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How to Make Your Retirement Savings Last Longer Skip to content

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Make Your Retirement Savings Last Longer

Bob Edwards talks with Jane Bryant Quinn about getting the most out of your money

Pile of money sitting on a table spilling out of a jar

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Bob Edwards: Hello. I'm Bob Edwards with an AARP take on today.

Getting your financial life on track and keeping it there. It's easier said than done. Preparing for retirement can sometimes seem intimidating, but it doesn't have to be that way. When asked, financially speaking, "What do you wish you would've done differently," the number one response from retirees and people nearing retirement was, "Saved more money." Saving money, however, is just one piece of the puzzle.

Jane Bryant Quinn: It is actually very sophisticated to have simple investments like low-cost mutual funds, index funds.

Bob Edwards: Joining us today is Jane Bryant Quinn, personal finance expert and author of how to make your money last. She also frequently writes for AARP Bulletin on topics including social security, investments, savings, and retirement. Welcome, Jane.

Jane Bryant Quinn: I'm delighted to be here with you, Bob.

Bob Edwards: You've been a leading voice on personal finance for decades. What has changed the most since you've been doing this?

Jane Bryant Quinn: I'd say that on the upside, more people have retirement savings thanks to 401(k)s and similar plans, and that's really good change. But myth sort of says in the old days, everybody had pensions -- but they didn't. Only small numbers of people had pensions. So, with the 401(k)s, more people are saving. They're also paying more attention to costs. Costs from mutual funds have dropped as more people discover the importance of cost. I mean, you can get no-loan index mutual funds now for zero cost, and that's pretty amazing.

On the downside, I would say the difference is that as more people do have 401(k)s and money to manage, the brokerage and the financial industry has developed many more complicated products. For example, a lot of these are high-cost, people don't know how much they're paying, and so the people who have caught onto costs and are focusing on these low-cost products, it's great. The people who have not are paying a lot for very complicated products, and I don't see that changing anytime soon.

Bob Edwards: Are there still some fundamentals that have remained the same?

Jane Bryant Quinn: Oh, sure. Saving more money, Bob, right? If you ask a retiree, "If you're looking back on your life, what would you wish you had done?" and they all say, "Save more money." Saving more money is more important than finding a higher yield investment. Extra savings, you know, beat an extra percentage point in earnings every single time. Also, I think it's true, it has always been true, is simplicity of the best times have been investments. Keeping things simple, that way you understand them, that simple products carry lower cost. I mean, these things are eternally true, and I think people are catching onto the fact that it is actually very sophisticated to have simple investments like low-cost mutual funds, index funds.

Bob Edwards: At the end of 2018, the Dow went crazy. I mean, the mattress was looking pretty good there.

Jane Bryant Quinn: Well, surely again, how are you going to look forward or look backward at how stocks have behaved? If you are someone who knows that you need stocks for long-term growth, and look, look at how much longer we're living, Bob. You know, you just can't say, "Oh, I only get money until I'm 70." You're going to need money maybe until you're a hundred. I mean, my mother, my wonderful mother is 103. I mean, we are living much longer, and that means you do have to put more money in stocks for growth. You can't try to time it. You know, one year it's going to be good, another year it's going to be bad.

But all of history shows that if you hold on to, say an index mutual fund that follows the market as a whole, 10, 12 years, you're going to be okay. As long as you have part of your money in safe investments, part of your money in cash so that you can pay your bills and you've got social security and pension, whatever, you can afford -- you know, at 65, you've got maybe three years to live. You can afford to have some of your money in stocks for long-term growth. I'm just not alarmed by these. As long as you've got the right allocation, like half your money in stocks, half your money in stock funds, I always say mutual funds, half your money in bond funds, and then you've got all this other money, cash, whatever on the side, you're going to be fine.

Bob Edwards: What advice would you give to people who are nearing retirement and carrying debt?

Jane Bryant Quinn: Well, I think I would say you should try to pay off that debt. You can be carrying debt but you can look forward and say, "I have enough income and retirement, so this is going to be okay." But you'll get more and more worried about it as you get older. So, I would say that if you have debt that it's going to be difficult to pay when you retire. Start repaying it as soon as you can, and even if that means don't put money into your 401(k) this year. Pay off the debt instead because it's a huge return on investment.

The return on investment equals the interest rate. So, if you have a credit card bill that's charging you 18% and every payment you make is an 18% return on your money guaranteed. So, I would try to pay off the debt at least down to a level that you feel that you can handle with the kind of income you have in retirement. Of course, ideally, pay it. But we're talking consumer debt. Mortgages are different, and if you're carrying a mortgage into retirement, you're probably going to have to budget it into your regular monthly expenses.

Bob Edwards: What risks are people not considering in retirement planning and savings?

Jane Bryant Quinn: I think the risk they're not considering is more of the emotional risk. You do the plan, and you try to figure out what's my risk. What are you retiring to? It is not uncommon for people to retire and then say, "Oh, this is great. I can sleep until noon. I can go to Starbucks and have some coffee." Whatever it is. But after a week or two weeks or three weeks, that gets pretty boring. It is not uncommon for people to have a honeymoon with their retirement and then had a depression coming on because they haven't figured out what they're going to do when they get up in the morning. So, you need an emotional plan for retirement as well as a financial plan. You know, activities, friends, part-time work, grandchildren, whatever it is.

Jane Bryant Quinn: I have a dear friend who retired a year ago, and he says he's failing at retirement because he's so bored. So, you need an emotional and living plan as well as the financial plan. I think that's something well worth doing.

Bob Edwards: Well, thanks for joining us, Jane.

Jane Bryant Quinn: My pleasure, Bob.

Bob Edwards: Preparing for our financial future is all about achieving milestones that make sense for us individually. Whether your milestones are big or small, achieving them can help you become financially secure. Visit aceyourretirement.org for tips on how to get your retirement savings on track. It's a free resource from AARP and The Ad Council for everyone to use, and it takes just three minutes. And AARP's Social Security Resource Center at AARP.org/socialsecurity, where you can get answers to your questions about benefits.

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 For more, visit AARP.org/podcast. Become a subscriber, and be sure to rate our podcast on iTunes, Stitcher, and other podcast apps. Thanks for listening. I'm Bob Edwards.

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Getting ready to retire? Social Security, savings, investments, income and expenses – it’s a lot to consider, but it’s all very manageable. Jane Bryant Quinn, author of How to Make Your Money Last, shares with us how to prepare for retirement.

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