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December 09, 2016

Penelope WangThese are tricky times for retirement investors. The stock funds in your portfolio are probably going gangbusters—the Dow Jones Industrial Average has broken through 19,500, and 2016 looks like it will go down as the eighth straight year of gains for equities. The bull run is likely to continue into 2017, according to my colleague Paul Lim, given the strong job market and rising wages. But given those returns, you should be thinking about taking gains from your stock funds and rebalancing into your bond funds. That move may seem pretty unappealing right now. Treasury yields have been climbing, and the Fed may raise its key rate when it meets next week—all of which could hurt bond values over the near term. (For a great bond refresher, take this quiz.) But don’t let that deter you. You can’t outguess the market, but you can be vigilant about staying on track toward your retirement goals.

Best wishes,

Penny

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THIS WEEK’S RETIREMENT NEWS, INSIGHTS AND ADVICE

Women’s Health Care Tab in Retirement: $79,000 More Than Men’s

You probably already know that women face a bigger retirement challenge than men do—they tend to live longer and earn less. Add health care costs to the tab. Reporter Elizabeth O’Brien lays out the latest numbers. All the more reason to hit the gym—and save, save, save. MONEY

Possible Retirement Policy Changes in a Trump Administration

Predicting changes in Washington is tough to do. But as reporter Mark Miller notes, there’s a big push for reforms that could dramatically change Social Security, Medicare and Obamacare, as well as retirement savings options, maybe not for the better. Pay attention, especially if you’re in or near retirement. MORNINGSTAR

These Free Tools Will Calculate Your Social Security Benefits

Deciding when to claim Social Security is one of the biggest decisions you will make at retirement. So it’s best to make a plan well before you stop working. The good news is that comparing different strategies is easier then ever with today’s online tools, as a Social Security Administration report found. Reporter Tom Anderson summarizes these free options. Best to use them as a starting point before getting more expert help. CNBC

Retirement? Fat Chance, Say Millennials

The notion of retirement may be going the way of typewriters and rotary phones. Young adults say they plan to work in retirement, either for income or to stay busy, according to a new survey. As contributor Dan Kadlec points out, millennials may have the right idea. MONEY

Lessons Learned from 5 Months as a Nomad

At age 58, Chuck Bolatin and his wife, Jet Metier, decided to sell most of what they owned and hit the road. Founders of a website, Best Places in the World to Retire, they could run their business anywhere—and they had lots of research to guide their travels. Here are some key lessons learned. For starters, it can be cheaper to live in a great locale than staying home. NEXT AVENUE

Do You Even Know How Bonds Work? It’s Time to Brush Up

Income investors may be getting nervous. Treasury bond yields have been rising, in part due to concerns over possible inflation. Plus, the Federal Reserve may increase a key rate at its next meeting on Dec. 14. What better time to get a quick refresher on bonds and how they fit into your investing strategy? Test your knowledge with this handy quiz from contributor Walter Updegrave. MONEY

About to Retire? How To Choose Between a Lump Sum, Annuity or Both

Traditionally, if you have a pension, you can take that either as a lump sum or a stream of monthly annuity payments. But new IRS rules allow employers to provide partial lump-sum payments and distributions. For those who have that flexibility, columnist Robert Powell offers guidelines for choosing the best option. For starters, figure out how much of your spending needs to be covered by a guaranteed income stream. MARKETWATCH

Thinking of Downsizing? Here’s What to Consider

Some 40% of boomers are considering moving later in life. And nearly half of that group say they want a smaller house, perhaps for greater convenience or to cut costs. But downsizing can be a difficult process. So before you get started, consider these questions from writer Glenn Ruffenach. The most important step: Make sure your spouse is on the same page. WALL STREET JOURNAL

YOUR RETIREMENT QUESTIONS ANSWERED

Why You Shouldn’t Empty Your 401(k) to Pay Off Credit Card Debt

Q: I have about $9,000 in credit card debt and a little less than that in retirement savings. I plan on working for at least 30 more years. Should I use my retirement money to pay off my credit card debt so I am financially stable enough to purchase a home?

A: Pulling money out of your 401(k) or other retirement accounts should generally be viewed as a last-ditch decision. “Other options, even bankruptcy, should be considered before pulling from a 401(k), as taking from this source is hijacking your future,” said Thomas Nitzsche, a credit educator at Clearpoint Credit Counseling Solutions. READ MORE

WORDS OF WISDOM

“The secret to doing good research is always to be a little underemployed. You waste years by not being able to waste hours.”

--Psychologist Amos Tversky

ABOUT PENNY: Penelope Wang is editor at large at MONEY with a focus on retirement planning. A graduate of Swarthmore College and Columbia University School of International Affairs, she was recently ranked among the "top social influencers in personal finance and wealth." You can email her at retirewithmoney@moneymail.com and follow her on Twitter @PennyWriter.

 
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