Praise for Jason Zweig

Comment on “A Satirical Take on Financial Terminology,” by Jason Zweig, in the January 2016 AAII Journal.

Great article, as is typical for Jason Zweig. I enjoy reading his weekly column in The Wall Street Journal, and it’s because of one of his articles about AAII a couple of months ago that I ended up becoming a member. I’m glad I did. Keep up the good work.
— Clay Daniels from Texas

Retirement Math

Comments on “The Mathematics of Retirement Portfolios,” by Craig Israelsen, in the January 2016 AAII Journal.

Good article. Soon-to-be retirees should understand what they are spending. Too much time is spent on “replacement ratios,” etc., when the soon-to-be retiree doesn’t even know what he or she is spending. Know that number and work from it rather than some hypothetical.
—John Ostendorf from Texas

Most retirement articles I read are written with the assumption that the audience does not have a defined benefit and that they must build up a large nest egg prior to retiring. This article is no exception.

While I understand that most defined benefit packages have become rare, they still exist. I just retired from the federal government after 38 years and am able to replace about 72% of my income through my annual annuity. I would like to see an article aimed toward my situation, one that provides an analysis of the best ways to replace, for example, the missing 28% of income.
—Steve from New Jersey

Editors respond:

Many AAII articles addressing retirement issues can apply whether you are living off income from a defined-contribution plan or an annuity from a defined-benefit plan. For tips on sources of retirement income and how to manage them, see these articles from the AAII archives.

• Four big decisions that can improve your financial security in retirement: “Optimizing Your Retirement Income: What Works Best and Why,” by Christine S. Fahlund, August 2008.
• The impact of a worker’s retirement age on Social Security benefits: “Social Security Basics,” by William Reichenstein and William Meyer, October 2013.
• Source of income: “Your House Can Be an Income-Generating Asset,” Briefly Noted, November 2014.
• An alternative to setting a withdrawal rate: “Retirement Planning: Focus First on Covering Fixed Expenses,” by Michael Falk, September 2014.

When to Claim Social Security

Comments on “The Changes to Social Security Claiming Strategies,” by Charles Rotblut, CFA, in the January 2016 AAII Journal.

Every article I read on Social Security claiming strategies recognizes the time value of waiting to claim Social Security, but never seems to recognize the time value of the lost revenue. By delaying a Social Security claim, other savings are used for living expenses that could have remained invested if Social Security was paying living expenses. If you include a modest 3% return on investment, the breakeven age would be pushed out even further, likely beyond 90 years, which is unlikely to be reached by most individuals or couples.
—Mark Gaines from California

This article and the subject it is written about is very complex. It is easy for a couple to overlook a strategy that may be the most advantageous to them. The complexity of Social Security rules lends itself to an automated analysis and decision-making tool; even certified financial planners struggle with the complexity of the rules. Spending $40 to $50 to access a website such as www.SocialSecuritySolutions.com or www.MaximizeMySocialSecurity.com is money well spent. Most of us don’t know when we will die, so there is no way to determine the best strategy ahead of time. The best we can do is understand the value of deferring benefits (longevity insurance and inflation protection) and weigh them against benefits of taking them early.
—J. Morlock from New Jersey