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Columns: Boomer Bucks
Barbara Mlotek Whelehan   Expert: Barbara Mlotek Whelehan
Boomer Bucks
If you think accumulating money for retirement is rough, wait until you get to the distribution phase...
Boomer Bucks

Getting retirement right
 

If you're like most baby boomers, chances are you're feeling some heat. The onus is on you to plan your retirement and, like it or not, you're thrust in the role of investment manager.

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You need to make asset allocation and investment purchase decisions in an attempt to build your retirement fund to colossal heights. This is known in finance parlance as the "accumulation phase" of retirement planning, and many of us are within spittin' distance of reaching the target retirement date.

You ain't seen nothin' yet. In the next chapter -- the "distribution phase" -- you get to figure out how to make your retirement savings last for 30 years or more. Now there's a challenge!

Today's retirees generally have a combination of pension plans, Social Security checks and personal savings to see them through their golden years, but many boomers lack the pension part of the equation. Vanguard boomers, those born in 1946, cross the threshold next year to age 62, the average age for retirement today in America. Unless they opt to have a working retirement (I call that an "un-retirement"), they're first in line to figure out how to stretch their savings.

3 good reasons to be nervous
If you're planning to self-fund your retirement with no help from insurance products such as annuities, you really have to start out with a pretty large nest egg. Either that or live at a level to which you may not be accustomed -- and I don't mean large.

Assuming you've saved up a tidy amount, note that several nefarious forces can wreak havoc on your retirement plans.

These sources of uncertainty include:
Mortality risk.
Inflation risk.
Sequence of future market returns risk.

Fidelity Research Institute recently released a report called "Structuring income for retirement" that inspires fear and foreboding tantamount to a Stephen King story.

The first uncertainty: mortality risk. How can we plan for this? We may not live to see age 70; then again, we might live to age 99. If we start our retirements spending like there's no tomorrow, we may discover there are many, many tomorrows, during which we'll have to resort to shopping at thrift stores and clipping coupons like crazy.

Next: "Just what is a safe withdrawal rate?"
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