MONEY real estate

Four Moves That Will Make Your House a Great Place to Retire

Q: I want to remain in my current home when I retire. What can I do to make sure it is a place where I can age well?

A: If your home is where your heart is, then you have lots of company: Three-quarters of people 45 and up surveyed by AARP say they’ll remain in their current residences as long as they can.

Adapting your home to accommodate your needs as you age takes work, however. So the earlier you start, the better. Do it now, while you have the income and energy to tackle the project, advises Amy Levner, manager of AARP’s Livable Communities initiative. Here’s your plan of action:

Start with the easy fixes. Many of the upgrades that make it easier to stay in your home as you get older—such as raising electrical outlets to make them more accessible, installing better outdoor lighting, and trading in turning doorknobs for lever handles—aren’t expensive. “And these small changes can make a big difference,” says Levner. Check out AARP’s room-by-room guide at aarp.org/livable-communities for more suggestions of what to fix.

Assess the bigger jobs. To make your house livable for the long, long run, consider investing in some more extensive renovations. These include things like bringing the master suite and laundry room to the first floor to avoid stairs, adding a step-in shower, and covering entranceways to prevent falls. Such jobs can be costly (see chart below), so get a bid from a contractor—then determine if it’s worth that price to you to stay or whether you’ll just move later if need be. The good news is that changes you make for aging in place can also make the home more appealing to future buyers, says Linda Broadbent, a real estate agent in Charlottesville, Va.

Notes: Prices for grab bars, door handles, and lights are per unit. Sources: AARP, National Association of Home Builders, AgeInPlace.org, Remodeling magazine

Budget for outsourcing. No getting around the upkeep a house requires. Sure, when you’re retired, you’ll have more time to mow the lawn and paint the fence. But don’t forget that you may be away from home for periods traveling or visiting the grandkids. And later on, you probably don’t want the physical drudgery of home maintenance. Research the fees to hire out some of the tougher tasks such as snow removal and yard work, and build those costs into your retirement income needs.

Deepen community connections. Your close-by social network is just as important as the house itself. “Living in a place where people know you and can help you or provide social interaction will give you a better quality of life,” says Emily Saltz, CEO of geriatriccare-management service provider Life Care Advocates. Use these pre-retirement years to strengthen local ties—explore volunteer opportunities, check out classes, and get to know your neighbors.

Maintaining a social circle is especially important if your kids live far away or have demanding jobs. Good friends will shuttle you to doctors’ appointments and hold the ladder while you change the fire-detector battery, as well as help you up your tennis game.

 

MONEY

Why It Pays to Delay Social Security Benefits

There's a flaw in the thinking that drives many people to start taking benefits early.

Social security is a great insurance policy. But sometimes people mistakenly regard it as just one more investment that they should try to maximize.

That kind of thinking might persuade you to take benefits sooner rather than later and can have a big impact on how much money you and your family receive.

Central to this problematic point of view is a breakeven analysis. Between the ages of 62 and 70, your benefits rise about 7% or 8% for each year you defer taking them. Wait until age 70, and your monthly benefit will be 76% higher, on an inflation-adjusted basis, than if you claimed at age 62.

Here’s the breakeven puzzle: Let’s say you wait to take Social Security so you can get a higher monthly benefit. How old will you be before the total value of your higher benefits catches up with the amount you would have received had you started taking Social Security years earlier?

Roughly calculated, the typical breakeven age is about 80½. Until then, you’ll get more money by taking benefits early. If you don’t spend those benefits but invest them instead, the breakeven age can be even higher.

So based on guesses about your lifespan and what you’ll earn by investing your benefits, you might think it best to take benefits early.

Why Breakeven Is Misleading

But this feels wrong to me. Once you start doing this breakeven analysis, you’re looking at Social Security as an investment on which you want to earn the highest return. And it isn’t an investment. Rather, Social Security is a gilt-edged insurance policy that protects you from a major risk: living a very, very long time—long enough to outlast your money.

Think about other types of insurance. You buy home insurance, for example, to protect against the possibility of damage or total loss.

If your home never burns down, is the money you spent on insurance premiums a loss? No. You pay for protection, not profits. That’s true for Social Security also.

The Ultimate Payoff

Social Security benefits are for as long as you live. The average 65-year-old will live about 20 more years; many people that age will live much longer (see the chart).

Source: United States Life Tables, 2010, Centers for Disease Control and Prevention (November 2014)

Those benefits are immune to a stock market collapse. They rise to offset inflation. While most 401(k) and traditional IRA distributions are fully taxable, no more than 85% of Social Security payments are subject to federal tax, and most states don’t tax Social Security.

Finally, waiting to receive a larger benefit means that survivor benefits based on your earnings will be larger too. That helps your surviving spouse (if your spouse isn’t collecting a larger amount based on his or her own work record). This is terribly important for women, who on average outlive their husbands and are more likely to need survivor benefits. Breakeven analysis can turn out to be a bad break for them.

Philip Moeller is an expert on retirement, aging, and health. He is co-author of The New York Times bestseller, “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” and a research fellow at the Center for Aging & Work at Boston College. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

MONEY

Hate Your Company’s 401(k)? Here’s How to Squeeze the Most From Any Plan

squeezing orange
Tooga Productions—Getty Images

Four steps to getting your savings plan right—even if your employer didn't.

Your 401(k) plan is potentially one the best tools you have to save for retirement. You get a tax advantage and often a partial match from your employer. But let’s face it: Not all company plans have the most compelling investment options. These strategies will help you use your plan to maximum advantage.

Money

1. Plug the biggest hole in your account: Costs.

Mutual fund charges look small, but the cost of paying an extra 1% a year in fees is that you give up 33% of your potential wealth over the course of 40 years. If there’s at least a basic S&P 500 or total stock market index fund in your plan, that’s often your best option for your equity allocation. Some charge as little as 0.1%, vs. 1% or more for actively managed funds.

2. Look beyond the company plan.

If your 401(k) doesn’t offer other low-cost investment options, diversify elsewhere. First, save enough in the 401(k) to get the company match. Then fund an IRA, which offers similar tax advantage. You can then choose your own funds, including bond funds and foreign stock funds, to complement what’s in your workplace plan.

3. While you’re at it, dump company stock.

About $1 out of every $7 in 401(k)s is invested in employer shares. But your income is already tied to that company. Your retirement shouldn’t be too.

4. Share strategy with your spouse.

It’s a good idea no matter how much you like your plan: If you hold a third of your 401(k) in bonds, for example, your combined mix may be riskier than you think if your spouse is 100% in stocks. But coordinating also improves your options. If your spouse’s plan has a better foreign fund, you can focus your joint international allocation there.

Adapted from “101 Ways to Build Wealth,” by Daniel Bortz, Kara Brandeisky, Paul J. Lim, and Taylor Tepper, which originally appeared in the May 2015 issue of MONEY magazine.

Read next: What You Can Learn From 401(k) Millionaires in the Making

MONEY real estate

The 30 Most Livable Cities for Baby Boomers

Wisconsin State Capitol and the State Street pedestrian mall, Madison, Wisconsin
Walter Bibikow—Getty Images/age fotostock Wisconsin State Capitol and the State Street pedestrian mall, Madison, Wisconsin

Apparently, Wisconsin is the place to go for an active, enjoyable life after age 50. At least, that’s what a new livability index from AARP says.

Apparently, Wisconsin is the place to go for an active, enjoyable life after age 50. At least, that’s what a new livability index from AARP says. The index ranks cities, down to the neighborhood, based on several factors that make an area desirable to the 50-plus population. AARP broke the rankings into three population categories (10 cities in each), and there are six Wisconsin cities on the list, more than any other state. (Minnesota came in second with four.)

Labeling a city “most livable” is a pretty subjective assessment — people who love New York may not be crazy about living in Fargo, N.D., for example, but both are on this list. AARP tried to find cities that included many of the factors important to Americans aged 50 years and older. The rankings are based on analysis by the AARP Public Policy Institute and other experts of 60 community factors in seven categories: housing, neighborhood, transportation, environment, health, engagement and opportunity. The analysis included responses to a national survey of 4,500 Americans in that age group about what’s most important for them to have in their communities. Each of the cities on this list stands out in many of the 60 factors AARP analyzed, making them suitable for residents with a variety of tastes.

Large (Population 500,000 and Higher)

  1. San Francisco
  2. Boston
  3. Seattle
  4. Milwaukee
  5. New York City
  6. Philadelphia
  7. Portland, Oregon
  8. Denver
  9. Washington, D.C.
  10. Baltimore

Medium (Population 100,000 to 500,000)

  1. Madison, Wis.
  2. St. Paul, Minn.
  3. Sioux Falls, S.D.
  4. Rochester, Minn.
  5. Minneapolis
  6. Arlington,Va.
  7. Cedar Rapids, Iowa
  8. Lincoln, Neb.
  9. Fargo, N.D.
  10. Cambridge, Mass.

Small (Population 25,000 to 100,000)

  1. La Crosse, Wis.
  2. Fitchburg, Wis.
  3. Bismarck, N.D.
  4. Sun Prairie, Wis.
  5. Duluth, Minn.
  6. Union City, N.J.
  7. Grand Island, Neb.
  8. Kirkland, Wash.
  9. Marion, Iowa
  10. West Bend, Wis.

When thinking about a new location, there are several things to consider, beyond what the community has to offer. For starters, you may want to look at job opportunities and the unemployment rate, and if you’re considering buying a home, see if you can afford property in the neighborhood you find desirable. Livability may be challenging to quantify, but affordability is a bit more black-and-white. Financial stability should always be a large factor in making big life decisions.

More from Credit.com

This article originally appeared on Credit.com.

MONEY Generation X

Why Gen Xers May Be More Prepared for Retirement Than Boomers

alarm clock
Erik Dreyer—Getty Images

In the face of future hardship, some Gen Xers are actually improving their savings habits.

It is generally acknowledged that Gen Xers are hugely disadvantaged when it comes to retirement security. Gen Xers entered the workforce just as companies began to abandon traditional pension plans for 401(k)s, which shift the burden of saving and investing from the employer to the employee. And while baby boomers still stand to collect their full Social Security benefits, Gen Xers are retiring just as the program’s trust fund is forecast to run dry—around 2033, according to the latest report. That could cut their payout by about a third.

And yet Gen Xers have one big advantage over boomers: time. Not only do they have more working years left to save in those 401(k)s, but their investments have longer to grow tax-deferred. According to projections from the Employee Benefit Research Institute, both Gen Xers and Baby Boomers face significant deficits in the amount of money that they need to retire comfortably, but the more years workers keep contributing to a 401(k), the more those shortfalls decrease.

For example, a Gen Xer assumed to have stopped saving in a 401(k) faces a current shortfall of $78,297, while one with at least 20 years of continued contributions could find the average shortfall at retirement reduced to only $16,782. (EBRI’s retirement savings shortfalls are discounted back to a present value of retirement deficits at age 65.)

Other research suggests Gen Xers are fully aware of the challenges they face and are taking steps to overcome them. In a recent survey by PNC Financial Services, 65% of Gen X respondents said that they believed that they were solely responsible for their own retirement with no expectation of Social Security, employer pension or inheritance, while only 45% of boomers believed that they were solely responsible.

The PNC survey polled more than more than 1000 “successful savers”—those ages 35 to 44 had a total of $50,000 in financial assets, or at least $100,000 if age 45 or older. Compared to boomers, Gen Xers have more aggressive portfolios, are more heavily invested in stocks, and worry more that their savings may not hold out for as long as they live.

Even the financial crisis seems to have affected the two generations differently. When asked the ways in which their thoughts about retirement planning have changed over the last six years, 51% of Gen Xers said that they planned to save more to reach their goals, compared to only 37% of Boomers. And in what’s the most encouraging finding I’ve yet seen about Gen X, 28% said that they have increased the amount that they typically save and invest since the recession, as opposed to 22% of baby boomers.

In other words, the financial crisis seemed to have served as something as a wake-up call for Gen Xers. In the face of future hardship, some are actually adjusting their behaviors instead of burying their heads in the sand. Despite the odds stacked against them, Gen Xers just might get pushed into habits of thrift and rise to meet the financial challenges ahead. The good news: time is on their side.

Konigsberg is the author of The Truth About Grief, a contributor to the anthology Money Changes Everything, and a director at Arden Asset Management. The views expressed are solely her own.

Read next: Why Wary Investors May Keep the Bull Market Running

MONEY retirement planning

Here’s Your 3-Step 15-Minute Retirement Plan

With a plan, you're likely to save four times as much. And it doesn't have to be complex to be effective.

Want to get serious about preparing for retirement? Get a plan. A 2014 Wells Fargo survey found that middle-class Americans who have a written retirement plan saved four times as much as those without one. Fortunately, a plan doesn’t have to be complex to be effective. In fact, putting together a perfectly acceptable one can be as easy as 1-2-3.

Step #1: Pick a savings target. Don’t get hung up on trying to identify the exact amount need to save. When you’re saving for a retirement that’s many years off in the future, there are too many unknowables to be that precise. To get things rolling, I suggest you shoot for 15% of pay, which is the figure cited for the typical household by the Boston College Center For Retirement Research in a recent paper. If that amount seems too daunting, then start at 10% and boost that figure by one percentage point each year until you hit 15% of salary.

The important thing, though, is to push yourself a bit when it comes to saving, as there may be some years when unexpected expenses or a job layoff prevent you from reaching your savings goal. Indeed, when researchers for TIAA-Cref’s Ready-to-Retire survey asked retirees last year what they wished they had done differently to prepare for retirement, almost half said they wish they had saved more of their paycheck for retirement. They also expressed regret that they hadn’t started saving sooner, So once you pick your target saving rate, start stashing your dough away immediately.

One more note about your savings rate: If you contribute to a 401(k) or other workplace plan and your employer matches a portion of what you save, those employer matching funds should count toward your savings target. So if your company contributes 50% of the amount you save up to 6% of salary for a 3% match—a typical formula—you would have to save just 12% of salary to reach a 15%.

Step #2: Settle on your investing strategy. This step trips up people for several reasons. Some get flustered because they know little or nothing about investing. Others think they’ve got to sift through dozens of investments to find the “best” of the lot. Still others feel that they aren’t doing an adequate job investing for retirement unless they’ve stuffed their portfolio with every possible investment representing every conceivable asset class known to man.

I have one word for people worried about such issues: chill. Investing doesn’t have to be complicated. In fact, whether you’re a neophyte or a grizzled veteran of the financial markets, simpler is better when it comes to building a retirement portfolio.

Here’s all you have to do. First, restrict yourself to low-cost index funds. You can build a diversified portfolio with just two funds: a total U.S. stock market index fund and a total U.S. bond market index fund. If you want to get fancy, you can throw in a total international stock index fund. (If you prefer, you can use the ETF versions of such funds instead.) You can find these investments at such firms as Vanguard, Fidelity and Schwab.

Second, settle on a stocks-bonds mix that’s appropriate given your tolerance for risk. You can get a recommended mix by going to the Investor Questionnaire-Allocation Tool in RealDealRetirement’s Toolbox. Once you’ve settled on a stocks-bonds mix, leave it alone, except perhaps to rebalance every year or so. Or, if you can’t see yourself building even a simple portfolio with a few funds, just invest in a target-date retirement fund. This type of fund—available from the same three firms mentioned above—gives you a fully diversified portfolio that becomes more conservative as you approach and enter retirement.

Step 3: Do an initial assessment. Now it’s time to see where you stand. That may seem premature if you’re really just getting started. But the idea is you want to get a sense of what kind of retirement you’ll end up with if you follow the course you’ve set in steps one and two. Think of it as establishing a baseline so you can gauge whether or not you’re making progress when you re-do this evaluation every 12 months or so.

Doing this assessment is pretty simple. Go to a retirement income calculator that uses Monte Carlo analysis to make projections, plug in such information as your age, salary, savings rate, the amount, if any, you already have stashed in retirement accounts, the stocks-bonds mix you arrived at in step 2, the age at which you intend to retire, the percentage of pre-retirement income you’ll require in retirement (80% or so is a decent estimate) and how many years you expect to live in retirement (I suggest to age 95 to be on the conservative side)…and voila! The calculator will churn a few seconds and forecast the probability that you’ll be able to retire on schedule given how much you’re saving and how you’re investing.

Generally, you’d like to see a probability of 80% or higher, although you shouldn’t freak out if your chances are much lower. The point of this exercise is to see where you stand now so you can adjust your planning to tilt the odds of success more in your favor, if that’s necessary. The most effective adjustment is saving more, but there are other possibilities, such as staying on the job longer, working part-time in retirement, maximizing Social Security benefits and relocating to a lower cost area once you retire.

Do you have to write all this down to get the benefit of this plan? I wouldn’t say it’s absolutely necessary. But I think it’s a good idea to jot down your target savings rate and the asset mix you’ve decided on if for no other reason than doing so can make you feel more committed to following through. You should also save a digital or hard copy each time you do an evaluation so you can see whether you’re making progress or backsliding.

You’ll want to refine and tweak this plan as you go along, but for now the most important thing is to get started. Because the sooner you set a savings rate and start funding your retirement accounts, the better your chances of having a secure and enjoyable retirement down the road.

Walter Updegrave is the editor of RealDealRetirement.com. If you have a question on retirement or investing that you would like Walter to answer online, send it to him at walter@realdealretirement.com.

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MONEY retirement planning

One Thing Successful Retirement Savers Have in Common

Gold Eggs
Getty Images

With the markets rebounding, workers with 401(k)s feel more confident about retirement. Everyone else, not so much.

Retirement confidence in the U.S. stands at its highest point since the Great Recession, new research shows. But the recent gains have been almost entirely confined to those with a traditional pension or tax-advantaged retirement account, such as a 401(k) or IRA.

Some 22% of workers are “very” confident they will be able to live comfortably in retirement, according to the Employee Benefit Research Institute 2015 Retirement Confidence Survey, an annual benchmark report. That’s up from 18% last year and 13% in 2013. But it remains shy of the 27% reading hit in 2007, just before the meltdown. Adding those who are “somewhat” confident, the share jumps to 58%—again, well below the 2007 reading (70%).

The heightened sense of security comes as the job market has inched back to life and home values are on the rise. Perhaps more importantly: stocks have been on a tear, rising by double digits five of the last six years and tripling from their recession lows.

Those with an employer-sponsored retirement plan are most likely to have avoided selling stocks while they were depressed and to have stuck to a savings regimen. With the market surge, it should come as no surprise that this group has regained the most confidence—71% of those with a plan are very or somewhat confident, vs. just 33% of those who are not, EBRI found. (That finding echoes earlier surveys highlighting retirement inequality.)

Among those who aren’t saving, daily living costs are the most commonly cited reason (50%). While worries over debt are down, it remains a key variable. Only 6% of those with a major debt problem are confident about retirement while 56% are not confident at all. But despite those savings barriers, most workers say they could save a bit more for retirement—69% say they could put away $25 a week more than they’re doing now.

At the root of growing retirement confidence is a perceived ability to afford potentially frightening old-age expenses, including long-term care (14% are very confident, vs. 9% in 2011) and other medical expenses (18%, vs. 12% in 2011). The market rebound probably explains most of that, though flexible and affordable new long-term care options and wider availability of health insurance through Obamacare may play a role.

At the same time, many workers have adjusted to the likelihood they will work longer, which means they can save longer and get more from Social Security by delaying benefits. Some 16% of workers say the date they intend to retire has changed in the past year, and 81% of those say the date is later than previously planned. In all, 64% of workers say they are behind schedule as it relates to saving for retirement, drawing a clear picture of our saving crisis no matter how many are feeling better about their prospects.

Those adjustments are simply realistic. Some 57% of workers say their total savings and investments are less than $25,000. Only one out of five workers with plans have more than $250,000 saved for retirement, and only 1% of those without plans. Clearly, additional working and saving is necessary to avoid running out of money.

Still, many workers have no idea how much they even need to be putting away. When asked what percentage of income they need to save, 27% said they didn’t know. And almost half of workers age 45 and older have not tried to figure out how much money they need to meet their retirement goals, though those numbers are edging up. As previous EBRI studies have found, workers who make these calculations tend to set higher goals, and they are more confident about reaching them.

To build your own savings plan, start by using an online retirement savings calculator, such as those offered by T. Rowe Price or Vanguard. And you can check out Money’s retirement advice here and here.

Read next: Why Roth IRA Tax Tricks Won’t Rescue Your Retirement

MONEY IRAs

Why Roth IRA Tax Tricks Won’t Rescue Your Retirement

magician balancing an egg on a paper fan
George Karger—Getty Images/Time & Life Picture Collection

It's a myth that a Roth IRA is a sure way to add wealth. Saving more will make a bigger difference.

Roth IRAs are in fashion. Many people seem to believe that the Roth’s tax-free nature somehow generates more wealth in the end than other retirement savings options. But Roth IRAs have no magical capabilities.

A simple example of putting $5,000 to work in two types of IRAs—Roth and Traditional—shows there is no difference in the ending values of the two accounts, assuming your tax rate is unchanged between the initial contribution and withdrawal.

If your tax rate does change, the story is different. If your rate goes down, a Traditional IRA does better. And if your rate goes up, then the Roth does better. So neither IRA is a slam-dunk for tax savings: It all depends on whether your tax rate changes, and in which direction.

RMDs May Be No Big Deal

Roths are also touted for their ability to sidestep required minimum distributions. RMDs are the government’s way of making sure you pay taxes on Traditional IRAs. They are calculated as your IRA account balance divided by a “distribution period” corresponding to your life expectancy. You must begin RMDs at age 70 1/2, and include those withdrawals as part of your taxable income.

RMDs can be a nuisance to those with significant savings, and the dwindling few who receive pensions, because they can generate unnecessary taxable income. That is money you don’t need for living expenses, which will be taxed anyway. Even worse, in some scenarios, RMDs plus Social Security can force you into a higher tax bracket.

But RMDs may be a moot point. Many of today’s retirees are tapping their portfolios well before 70½ or relying on Social Security. And for many pre-retirees, the problem won’t be having to take out more than they need—it’s not having enough retirement savings in the first place! The government’s RMD rules won’t force much, if any, “extra” income on them.

Because of the threat of RMDs pushing you into a higher tax bracket, the conventional advice is that you should “top-off” your tax bracket in low-income years of early retirement by doing a Roth Conversion. That means transferring money from your Traditional IRA to a Roth, and paying income tax on the converted amount. You would be choosing to pay taxes now, in hopes that will save you on higher taxes in the future.

Consider the Margin for Error

But conventional rules of thumb can be inaccurate. You have to run your own numbers and, even then, the accuracy of the answers will be limited by your ability to predict your income far into the future. RMDs and Roth conversions lead to some very complex financial scenarios.

Analyzing my own situation using the best retirement calculators shows only modest levels of RMDs into our 90s, with our current 10% to 15% tax bracket unchanged. In theory, I could generate about 2% to 3% more wealth in the end if I did Roth conversions, as long as I paid the conversion tax from non-IRA assets. If I paid the tax from IRA funds, there would be no value in doing a conversion.

However, that 2% to 3% gain is well within the margin of error for retirement calculations. Who knows if I would ever see it? But, in doing Roth conversions, I would see additional complexity and paperwork in my financial life starting right now. Given that, I’m foregoing Roth conversions for the time being.

Roth conversions are unlikely to save you from high taxation of retirement assets. That’s because the total amount you can convert is limited by the number of years you spend in a lower tax bracket and your “headroom” to the next higher bracket.

Still, there are scenarios where Roths can save you money, particularly for those in higher tax brackets. And Roths can be useful to tax diversify your savings. To clarify the issues in your situation, use one or more of my recommended high-fidelity retirement calculators to run your own numbers.

And before you invest too much time in Roth tax tricks, make sure your overall retirement savings rate is on track: that will have a much bigger impact on your long-term financial success!

Darrow Kirkpatrick is a software engineer and author who lived frugally, invested successfully, and retired in 2011 at age 50. He writes regularly about saving, investing and retiring on his blog CanIRetireYet.com.

Read next: Which Wins for Retirement Savings: Roth IRA or Roth 401(k)?

MONEY Investing

Why Wary Investors May Keep the Bull Market Running

running bull
Ernst Haas—Getty Images

Retirement investors are optimistic but have not forgotten the meltdown. That's good news.

Six years into a bull market, individual investors around the world are feeling confident. Four in five say stocks will do even better this year than they did last year, new research shows. In the U.S., that means a 13.5% return in 2015. The bar is set at 8% in places like Spain, Japan and Singapore.

Ordinarily, such bullishness following years of heady gains might signal the kind of speculative environment that often precedes a market bust. Stocks in the U.S. have risen by double digits five of six years since the meltdown in 2008. They are up 3%, on average, this year.

But most individuals in the market seem to be on the lookout for dangerous levels of froth. The share that say they are struggling between pursuing returns and protecting capital jumped to 73% in this year’s Natixis Global Asset Management survey. That compares to 67% in 2013. Meanwhile, the share of individuals that said they would choose safety over performance also jumped, to 84% this year from 78% in 2014.

This heightened caution makes sense deep into a bull market and may help prolong the run. Other surveys have shown that many investors are hunkered down in cash. That much money on the sidelines could well fuel future gains, assuming these savers plow more of that cash into stocks.

Still, there is a seat-of-the-pants quality to investors’ behavior, rather than firm conviction. In the survey, 57% said they have no financial goals, 67% have no financial plan, and 77% rely on gut instincts to make investing decisions. This lack of direction persists even though most cite retirement as their chief financial concern. Other top worries include the cost of long-term care, out-of-pocket medical expenses, and inflation.

These are all thorny issues. But investing for retirement does not have to be a difficult chore. Saving is the hardest part. If you have no plan, getting one can be a simple as choosing a likely retirement year and dumping your savings into a target-date mutual fund with that year in the name. A professional will manage your risk and diversification, and slowly move you into safer fixed-income products as you near retirement.

If you are modestly more hands-on, you can get diversification and low costs through a single global stock index fund like iShares MSCI All Country or Vanguard Total World, both of which are exchange-traded funds (ETFs). You can also choose a handful of stock and bond index funds if you prefer a bit more involvement. (You can find good choices on our Money 50 list of recommended funds and ETFs.) Such strategies will keep you focused on the long run, which for retirement savers never goes out of fashion.

Read next: Why a Strong Dollar Hurts Investors And What They Should Do About It

MONEY Social Security

This Little-Known Pension Rule May Slash Your Social Security Benefit

teacher in lecture hall
Gallery Stock

If you are covered by a public sector pension, you may not get the Social Security payout you're expecting.

Some U.S. workers who have paid into the Social Security system are in for a rude awakening when the checks start coming: Their benefits could be chopped up to $413 per month.

That is the maximum potential cut for 2015 stemming from the Windfall Elimination Provision (WEP), a little-understood rule that was signed into law in 1983 to prevent double-dipping from both Social Security and public sector pensions. A sister rule called the Government Pension Offset (GPO) can result in even sharper cuts to spousal and survivor benefits.

WEP affected about 1.5 million Social Security beneficiaries in 2012, and another 568,000 were hit by the GPO, according to the U.S. Social Security Administration (SSA). Most of those affected are teachers and employees of state and local government.

These two safeguards often come as big news to retirees. Until 2005, no law required that affected employees be informed by their employers. Even now, the law only requires employers to inform new workers of the possible impact on Social Security benefits earned in other jobs.

The Social Security Administration’s statement of benefits has included a generic description of the possible impact of WEP and GPO since 2007; for workers who are affected, the statement includes a link is included to an online tool where the impact on the individual can be calculated. People who have worked only in jobs not covered by Social Security get a letter indicating that they are not eligible.

Many retirees perceive the two rules as grossly unfair. Opponents have been pushing for repeal, so far to no effect.

Why WEP?

To understand the issue, you need to understand how Social Security benefits are distributed across the wealth spectrum of wage-earners.

The program uses a progressive formula that aims to return the highest amount to the lowest-earning workers—the same idea that drives our system of income tax brackets.

It is a complex formula, but here is the upshot: Without the WEP, a worker who had just 20 years of employment covered by Social Security, rather than 30, would be in position to get a much higher return because of those brackets.

Where is the double dip? The years in a job covered by a pension instead of Social Security.

“If you had worked in non-covered employment for a significant portion of your career, there should be a shared burden between the pension you receive from that period of your employment and from Social Security in providing your benefit,” says SSA Chief Actuary Stephen C. Goss. “Just because a person worked only a portion of their career with Social Security-covered employment, they should not be benefiting by getting a higher rate of return.”

If you are already receiving a qualifying pension when you file for Social Security, then the WEP formula kicks in immediately. The SSA asks a question about non-covered pensions when you file for benefits, and it also has access to the Internal Revenue Service Form 1099-R, which shows income from pensions and other retirement income.

If your pension payments start after you file, the adjustment will occur then.

If you have 30 years of Social Security-covered employment, no WEP is applied. From 30 to 20 years, a sliding WEP scale is applied. Below 20 years, your benefit would drop even more. (For more information, click here.)

How does this affect your checks? The SSA offers this example: A person whose annual Social Security statement projects a $1,400 monthly benefit could get just $1,000, due to the WEP.

Your maximum loss is set at 50% of whatever you receive from your separate pension, so if that is relatively small, the WEP effect will be minimal.

You can still earn credits for delayed filing, and you will still get Social Security’s annual cost-of-living adjustment for inflation, but the WEP will still affect your initial benefit.

The WEP formula also affects spousal and dependent benefits during your lifetime. However, if your spouse receives a survivor benefit after your death, it is reset to the original amount.

Can you do anything to avoid getting whacked by WEP? Working longer in a Social Security-covered job before retiring might help. Remember, you are immune to the provision if you have 30 years of what Social Security defines as “substantial earnings” in covered work. That amounts to $22,050 for 2015.

So if you have 25 years, try to work another five, says Jim Blankenship, a financial planner who specializes in Social Security benefits. “That’s money in your pocket.”

Read next: The Pitfalls of Claiming Social Security in a Common-Law Marriage

Update: This story was updated to reflect that Social Security Administration gives little advance warning to beneficiaries, instead of no advance warning, and a description of Social Security benefits statements was added.

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