After a year of sudden terror and dreary markets, people are thinking more and more of what they’ll do at the end of their employment.
In some cases these plans will be pushed up despite any financial schedule, when people feel life is too short to postpone retirement. Others may put their plans on hold as they review their portfolios and reevaluate the full impact of market gyrations.
We have a stack of books this month on retirement planning. Most are meant for the layman, though one or two may shed some light on topics that you may have only a passing interest in, such as 403(b) plans. Some are particularly useful for clients who have resisted discussing estate planning, or who have presented you with unrealistic goals, have minimal assets, or have an “I can’t ever retire” mentality.
The Nitty Gritty
When it comes to helping clients understand retirement issues, whether it’s the difference between a 401(k) and a 403(b) or how to calculate distributions and what can happen tax-wise if you don’t do it right, we have five books you may want to recommend: J.K. Lasser’s Winning With Your 403(b), by Pam Horowitz (John Wiley & Sons, 2001), J.K. Lasser’s New Rules for Estate and Tax Planning, by Harold Apolinsky and Stewart H. Welch III (Wiley, 2002), Smart Guide to Estate Planning, by Laura Spinale (Wiley, 1999), Ernst & Young’s Retirement Planning Guide, Ernst & Young (Wiley, 2001), and The Complete Idiot’s Guide to Retiring Early, by Dee Lee and Jim Flewelling (Alpha Books, 2001).
Each of these books has something to offer the reader: clear, simple explanations of tough concepts, an upbeat approach to less-than-eagerly anticipated events, reality checks for retirement planning and expectations, and some of the ins and outs of the new tax law. Idiot’s Guide offers sound advice on what must be done to build one’s portfolio in order to leave the working world behind as quickly as possible. It also addresses the hard questions, such as how to cope with the reality of retirement, how to invest to keep your retirement income safer, and how to decide when you have enough to take the big step.
Estate and Tax Planning looks at wills vs. trusts, probate, insurance, gifting, and other strategies for minimizing estate tax. It also takes a good look at the amazing range of tax bills possible on the same estate, depending on one’s strategy. Whether your client’s desire is to conserve assets for heirs, make sure there’s enough to support a lavish lifestyle, or leave the biggest possible chunk to charity, it’s an excellent eye-opener for those who may be resisting planning for when they’re no longer around.
Clients with 403(b)s who don’t really understand them will feel much better after reading Winning With Your 403(b). In addition to defining a 403(b) and comparing it to other retirement vehicles, Horowitz devotes a great deal of attention to the pitfalls of 403(b) investing (many of which arise out of ignorance), the benefits of that particular type of plan, and how to manage one’s account. Investment options are examined in layman’s terms, as are allocation strategies to maximize returns and ways to help meet other financial goals.
Both the Smart Guide to Estate Planning and Ernst & Young’s Retirement Planning Guide offer something you might not expect to find in such practical-sounding books: deeper meanings. The former has a section on ethical wills, a fascinating concept that some clients may be familiar with. Based on an ancient Hebrew practice, the ethical will is not a legal document, but it sums up the principles that were important to you in your lifetime and sets them forth for those who come after you.
The latter book has a section on “personal and transitional issues” that includes such retirement planning aids as questionnaires to help the reader determine her attitudes toward growing older, plan for volunteer work, or clarify her values. Both books also offer good information, clearly presented, for a thorough understanding of a wide range of estate and retirement issues.