Retirement Weekly: Are your retirement savings falling short? Here’s what to do.

The answer to “how much savings do I need for a comfortable retirement?” is incredibly personal. There are a lot of factors that go into determining this value for each unique person.

Whatever that perfect number is for you, the best way to get there is to start saving early. But if you’re closing in on retirement and feel like your savings are too lean, don’t worry—there are steps you can take, even late in the game, to set yourself up for a comfortable retirement.

1. Make a plan ASAP

Knowing how much money you need in savings to retire comfortably is the key question. And no matter what age you are, it’s never too late to make this calculation.

This value will be completely driven by how much you plan to spend on a monthly or annual basis when you retire. This is typically driven by your current lifestyle; however, lifestyles can fluctuate depending on what stage of life you’re in. For example, a young professional may prefer a more expensive lifestyle than they currently have, whereas a couple with three children may be currently spending more money on college savings than they will during retirement.

Whatever your individual case may be, sit down and map it out so you know the reality and can make sound financial decisions to help you reach your goal. If you aren’t sure how to begin, set up a meeting with a financial adviser to ensure you’re putting your best foot forward.

Read: The happiest retirees have at least $500,000, one financial adviser said. Here’s what readers had to say about that.

2. Avoid the comparison game

It’s human instinct—and we all do it—but when it comes to catching up on your retirement savings, it’s imperative to resist the urge to “keep up with the Joneses.”

When you’re building your wealth, try to quell your need for “the latest and greatest.” When you do buy something, buy quality so that it lasts and you won’t need to continually re-buy that item. Instead of wasting money on constant upgrades to items that still work just fine, you’ll be investing in your retirement and setting yourself up for a healthy financial future. Focus on you and your goals, not those of your neighbors or peers.

A good tactic to achieve this is reverse budgeting: living a lifestyle that’s affordable after your savings plans are in place. Once your savings and investments are tucked away, you’ll live day-to-day on the remainder. By not spending every dollar you make, and never “dipping into” your investments, you’ll set yourself up for successful savings.

3. Consider a backdoor Roth

If your cash flow and income level allow, a backdoor Roth could help you save more by building a tax-free bucket of money to use in retirement.

The backdoor Roth IRA allows high-income earners to put money into a Roth IRA for future tax-free savings that isn’t subject to Required Minimum Distribution requirements. There aren’t immediate tax benefits, but you’ll be able to take advantage of tax-free growth for the future—which can be key if you’re falling behind on your retirement savings.

Keep in mind that if you’re younger than 59.5, there is a rule that requires funds from a converted Roth to remain in the account for a minimum of five years, or you may be subject to an early-withdrawal penalty.

Read: Congress is about to kill this popular retirement tax move

4. Actions to take today

If you’re anxious to boost your retirement savings right away, here’s a list of quick tips to help you get started.

  • Use credit cards with benefit plans: Try to put most of your daily expenses on a credit card that offers points or mileage. Pay the balance off in full every month so you don’t incur fees, and use the rewards system to cover your leisure activities or vacations so the rest of your savings can go entirely to a retirement fund. 
  • Minimize your taxes: Lots of financial investments offer an element of tax savings to you—including retirement plans, home mortgage interest, charitable contributions, and health savings accounts. Consulting a financial and tax professional could be helpful to determine which of these options makes the most sense for you.
  • Consider college savings plans: If you have children and want to save for their education, there are many plans available that offer tax benefits. Review the benefits of custodial plans, 529 plans, and prepaid tuition plans to determine how much you might be able to save in future cash flow and tax savings.
  • Take advantage of “catch up” features: Retirement and IRA “catch up” features allow for savers age 50 and over to put away an additional $6,500 contribution for 401(k)s and $1,000 contribution for IRAs.
  • Invest in growth-focused investments: If you have five or more years until you need your retirement funds, adjust your portfolio to balance the risk of downturns in the stock market with bonds or stable-value investments.
  • Add investments with downside protection: Safeguard your savings in case the stock market makes an unexpected decline.
  • Consider you potential long-term care needs. Certain insurance policies allow you to purchase coverage that can be paid up in 10 years. It may be best to purchase these while you’re still working and earning income rather than when you retire.

It’s never too late to start saving aggressively for retirement. Making a comprehensive plan—covering savings, debt management, insurance, taxes, investments, retirement, and estate planning—is the best way to ensure you’re preparing today for what you’ll need tomorrow.

Faron Daugs, CFP, Wealth Advisor, is founder and chief executive of Harrison Wallace Financial Group.

Encore: New proposal would improve Social Security’s finances and modestly enhance benefits

Rep. Al Lawson (D-FL) recently proposed a piece of Social Security legislation, which has been scored by SSA’s Office of the Chief Actuary. The Lawson proposal is the second major Social Security bill in a month. following Rep. John Larson’s (D-CT) Social Security 2100: A Sacred Trust.  

As a reminder, the Social Security actuaries project a program deficit over the next 75 years of 3.54% of taxable payrolls. This deficit reflects the combination of rising costs and constant levels of income (see Figure 1). The increasing costs are the result of a slow-growing labor force and the retirement of baby boomers, which raises the ratio of retirees to workers. Social Security’s deficit can be eliminated either by bringing up the income rate and/or lowering the cost rate.  

Read: Social Security proposal would raise revenue and temporarily enhance benefits

Both the Lawson and Larson bills maintain current benefits — that is, they do not reduce the cost rate. Instead, they raise the income rate by lifting the cap on maximum taxable earnings. The area where the two bills differ the most is benefit enhancements. Whereas the Larson bill proposes a dozen enhancements for a five-year period, the Lawson bill offers four enhancements on a permanent basis. 

What does the news mean for your wallet? Sign up for Personal Finance Daily to find out

Specifically, the Lawson legislation proposes to:

  1. Use the Consumer Price Index for the Elderly (CPI-E), which historically has risen faster than the CPI-W price index currently used for Social Security, to adjust benefits for inflation.
  2. Extend student benefits up to age 23 if full-time students. 
  3. Increase the special minimum benefit for workers with very low earnings and index it by the growth in average wages.
  4. Establish an alternative benefit for surviving spouses equal to 75% of the couple’s benefit (subject to an upper limit).

To pay for these benefit enhancements and, more important, to reduce the 75-year deficit, the Lawson legislation would apply the payroll tax on earnings above $250,000 and on all earnings once the taxable maximum reaches $250,000. The legislation would apply a 2% benefit factor on average earnings above the current law maximum. 

Read: This hidden wrinkle in Social Security can help you decide when to file for benefits

Enactment of these benefit and revenue provisions would cut Social Security’s long-range deficit roughly in half, from 3.54% of taxable payroll to 1.88% (see Figure 2). 

Both bills have some favorable aspects: they maintain current benefits and they raise additional revenues, although at least the Larson bill appears limited in the revenue-raising efforts by President Biden’s pledge not to raise taxes on households earning less than $400,000.

In terms of benefit enhancements, both “spend” a lot of future revenue switching from the CPI-W to the CPI-E for indexing benefits. Personally, I wouldn’t bother. The other benefit changes in the Lawson bill are relatively small and positive. Most important, they are permanent, avoiding the chaos likely to be created by the temporary enhancements in the Larson bill.

In the end, however, any solution ­­is likely to involve a modest increase in the payroll tax rate, a change that would raise taxes on those with less than $400,000.      

NerdWallet: Living longer often means more years spent with serious illness—learn how to increase your health span

This article is reprinted by permission from NerdWallet

We’re living longer on average, but the number of years we’re healthy hasn’t kept up. This lagging “health span” translates into more time living with serious illness and disabilities at the end of our lives.

This can have significant repercussions for our retirements. Some of us will have our working lives cut short by ill health, reducing how much money we can save for our futures. Others will face big bills for medical and nursing home care. Then there is the emotional toll of struggling with poor health rather than traveling, visiting the grandkids and engaging in all the other activities we’d planned for our golden years.

It doesn’t necessarily have to be this way. Many of the biggest risk factors for poor health are within our power to modify, prevent or control, says R. Dale Hall, managing director of the Society of Actuaries Research Institute, which provides research on managing risks. But as with retirement saving, the earlier we get started, the better.

Learn the 5 health span risk factors

The institute commissioned Vitality, a company that partners with insurers and employers to promote healthier living, to conduct a study that identified five lifestyle risk factors with the largest impact on health span: tobacco use, obesity, high blood sugar, poor diet and high blood pressure.

Read: These simple (and tasty) diets help reduce your blood pressure and heart disease

The researchers also highlighted ways to modify those risks, including quitting smoking, engaging in physical activity, eating a healthy diet and taking medications as prescribed.

Read: The best reason of all to postpone retirement

The study relied on data from the Global Burden of Disease, a resource maintained by the University of Washington’s Institute for Health Metrics and Evaluation that tracks the prevalence of diseases and risk factors worldwide, along with the relative harm they cause. The GBD shows average remaining life expectancy at age 65 in the U.S. rose from 17.6 years in 1990 to 19.6 years in 2019, a two-year gain. Healthy life expectancy, on the other hand, rose less than one year, from 12.2 years to 13.1 years.

That echoes similar statistics from the World Health Organization, which found that U.S. life expectancy at age 60 rose nearly 8% between 2000 and 2019, but healthy life expectancy rose less than 5%.

Related: Seniors who are obese run higher cancer risks

Recognize the other barriers to healthier living

The GBD has some limitations: It doesn’t track the impact of well-established prevention strategies such as immunizations and screenings, or account for risk factors such as stress, depression, lack of sleep, loneliness and lack of purpose, the Vitality researchers said.

It’s also important to acknowledge that there can be huge systemic barriers to healthier living. If you live in an area with limited access to fresh fruits and vegetables, it’s harder to eat well. If you live in crowded housing in an unsafe neighborhood, getting enough exercise can be tough. If you must choose between buying medication and food, you’re unlikely to fill the prescription your doctor wrote for you — assuming you can afford to visit a doctor. The more money you have, the better access you have to the key health interventions that help people live a longer life in good health.

Even when we have enough money, our behavioral biases can get in the way — particularly our tendency to value present gratification over future gain.

“I’d honestly rather sit on the couch and eat the bag of crisps rather than go for the run,” says Tanya Little, Vitality’s chief growth officer. “And yet future me would thank me for going for the run now.”

Identify one area for change

Similarly, we may choose inaction over action if we’re asked to change too much, Little says. Instead, Vitality’s programs identify one change that would have the biggest impact based on each person’s health and lifestyle profile.

“This idea of an endless list is totally overwhelming and demotivating,” Little says. “Whereas if I say to you, ‘If you just did this one thing’ … you are much more likely to do it.”

You might like: Beat the blues this holiday season by keeping in touch with older family and friends all year

Once people make progress on a single goal, they’re often inspired to change others, Little says. People who get more exercise often start to eat healthier, for example.

Healthy habits don’t make us immune to illness and disability, of course. But minding our health improves the odds we’ll have many more years to enjoy.

If you’d like to see what Vitality recommends for you, as well as its estimate of your life and health spans, you can visit the company’s calculator.

More From NerdWallet

Liz Weston writes for NerdWallet. Email: lweston@nerdwallet.com. Twitter: @lizweston.

The Moneyist: My late mother’s will was signed under ‘suspicious circumstances.’ My father ransacked $2M from her estate — he now lives with his much younger wife.

Dear Quentin,

My darling mother died in 2008 in Florida. Her will — in my opinion fake, but I can’t prove it — was signed weeks before her death under suspicious circumstances, and creates a trust. 

That trust stipulates that her husband, my father, gets to use the income from her estate until his death, at which time her estate is to be distributed to her three children or their heirs. Unfortunately, it also named her husband executor. 

My father is independently wealthy; my guess is he was worth $15 million in 2008. He doesn’t need a home, as he lives with his new and much younger wife in her home. We children are well aware that all of his money is going to her and her children, in Australia, and we agree we have no claim to it.

As soon as the funeral was over, my father took all of my mother’s investments, a CD worth $1 million and a mutual fund worth $300,000. They have vanished. He sold my mother’s Florida home quickly and pocketed $250,000. 

‘My father took all of my mother’s investments, a CD worth $1 million and a mutual fund worth $300,000. He sold my mother’s Florida home quickly and pocketed $250,000. ‘

Later, he sold her Illinois home and pocketed that — $500,000. He auctioned her possessions and raised over $100,000, and took that. There’s more, but I’ll drop it. His takings exceed $2 million. We do not get the earnings, so the number in 2008 is the number.

Counsel says that under Florida law no reading of the will is required, and next of kin do not have to be notified. What is missing is annual accounting to her beneficiaries of her estate’s net worth and income distribution, but we have no way to compel it, since the lawyer is compromised by representing my father.  

Further, counsel says that no recovery can be made until the husband dies and his will is executed. My sister is dead and her two children will not participate. Nevertheless, my brother and I agree that we will offer them each one-sixth of anything we recover. Can we reimburse ourselves first? It is likely they will not respond. What do we do then?

Anyway, I have lost hope. My father is close to 90 and appears to be losing his cognitive abilities, but he still manipulates everyone. Is there any strategy that might manifest my mother’s will to benefit her children?

Seeking Justice and Lost Inheritance

Dear Seeking,

The first thing you should seek is independent counsel.

There’s so much to unpack here, least of all your feelings about your father, and your suspicions about the legality of your mother’s will, and the way her trust has been managed or, indeed, mismanaged. One word of caution: Your belief that there was a fake will may not bear out.

The truth could be far more mundane than the willful ransacking of her estate outlined in your letter — an estate left in the hands of one person. I don’t want you chasing ghosts, and I don’t believe it’s healthy to chase dragons.

Florida law states that there is a three-month statute of limitations to contest a will, a time period that can only be extended if there was fraud, misrepresentations or misconduct. (You can read more about the Florida statute on that time limit here.)

It’s always important to act swiftly in such cases of uncertainty surrounding the legitimacy of a will or trust. You have — in all likelihood — allowed far too much time to pass since your mother’s death to take legal action now.

‘Your belief that there was a fake will may not bear out. Additionally, you have already allowed too much time to pass since your mother’s death. ‘

You have also far exceeded the statute of limitations for contesting a trust. There is also a different statute of limitations for contesting a trust — due to lack of mental capacity, for instance, or undue influence — and filing a lawsuit for breaching a trust. Those time periods can run from six months to four years.

You may have more luck holding your father to account for his management of the trust, assuming you and your siblings are qualified beneficiaries. Radio silence is not typically an option when managing a trust in Florida.

According to this Florida statute, the trustee should keep the beneficiaries reasonably informed. “Upon reasonable request, the trustee shall provide a qualified beneficiary with relevant information about the assets and liabilities of the trust and the particulars relating to administration,” it states.

‘You may have more luck in holding your father to account for his management of the trust, assuming you and your siblings are qualified beneficiaries.’

The law firm Comiter, Singer, Baseman & Braun outlines the process for compelling a trustee to provide annual accounts and relevant details of the trust’s assets and liabilities. The trustee is obliged to give notice to the beneficiaries of the trust’s existence and the identity of the settlor/settlors, among other acts of transparency.

“When a trustee does not comply with the Florida Trust Code’s requirements they may be in breach,” the law firm says. “A trustee who is in breach of his or her duties as a trustee may be compelled by the court to account and/or provide information to a qualified beneficiary.”

Your mother could have left a separate trust for her children. It’s difficult to know her thinking. Perhaps she thought it best to leave her husband in charge of her estate. Or maybe she believed he would pass it on to her children.

This has dragged on for 15 years. Don’t allow it to usurp the next 15.


You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

The Moneyist regrets he cannot reply to questions individually.

More from Quentin Fottrell:

My married sister is helping herself to our parents’ most treasured possessions. How do I stop her from plundering their home?
My mom had my grandfather sign a trust leaving millions of dollars to two grandkids, shunning everyone else
My brother’s soon-to-be ex-wife is embezzling money from their business. How do we find hidden accounts?
‘Grandma recently passed away, leaving behind a 7-figure estate. Needless to say, things are getting messy’

The Ratings Game: Honeywell stock leads the Dow’s losers after BofA analyst backs away from bullish stance

Shares of Honeywell International Inc. took a hit Wednesday, after BofA Securities analyst Andrew Obin said he no longer recommended investors buy, citing expectations that inflation and supply-chain headwinds will continue into next year.

Obin downgraded the diversified industrial company to neutral from buy. He also cut his stock price target to $245 from $270.

Honeywell’s stock HON, -1.52% fell 1.6% in midday trading. It had bounced 2.7% over the previous four sessions, since closing on Dec. 1 at a 10-month low of $199.42.

The stock’s price decline of $3.29 shaved about 22 points off the Dow Jones Industrial Average’s DJIA, -0.23% price, while the Dow declined 84 points, or 0.2%.

BofA’s Obin said “there is a lot to like” about Honeywell, as recent investments have shifted the company business toward higher growth and margins, but he believes the company is likely to face revenue and margin pressures into the first half of 2022.

Honeywell Chief Financial Officer Gregory Lewis said at the company’s “Leadership Webcast Series” last month that fourth-quarter revenue was trending to the low-to-middle end of expectations given the “severity of the constraints” in the economy from parts shortages and logistics and labor challenges, according to a FactSet transcript.

And while the company was doing what it could to alleviate the challenges, including raising prices and compensation, Lewis said it was “going to be a real fight.”

“It’s going to be with us for a while,” Lewis said. “It’s really hard to say whether we’re seeing the peak right now, but I would say to just kind of reiterate, I think we’re going to see some of these challenges going into the first half of next year.”

He highlighted, however, that “demand is not the issue,” it’s meeting that demand.

BofA’s Obin said given the near-term headwinds, he believes the scope for upward earnings revisions and valuation multiple expansion is limited.

“We believe [Honeywell] is a high-performing multi-industrial, with the sum worth more than the parts,” Obin wrote in a research note to clients. “However, our sum-of-the-parts analysis does not support further multiple expansion in the near term.”

The stock has slumped 9.2% over the past three months, while the SPDR Industrial Select Sector exchange-traded fund XLI, +0.08% has tacked on 2.1% and the Dow has gained 1.7%.