I said, the sky's the limit for these kids. The education is really important, we've run out of time unfortunately, but, um, and there's lots more in the in the CPE that we planning we'll have you come back on and share more knowledge and wisdom about that in the future if you don't mind. Absolutely my pleasure. All right, that wraps up this edition of Decoding Retirement. We're glad you joined us and we hope that we provided you with some actionable advice to help you plan for or live in you can listen to or watch us on all your favorite podcast platforms, and if you've got questions about retirement, email us at yfpodcast@yahoo This content was not intended to be financial advice and should not be used as a substitute for professional financial services. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
22-05-2025
- Business
- Yahoo
Think you'll retire at 65? You may need a backup plan.
Listen and subscribe to Decoding Retirement on Apple Podcasts, Spotify, or wherever you find your favorite podcasts. Do you plan on working to 65 or perhaps even later? If so, it would be well worth coming up with a backup plan. While 70% of people plan to work until 65, less than 30% actually do, according to Michael Conrath, chief retirement strategist for JPMorgan Asset Management. In fact, most retire by 62. "It's a big gap," Conrath said in a recent episode of Decoding Retirement (see video above or listen below). "It just shows people have plans, and then life comes at them and things change." This embedded content is not available in your region. Sometimes, people make retirement decisions that are entirely within their control, Conrath said. But that's not always the case. Your company may downsize, or you may experience a health problem or disability. Sometimes, you become a caregiver. There could be any number of reasons, according to JPMorgan's Guide to Retirement. "What people have in mind years before retirement may not be where they land," he said. "So you've got a plan for those what-if situations." Read more: Here's what to do with your retirement savings in a market sell-off At the same time, a significant number of workers will stay on the job. More than 27% of those ages 65 to 74 are still in the workforce, and even among those 75 and older, over 8% remain employed. "Retirement is no longer this binary decision to work or to retire," Conrath said. That shift is clearly visible in the data. Using anonymized information from Chase banking customers, Conrath noted that the firm found that 53% of households are partially retired. These individuals are drawing from sources like Social Security, pensions, or annuities while still earning some wage income. "There's this hybrid approach," Conrath said, and it comes with nuances. Some people continue working simply because they enjoy it. "They love what they're doing," he said. "They love the social elements ... they have a purpose." But others remain in the workforce out of necessity. According to Conrath, partially retired households tend to carry more debt and spend more, which influences their retirement timing. As a result, this group often transitions to full retirement later than those who retire all at once. "They're working to be able to maintain that spending but also pay off their debt," he said. A key part of planning is preparing for a time horizon that could span 35 years or more, partly due to living longer but also because you may retire sooner than expected. "I think a lot of people, when left to their own devices, will sometimes plan based on averages," Conrath said. "But you generally need to plan for a long life." If you planned to retire at 65 but ended up leaving the workforce at 62, that shift raises important questions. Retiring just three years earlier might not sound like a big deal, but financially, it can make a significant difference, as you'll have fewer years to save and more years to fund. That's why it's important, Conrath said, to carefully consider your options. You might look at claiming Social Security earlier, but that comes with trade-offs. Alternatively, you'll want to assess whether your portfolio or other sources of income can help you bridge those extra years before full retirement benefits kick in. This is where retirement savings checkpoints can help workers gauge whether they're on track to fund their lifestyle in retirement. Take, for instance, a household with an income of $80,000, which is roughly the median in the US for 2023. In that scenario, JPMorgan's Retirement Guide suggests that a 30-year-old should have $90,000 saved for retirement, while a 65-year-old should have $615,000 saved (see chart below). Read more: How much money should I have saved by 30? These checkpoints are meant to be a starting point for the conversation, Conrath said. According to JPMorgan's research, about 56% of US households haven't even done a basic calculation to figure out how much they'll need for retirement. If you find you're not on track, the aim of these checkpoints isn't to induce fear or shame — it's to provide clarity and guidance. And once you know where you stand, Conrath said, you can start taking steps to move closer to your retirement goals. Conrath also highlighted how retirement spending doesn't follow a straight line, contrary to what many assume. "I think historically people have thought that spending is this linear progression and you just spend to keep pace with inflation," he said. In reality, retirement spending tends to follow a "smile" pattern, Conrath said. Spending is typically higher in the early years, driven by travel, leisure, and lifestyle pursuits. It declines in the middle phase of retirement, and then rises again later in life, largely due to increasing healthcare costs. "So, spending is not linear," he said. "It adjusts over time. But it's important to have a strategy that's dynamic and flexible so you can account for that." The key, Conrath emphasized, is preparing for both the expected and the unexpected. That means creating a plan that not only funds long-term goals but can also adapt to near-term spending needs and lifestyle changes. A time-honored rule of thumb suggests that you should plan on needing 70% to 80% of your pre-retirement income during retirement to fund your lifestyle. But in fact, JPMorgan's research found that this conventional wisdom is not applicable to many households. "These so-called rules of thumb, 70%, 80%, they can feel a bit broken," he said. Read more: Retirement planning: A step-by-step guide In fact, income replacement needs vary significantly by household income. For example, those earning around $30,000 before retirement may need to replace as much as 104% of their income to maintain their standard of living, while households with a pre-retirement income of $300,000 may only need to replace about 55%. One reason for this is simply differences in spending patterns, Conrath explained. Lower-income households typically spend all the income they receive out of necessity. In contrast, higher-income households tend to save more, which is encouraging given the size of the financial needs in retirement. Another consideration is inflation, which often creeps up gradually and can quietly erode your portfolio and your purchasing power over time, Conrath said. That's why it's important to analyze inflation both broadly and by spending category. "Not only do people spend differently in different ways over time, but things inflate at different rates as well," he said. One area that deserves special attention is healthcare — particularly Medicare — since its costs have historically increased much faster than overall inflation. In fact, Conrath said many advisers treat healthcare inflation separately in their planning models, often using an annual estimate of around 6%, which aligns with projections from the Medicare Trustees Report. As people age, healthcare needs typically grow, along with costs. That makes it critical to account for higher healthcare expenses in the later years of retirement, including the potential need for long-term care. Each Tuesday, retirement expert and financial educator Robert Powell gives you the tools to plan for your future on Decoding Retirement. You can find more episodes on our video hub or watch on your preferred streaming service. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
