Finance: Retiring Well

Karl and Claire Ritzler are typical vanguard baby boomers: they've worked for nearly three decades; two kids are out of the house, and the third is nearing college graduation. And, at age 50, statistically speaking, the Ritzlers are only a little more than halfway through life. That's right: the Society of Actuaries estimates that baby boomers will be the first generation of which both sexes are expected to live well into their 80s, and many will live to see a 100th birthday.

That's great news--if you can afford it. Trouble is, recent studies indicate that most boomers will outlive their savings--unless they change their ways and their retirement plans. A Merrill Lynch report found that the average boomer couple are saving 39% of what they should to preserve their life-style through decades of retirement. Says Sara Rix, a senior policy analyst at the American Association of Retired Persons: "Boomers aren't saving enough to maintain the standard of living to which they've become accustomed."

If you fit that description, take heart: you can still catch up, thanks in part to a healthy U.S. economy and low inflation. But if you haven't done so already, get started now. Whether you're in the peak earning years of your 50s or well into retirement and trying to make your money last, it helps to understand that the old rules of saving and planning for retirement have been thrown out the window by America's happy boom in longevity. It's still true, as New York City-based financial planner Jonathan Satovsky says, that you should "save like mad as early as possible." But that's where the similarities end between your retirement plan and your parents'. If you quit work at 65, you could be retired for 35 years. And that requires a different strategy.

You're also likely to be more active for more years than your parents were, which you should factor into your plans. "Sixty-five is younger now than it ever was," says Elissa Buie, president of the Institute for Certified Financial Planners. She recommends that clients make plans to live through four stages of retirement: continuing to work to some degree; pursuing active leisure, such as travel and tennis, with little or no work; shifting to more sedentary pursuits, like gardening and reading, as one's energy wanes; and finally, dealing with declining health and serious illness.

Your best chance to make your money last is to follow one or more of these strategies for today's longer retirements:

--Stay invested mainly in stocks for higher returns so your money will last well into your retirement.

--Rather than quit work entirely, take a less demanding and more enjoyable job that will pay your current expenses for five to 10 years while your savings grow untouched.

--Don't get panicked by those articles that say you need $500,000 or $1 million in savings to retire comfortably; once you're not working, you have many options to live both enjoyably and less expensively.

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