MONEY Second Career

3 Secrets to Launching a Successful Second Act Career

Adele Douglass created the first U.S. humane certification program for farm animals raised for food Robert Merhaut

Adele Douglass built a non-profit that protects millions of farm animals and gives farmers a new marketing niche.

After a three-decade career in Washington devoted to animal welfare issues, Adele Douglass thought she knew a lot about how bad their mistreatment could get. Still, she was shocked when she began to look closely at the conditions of farm animals in the U.S.

She discovered chickens being raised in cages so overcrowded they couldn’t raise their wings, pigs unable to turn around in tightly packed pens, and animals left unsheltered against outdoor elements.

Douglass decided the best way to improve the conditions of livestock was to push for change herself. So in 2003, at age 57, she quit her job as a non-profit executive for an animal rights association and launched her own organization, Humane Farm Animal Care. “The more I knew, the more appalled I got, and the more I wanted to do something myself,” says Douglass, now 67. “Legislation was not going to solve the problem. It took 100 years for the Humane Slaughter Act to be passed.”

Douglass figured out a way to engage farmers and consumers on the issue—by addressing their growing concerns over eating meat from animals being fed antibiotics. She developed Certified Humane, which is the first certification in the U.S. that guarantees farm animals are treated humanely from birth to slaughter. To get this certification, farmers must allow animals to engage in natural behaviors, provide appropriate space for roaming, and food free of antibiotics or hormones. Farmers who are Certified Humane can market to natural food shoppers and get higher prices for their products, Douglass says.

Humanely raised food appeals to American families of all income levels. “Young mothers want to feed their families good food. Poor people don’t want to feed their families junk” says Douglass.” Following humane practices also improves the environment, since fewer animals raised on more space creates less pollution.

To fund the organization, Douglass cashed in her $80,000 401(k) account. Her daughter, who had encouraged her to make the move, gave her $10,000 and worked at the organization during its first few years. Douglass also received grants from the American Society for the Prevention of Cruelty to Animals and The Humane Society. In the first year of operation in 2004, 143,000 animals were raised under the organization’s standards.

Today 87 million animals are in the program, and the non-profit has three full-time employees and two part-timers. Fees for certification and annual inspections cover about 30% of the organization’s costs—the rest comes from donations and grants.

Douglass shares this advice for others hoping to launch a second act career:

Make a plan before you exit. Douglass spent years researching the issue before quitting her job. She was able to get off the ground in just one year because she modeled the certification program after an existing similar program in the U.K. called Freedom Food.

Leverage your contacts. Douglass has a deep list of connections, from animal scientists and USDA officials to fundraisers and academics, as well as contacts in the animal rights movement and veterinary profession. “I had the contacts, knowledge and experience which gave me confidence I could do this on my own,” says Douglass.

Cut personal expenses. Though Douglass’ salary isn’t much less than what she earned in her previous career, her compensation is a lot more volatile. She has willingly taken pay cuts in recent years. Douglass says she hasn’t had to change her lifestyle much. But she reduced her biggest expense—her home—by downsizing to a smaller place, which made it easier to adjust.

At 67, Douglass doesn’t envision retiring. Now living alone, with three adult children and five grandchildren, she says her family is one of her greatest joys. But her work remains an enormously satisfying part of her life too. “Sure, there are days when I am tired and frustrated. But I am doing something that benefits people, animals and the environment. I feel really good about that,” says Douglass.

Adele Douglass is a 2007 winner of The Purpose Prize, a program operated by Encore.org, a non-profit organization that recognizes social entrepreneurs over 60 who are launching second acts for the greater good.

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MONEY Ask the Expert

Here’s How Social Security Will Cut Your Benefits If You Retire Early

man holding calculator in front of his head
Oppenheim Bernhard—Getty Images

Whether you retire early or later, it's important to understand how Social Security calculates your benefits.

Q: I am 60 and planning on withdrawing Social Security when 62. Due to a medical condition, I am not making $16.00 an hour anymore but only making $9.00. Do you know how income level is calculated on early retirement? Thank you.

A. Social Security retirement benefits normally may be taken as early as age 62, but your income will be substantially higher if you can afford to wait. If you are entitled to, say, a $1,500 monthly benefit at age 66, you might get only $1,125 if you began benefits at age 62. Defer claiming until age 70, when benefits reach their maximum levels, and you might receive $1,980 a month.

Still, most older Americans are like you—they can’t afford to wait. Some 43% of women and 38% of men claimed benefits in 2012 at the age of 62, according to a Social Security report. Another 49% of women and 53% of men took benefits between ages 63 and 66. Just 3% of women and 4% of men took benefits at ages 67 and later, when payouts are highest.

Why are people taking Social Security early? The report didn’t ask people why they claimed benefits. But academic research suggests that the reasons are pretty much what you might expect—retirees need the money, and they also worry about leaving benefits on the table if they defer them. There is also strong evidence that most Americans are not fully aware of the advantage of delaying benefits. A study last June sponsored by Nationwide found that 40% of early claimants later regretted their decisions.

So before you quit working, it’s important to understand Social Security’s benefits formula. To calculate your payout, Social Security counts up to 35 of your highest earning years. It only includes what are called covered wages—salaries in jobs subject to Social Security payroll taxes. Generally, you must have covered earnings in at least 40 calendar quarters at any time during your working life to qualify for retirement benefits.

The agency adjusts each year of your covered earnings to reflect subsequent wage inflation. Without that adjustment, workers who earned most of their pay earlier in their careers would be shortchanged compared with those who earned more later, when wage inflation has caused salary levels to rise.

Once the agency adjusts all of your earnings, it adds up your 35 highest-paid years, then uses the monthly average of these earnings (after indexing for inflation) to determine your benefits. If you don’t have 35 years of covered earnings, Social Security will use a “zero” for any missing year, and this will drag down your benefits. On the flip side, if you keep working after you claim, the agency will automatically increase your benefits if you earn an annual salary high enough to qualify as one of your top 35 years.

The figures below show how Social Security calculated average retirement benefits as of the end of 2012 for four categories of worker pay: minimum wage, 75% of the average wage, average wage, and 150% of the average wage. (The agency pulls average wages each year from W-2 tax forms and uses this information in the indexing process that helps determine benefits.)

  • Worker at minimum wage: The monthly benefit at 62 is $686 and, at age 66 is $915.50. The maximum monthly family benefits based on this worker’s earnings record (including spousal and other auxiliary benefits) is $1,396.50.
  • Worker at 75% of average wage: The monthly benefit at 62 is $975 and, at age 66 is $1,300.40. The maximum monthly family benefits based on this worker’s earnings record (including spousal and other auxiliary benefits) is $2,381.20.
  • Worker at average wage: The monthly benefit at 62 is $1,187 and, at age 66 is $1,583.20. The maximum monthly family benefits based on this worker’s earnings record (including spousal and other auxiliary benefits) is $2,927.40.
  • Worker at 150% of average wage: The monthly benefit at 62 is $1,535 and, at age 66 is $2,047. The maximum monthly family benefits based on this worker’s earnings record (including spousal and other auxiliary benefits) is $3.582.80.

In short, claiming at age 62 means you’ll receive lower benefits compared with waiting till full retirement age. But given a lifetime earnings history and Social Security’s wage indexing, receiving a lower wage for your last few working years will not make a big difference to your retirement income.

Philip Moeller is an expert on retirement, aging, and health. His book, “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” will be published early next year by Simon & Schuster. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

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MONEY Second Career

How to Find the Right Match for Your Second Career

Signing up with an encore career matchmaker can be a smart way to find fulfilling, paid work in retirement.

WANTED: Retirees looking for flexible, paid part-time work in their field of expertise.

Now, that’s a help-wanted ad many boomers dream of running across in their Unretirement years, isn’t it? Well, for Harry Coleman of Cincinnati, Ohio, that’s pretty much what happened, thanks to a “matchmaking” service.

Coleman worked for Procter & Gamble (P&G) for 30 years, mostly in product development, and decided to grab P&G’s juicy retirement package at age 51 in 2008. “The last nine years at P&G were a blast,” he says. “But I wanted more of a work and life balance and you can’t do that if you’re working 50 to 60 hours a week.”

A Three-Bucket Approach

These days, Coleman, now 57, embraces a “three bucket” approach to life.

The first two buckets are for volunteering and charitable activities (mostly through his church) and for “goofing off”—golfing, traveling and taking on projects around the house.

The third bucket relates to that ideal help-wanted ad. In this bucket, Coleman takes on flexible, fulfilling, paid part-time consulting positions he has found since he retired mostly through a firm called YourEncore. “The jobs keep me engaged mentally on the work side; I can pick and choose projects,” he says. “Yet I have the capacity to be more involved in other things.”

YourEncore, based in Indianapolis, Ind., is essentially a matchmaker between large corporate customers around the country looking for experienced brainpower to address a pressing business problem (typically for about 10 weeks) and seasoned, skilled Unretirees who are eager for a challenge and part-time income.

YourEncore was created in 2003 when P&G and Eli Lilly, the Indianapolis-based pharmaceutical giant, asked consultant John Barnard for a way management could draw on the knowledge and expertise of retired employees. Boeing quickly joined the venture to recruit “retired engineers for urgent and complex technical projects,” as an internal company online newsletter put it.

Companies using YourEncore are largely in the food, consumer product and life sciences industries. So far, more than 8,000 people have found work through the matchmaker; 65 percent of them have advanced degrees. The pay is good, although the exact amount depends on the person’s experience, the company, the difficulty of the project and the time commitment.

Encore Career Matchmaking Services Are Sprouting

YourEncore is just one example of the growing number of matchmaking services targeted at retiring boomers. It focuses on private sector work, but many others specialize in the social venture space, creating bridges between for-profit careers and nonprofit encores for the greater good. Some are regional, such as Experience Matters in Maricopa County, Ariz. ESC of New England runs an Encore Fellows program in greater Boston. Other matchmakers like ReServe, headquartered in New York City, have national and international ambitions.

Though the Unretiree matchmaking business is pretty new, it’s already starting to puncture a common stereotype: that the idea of gray hair and creativity is an oxymoron. For example, YourEncore workers have earned a reputation for creative problem solving, says Peter Kleinhenz, manager of the its P&G office. “You can be really productive when you don’t have a career that needs to be advanced or turf to protect,” says Kleinhenz.

New York City-based ReServe offers a very different business model, but it, too, acts as an encore career matchmaker.

ReServe connects 55-plus professionals with local nonprofits, public institutions and government agencies. Aside from its New York operations, ReServe also places candidates — typically former lawyers, doctors, nurses, teachers, accountants, corporate recruiters and the like — in Baltimore, Md.; Miami, Fla.; Newark, N.J.: Boston, Mass.; southeast Wisconsin and New York’s Westchester County. ReServe has placed more than 3,300 workers at more than 350 organizations.

ReServists work for a $10-an-hour stipend, well below their market value during their earlier career. (Another $5-an-hour is split between the company managing payroll for the person and ReServe.) The job is between 10 and 20 hours a week and the average ReServe contract lasts nine months to a year.

“A good proportion—50%—are not really looking to do what they have done before. They want to use their skills in a brand new setting. The common denominator is transferable skills,” says Lorrie Lutz, chief strategy officer at Fedcap, a New York-based nonprofit that combined with the smaller ReServe in 2012.

For example, Lutz says, an accountant with a passion working with kids might spend a stint as a math tutor. A marketing professional might employ her skills at a government agency struggling to get its policy message out.

Giving Back for Your Next Career

ReServe plans on operating in every state and taking its program overseas. “We think we have a great idea here. There’s a generation of talent here and abroad. Boomers are the most-educated generation,” says Lutz. “They have so much to give back.”

That’s certainly the case with Scott Kariya, an IT recruiter for 23 years who “retired” at 52 in 2006. Quickly bored, Kariya reached out to ReServe. He didn’t find an open position at the time, but in 2008 talked his way into a job at ReServe’s main office.

He worked there three days a week using his recruiting skills, spending the rest of his time volunteering at the local Red Cross, managing his investment portfolio and doing other things. “Everyone wants to stay busy,” says Kariya. “But I think a lot of people get tired of the 50-hour workweek.” Today, he heads up ReServe’s information technology operations.

A common denominator among encore career matchmakers is the amount of effort they put into finding the right people for clients’ needs. YourEncore gains an understanding of the proposed project from P&G, Lilly or another corporate customer, and then uses that to find the right experts. ReServe learns about the skills and passions of its applicants so the client partnerships are fruitful.

I’ve witnessed the same matchmaking ethos at Experience Matters in Phoenix and with the national Encore Fellowships Network. Although the infrastructure is still being built, the future looks bright because corporate America and nonprofits seem more aware of the talents and skills of available boomers.

Locating a Local Matchmaker

To find an encore career matchmaker in your area, you might start at the Encore.org site. But you may need to take a more indirect route, by networking locally. For example, in Portland, Ore., Life By Design NW serves as an information clearinghouse. JV EnCorps (part of the Jesuit Volunteer Network) recruits people 50 and older in Portland and Bend, Ore. and Seattle, Wash. In Kansas City, you could check out Next Chapter Kansas City, a grassroots networking group for boomers.

At the moment, the supply of people eager to keep using their accumulated knowledge and creative insights exceeds the demand for their services. But organizations like YourEncore and ReServe point the way toward a model that allows for engagement and compensation for people who’d otherwise have lots of time on their hands.

It’s a model that may well end up defining Unretirement the way Sun City symbolized retirement for a different generation in the 1960s.

Chris Farrell is senior economics contributor for American Public Media’s Marketplace and author of the new book Unretirement: How Baby Boomers Are Changing the Way We Think About Work, Community, and The Good Life. He writes about Unretirement twice a month, focusing on the personal finance and entrepreneurial start-up implications and the lessons people learn as they search for meaning and income. Tell him about your experiences so he can address your questions in future columns. Send your queries to him at cfarrell@mpr.org. His twitter address is @cfarrellecon.

More from Second Avenue:

Manual for an Encore Career

3 Essential Tips to Switch to a Second Career

Dipping Your Toe Into Encore Career Waters

MONEY Medicare

Some Medicare Advantage Plans Have Hidden Risks—Here’s How to Avoid Them

hands using measuring tape
Nils Kahle

Although they promise quality care at lower cost, some Medicare Advantage plans fall short. Before you enroll, here are key questions to ask.

Seniors have flocked to Medicare Advantage in recent years, attracted by savings on premiums and the convenience of one-stop shopping. But as the annual Medicare enrollment season began this week, a memorandum from federal officials to plan providers surfaced that serves as a big red warning flag.

The upshot: Assess the quality of any Advantage plan before you sign up.

The memorandum, first reported by the New York Times, described ongoing compliance problems uncovered in federal audits of Advantage and prescription drug plans. These include inadequate rationales for denial of coverage, failure to consider clinical information from doctors and failure to notify patients of their rights to appeal decisions. The audits also uncovered problems with inappropriate rejection of prescription drug claims.

Advantage is a managed care alternative to traditional fee-for-service Medicare. It rolls together coverage for hospitalization, outpatient services and, usually, prescription drugs. Advantage plans also cap your out-of-pocket expenses, making Medigap supplemental plans unnecessary.

The savings can be substantial. Medigap plan premiums can cost $200 monthly or more, and stand-alone drug plans will average $39 a month next year. Enrollees have been voting with their wallets: 30% are in Advantage plans this year, up from 13% in 2005, according to the Henry J. Kaiser Family Foundation.

Advantage plans are subject to strict rules and regulations, and must cover all services offered in original Medicare, with the exception of hospice services. Some offer extra coverage, such as vision, hearing, dental and wellness programs.

And there is evidence that the quality of these plans is rising. Medicare uses a five-star rating system to grade plan quality, and plans can earn bonus payments based on their ratings. Average enrollment-weighted star ratings increased to 3.92 for 2015, from 3.86 in 2013 and 3.71 in 2013, according to Avalere Health, an industry research and consulting firm. Avalere projects that 60% of Advantage enrollment will be in four- or five-star plans next year, up from 52% this year.

But the Medicare memorandum focuses on problems outside the rating system. “It’s about basic blocking and tackling and whether a plan adheres to the program’s technical specs,” says Dan Mendelson, Avalere’s chief executive officer. “These are the basic functions that every plan should be able to handle.”

Nevertheless, consumer advocates say they deal with these compliance problems regularly, and more often with enrollees in Advantage than in traditional Medicare.

“The most typical problems have to do with plans that are making it difficult or impossible for people to get their medications,” says Jocelyn Watrous, an advocate for patients at the Center for Medicare Advocacy. “They impose prior authorizations or other utilization management rules that they make up out of whole cloth.”

Consumer advocates urge Medicare enrollees to restrict their shopping this fall to four- and five-rated plans, of which plenty are available in most parts of the country. “If a plan consistently gets four or five stars, all other things being equal it will be a high performer,” says Joe Baker, president of the Medicare Rights Center.

Few Medicare enrollees roll up their sleeves to shop, however. A study by Kaiser found that, on average, just 13% of enrollees voluntarily switched their Advantage or drug plans over four recent enrollment periods. And focus groups with seniors conducted by the foundation last May found that few pay attention to the star ratings.

“Seniors said they don’t use the ratings because they don’t feel they reflect their experiences with plans,” said Gretchen Jacobson, associate director of the foundation’s Medicare program. “Even when we told them that their plan only has two stars, many just wanted to stay in that plan.”

Advocates say the star ratings are just a starting point for smart shoppers.

They say you should check to make sure health providers you want to see are in a plan’s network. You should also consider how you would react if any of those providers disappeared during the 12 months that you are locked into the plan. Advantage plans can—and do—drop providers. UnitedHealth Group, the industry’s largest player, made headlines last year when it dropped thousands of doctors in 10 states. Advantage plans in Florida, Pennsylvania, California and Delaware also terminated provider relationships.

Also be sure to examine the prescription drug “formularies” in your plan—the rules under which your medications are covered. And talk with your doctors about any plan you are considering, especially if you see specialists for a chronic condition.

The Medicare memorandum to plans also underscores the importance of appealing denied claims, Baker says. “Appeal, appeal, appeal—it’s like ‘location, location, location’ in real estate.”

MONEY retirement planning

3 Little Mistakes That Can Sink Your Retirement

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Cultura RM/Korbey—Getty Images/Collection Mix

Big mistakes are easy to catch, but even a small miscalculation may jeopardize your retirement portfolio. Here are three common missteps to avoid.

We think it’s the big mistakes that cost us in retirement, like hiring an unscrupulous adviser or funneling savings into a risky investment that goes belly up. Major errors can certainly hurt. But the smaller seemingly sensible decisions we make without really examining the rationale behind them can also come back to bite us in the…

Assiduous planning is key to a secure retirement, but the effectiveness of plans we make depends on the assumptions behind them. And when you’re making a plan that extends well into the future, as is the case with retirement, even a small miscalculation can take you way off course. Below are three mistakes that may seem minor, but that can seriously erode your odds of achieving a successful retirement. Make sure you’re not incorporating these errors of judgment into your retirement planning.

1. Relying on an unrealistic rate of return. Clearly, the higher the return you earn on the money in 401(k)s, IRAs and other retirement accounts, the less you’ll have to stash away in savings each month to build a sizable nest egg. For example, if you start saving $600 a month at age 30 and earn a 7% annual rate of return, you’ll have $1 million by age 65. Bump up that rate of return to 8% a year, however, and you have to put away only $480 a month to hit the $1 million mark by 65, leaving you an extra $120 month to spend. Earn 9% annually, and the monthly savings required to get to $1 million shrinks to just $385 a month, freeing up even more for spending.

Problem is, just because a retirement calculator lets you plug in a higher rate of return or a more aggressive stocks-bonds mix, doesn’t mean that loftier gains will actually materialize. Shooting for higher returns always involves taking on more risk, which raises the possibility that your aggressive investing strategy could backfire and leave you with a smaller nest egg than you expected. That can be especially dangerous when you’re on the verge of retirement.

For example, just prior to the financial crisis, nearly one in four pre-retirees had more than 90% of their 401(k)s in stocks. A pre-retiree with a $1 million retirement account invested 90% in stocks and 10% in bonds would have suffered a loss in 2008 of roughly 33%, reducing its value to $670,000—enough of a drop to require seriously scaling back retirement plans if not postponing them altogether. No one knows whether recent market turbulence will be a prelude to a similar meltdown. But anyone who has his retirement savings invested in a high-octane stocks-bonds mix, clearly runs the risk of a experiencing a significant setback.

A better strategy when creating your retirement plan is to keep your return assumptions modest and focus instead on saving as much as you can. That way, you’re not as dependent on investment returns to build an adequate nest egg. To see how different savings rates and stocks-bonds mixes can affect your chances of achieving a secure retirement, check out the Retirement Income Calculator in RDR’s Retirement Toolbox.

2. Factoring pay from a retirement job into your planning. It’s almost become a cliche. Virtually every survey asking pre-retirees what they plan to do in retirement shows that the overwhelming majority plan to work. Indeed, a recent Merrill Lynch survey found that nearly three out of four people over 50 said their ideal retirement would include working. Which is fine. Staying connected to the work world in some way can not only offer financial benefits, it can also keep retirees more active and socially engaged.

It would be a mistake, however, to factor the earnings you expect to receive while working in retirement into your estimate of how much you have to save. Or, to put it more bluntly, you’re taking a big risk if you assume that you can skimp on saving because you’ll be make up for a stunted nest egg with money from a retirement job.

Why? Well for one thing, what people say they plan to do in 10 or 20 years and what they end up doing can be very different things. You may find that the eagerness you feel in your 50s to continue to working may fade as you hit your 60s and 70s. Or even if you wish to work—and actively seek it through sites like RetiredBrains.com and Retirementjobs.com, it may not be as easy as you think to land a job you like. Maybe that’s why the Employee Benefit Research Institute’s Retirement Confidence Survey finds year after year that the percentage of workers who say they plan to work after retiring (65% in the 2014 RCS) is much higher than the percentage of retirees who say they have actually worked for pay since retiring (27%).

So when you’re making projections about income sources in retirement, keep work earnings on the modest side, if you factor them in at all. And don’t fall into the trap of believing you can get by with saving less today because you’ll stay in the workforce longer or rejoin it whenever you need some extra cash in retirement. Or you may find yourself working some type of job in retirement whether you like it or not.

3. Taking Social Security sooner rather than later. Although a recent GAO report found that the percentage of people claiming Social Security at age 62 has declined in recent years, 62 remains the single most popular age to begin taking benefits, and a large majority still claim benefits before their full retirement age. But unless you have no choice but to grab benefits early on, doing so can be a costly mistake.

One reason is that for each year you delay between 62 and 70, you boost the size of your benefit roughly 7% to 8%. You’re not going to find a low-risk-high-return option like that anywhere else in today’s financial markets. More important, waiting for a higher monthly check can often dramatically increase the amount of money you receive over your lifetime. That’s especially true for married couples, who can take advantage of a variety of claiming strategies to maximize their expected benefit.

For example, if a 65-year-old husband earning $90,00 a year and his 62-year-old wife who earns $60,00 claim Social Security at 65 and 62 respectively, they might receive just over $1.1 million in today’s dollars in joint benefits over their expected lifetimes, according 401(k) advice firm Financial Engines.

But they can boost their estimated joint lifetime benefit by roughly $177,000, according to the Social Security calculator on Financial Engines’ site, if the wife files for her own benefit based on her work record at age 63, the husband files a restricted application for spousal benefits at 66 and then switches to his own benefit based on his work record at age 70.

Although you may not think of it this way, Social Security is, if not your biggest, certainly one of your biggest and most valuable retirement assets. And chances are you’ll get more out of it by taking it later rather than sooner and, if you’re married, coordinating the timing with your spouse.

Walter Updegrave is the editor of RealDealRetirement.com. He previously wrote the Ask the Expert column for MONEY and CNNMoney. You can reach him at walter@realdealretirement.com.

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MONEY retirement planning

Why Americans Can’t Answer the Most Basic Retirement Question

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marvinh—Getty Images/Vetta

Workers are confused by the unknowns of retirement planning. No wonder so few are trying to do it.

Planning for retirement is the most difficult part of managing your money—and it’s getting tougher, new research shows. The findings come even as rising markets have buoyed retirement savings accounts, and vast resources have been poured into things like financial education and simplified investment choices meant to ease the planning process.

Some 64% of households at least five years from retirement are having difficulty with retirement planning, according to a study from Hearts and Wallets, a financial research firm. That’s up from 54% of households two years ago and 50% in 2010. Americans rate retirement planning as the most difficult of 24 financial tasks presented in the study.

How can this be? Jobs and wages have been slowly improving. Stocks have doubled from their lows, even after the recent market tumble. The housing market is rebounding. Online tools and instruction through 401(k) plans have greatly improved. We have one-decision target-date mutual funds that make asset allocation a breeze. Yet retirement planning is perceived as more difficult.

The explanation lies at least partly in an increasingly evident quandary: few of us know exactly when we will retire and none of us know when we will die. But retirement planning is built around choosing some kind of reasonable estimate for those two variables. But that’s something few people are prepared to do. As the study found, 61% of households between the ages of 21 to 64 say they can’t answer the following basic retirement question: When will I stop full-time work?

Even the more straightforward retirement planning issues are challenging for many workers. Among the top sources of difficulty: estimating required minimum distributions from retirement accounts (57%), deciding where to keep their money (54%), and getting started saving (51%).

Those near or already in retirement have considerably less financial angst, the study found. Their most difficult task, cited by 33%, is estimating appropriate levels of spending, followed by choosing the right health insurance (31%) and a sustainable drawdown rate on their savings accounts (28%).

For younger generations, planning a precise retirement date has become far more difficult, in part because of the Great Recession. Undersaved Baby Boomers have been forced to work longer, and that has contributed to stalled careers among younger generations. The final date is now a moving target that depends on one’s health, the markets, how much you can save, and whether you will be downsized out of a job. Americans have moved a long way from the traditional goal of retirement at age 65, and the uncertainty can be crippling.

Nowhere does the study mention the difficulty of estimating how long we will live. Maybe the subject is simply one we don’t like to think about, but the fact is, many Americans are living longer and are at greater risk of running out of money in retirement. This is another critical input that individuals have trouble accounting for.

In the days of traditional pensions, many Americans could rely on professional money managers to grapple with these problems. Left on their own, without a reliable source of lifetime income (other than Social Security), workers don’t know where to start. The best response is to save as much as you can, work as long you can—and remember that retirees tend to be happy, however much they have saved.

Related:

How should I start saving for retirement?

How much of my income should I save for retirement?

Can I afford to retire?

Read next: 3 Little Mistakes That Can Sink Your Retirement

MONEY Ask the Expert

How Late-Life Marriage Can Hurt Your Retirement Security

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Robert A. Di Ieso, Jr.

Q: I am 66 and my partner is 63. We are thinking of getting married. How long must we be married for her to be eligible for spousal benefits based on my earnings? Neither of us have filed for Social Security yet. – Mark Sander, Indianapolis, IN

A: It’s wonderful to find love at any age. But for older couples, the decision to marry can have a big impact on your retirement finances, particularly when it comes to Social Security. Some experts say that may be one reason why co-habitation among older people is on the rise. According to the U.S. Census, nearly three million people age 50 and older live together, up from 1.2 million in 2000. “Many seniors live together instead of getting married because of money issues,” says Steve Vernon, author of Recession-Proof Your Retirement Years.

The good news is that if you do tie the knot, you only need to be married for one year for your wife to collect Social Security spousal benefits.

Still, it may not be a good idea for your wife to apply for benefits right away, says Vernon. At age 66 you are what Social Security deems full retirement age. But for your wife to collect full spousal benefits (50% of your full Social Security monthly payment) she will need to be full retirement age too.

If your wife files for Social Security before she reaches 66, she will get less than she would receive than if she waited till full retirement age. How much less? If your wife files for spousal benefits at 63, she will get 37.5% of your Social Security. At 64, that rises to 42% and at 65, 46%.

Waiting to collect benefits also means a higher payout for you. You can boost your Social Security paycheck by 8% each year you wait until age 70. A method called file and suspend allows you to file for your Social Security benefits so your wife can start collecting spousal benefits but you suspend receiving your benefits till you are 70.

Also be aware that if either of you has been married before, remarrying could mean losing alimony or the survivor benefits of a pension. “You really need to think strategically about how to maximize your Social Security benefits,” says Vernon.

There are a number of calculators and advice services that can help you figure the claiming strategy that’s best for your situation. Earlier this year, 401(k) advice provider Financial Engines released a Social Security income calculator that’s free and easy to use. The calculator sifts through thousands of claiming strategies to come up with a recommended option. For $40, you can use the Maximize My Social Security online software to evaluate more detailed scenarios. You may also want to consult a financial planner who’s familiar with Social Security rules.

Marriage can have a hazardous effect on other parts of your financial life, says Vernon. You will legally be on the hook for your spouse’s medical bills, and there may be sticky issues when it comes to inheritance. In some cases, married couples also face higher taxes, depending on your income and tax bracket.

Whether you get married is a personal decision, but by choosing the right financial plan, you’re more likely to enjoy a happy retirement together.

Do you have a personal finance question for our experts? Write to AskTheExpert@moneymail.com.

More from Money’s Ultimate Retirement Guide:

How does working affect my Social Security benefits?

Will my spouse and kids receive Social Security benefits when I die?

Are my Social Security payouts taxed?

MONEY Social Security

This Little-Known Social Security Strategy Can Boost Your Retirement Income

woman flicking light switch
JGI/Jamie Grill—Getty Images

For retirees who need added income temporarily, turning your Social Security benefit on and off can be a smart move. It may also help your family over the long term.

Welcome to the Social Security claiming world of start-stop-start, a sophisticated strategy that can add big bucks to some people’s lifetime benefits if properly used.

By now, anyone who regularly reads about Social Security likely knows that delaying benefits until age 70 allows them to reach their highest level.

They also probably know that beginning to collect retirement benefits as early as age 62 will reduce them by 25% from what they would have been at age 66 (and 76% from their level at age 70 if claiming is deferred).

But it’s a whole lot less likely that they know about being able to begin taking benefits early, stopping them at age 66, and enjoying the benefits of delayed retirement credits until age 70. This is a potentially great option that can boost lifetime benefits, as well as help people who may be in a temporary financial bind in their early 60s—perhaps they have to take early retirement, but later end up earning more money in a second career.

Larry Kotlikoff, an economics professor (and co-author of my upcoming book on Social Security claiming), provides a useful and detailed explanation of the start-stop-start strategy. His analysis includes extensive computer simulations to determine how best to take advantage of these rules.

How Start-Stop-Start Works

The flexibility to start and stop your benefit is yet another important aspect of the agency’s rules regarding what it calls Full Retirement Age (FRA). This is 66 for people born between 1943 and 1955. For people born later, it rises by two months a year before hitting 67 for anyone born in 1960 and later. (I wrote recently about how the FRA can affect claiming decisions.)

I recommend that people consider waiting until age 70 to begin Social Security. But there are lots of valid reasons to begin claiming as soon as 62, which normally is the soonest you can receive benefits (there are earlier claiming ages for people with disabilities and surviving spouses).

If you take reduced benefits early—with “early” meaning before your FRA—you generally are stuck at those reduced benefit levels until you reach your FRA. There is a provision that lets you withdraw your benefit decision within a year of making it, pay back everything you’ve received from Social Security (included Medicare premium payments, if applicable) and get a fresh start with your claiming record.

But most early claimers don’t do this. Once they file early, they are stuck with whatever reduced benefit they get until they hit their FRA. At that time, Social Security rules allow a person to suspend their benefits for as long as four years. This is the “stop” part of start-stop-start. And most people are not aware of this FRA-related rule.

During this “stop” period, their benefits will earn delayed retirement credits. If they suspend for the full four years before their second “start,” their benefit will be 32% higher than when they suspended it. That’s a real 32% gain, too, as the delayed credits include the program’s annual cost-of-living adjustments for inflation. Now, this person’s benefits at age 70 will still be less than if they had never claimed a reduced benefit. But they’ll still be much higher than if they had never suspended them at their FRA.

Here’s a simple example: Say you are due a $1,000 retirement benefit at your FRA of 66. It will rise 32% to $1,320 a month (in real, inflation-adjusted terms) if you wait to claim until you turn 70. It will be reduced 25% to $750 a month if you claim early at age 62. However, that $750 will rise by 32% to $990 a month if you suspend at age 66 (the “stop”) and resume (the second “start”) at age 70. That’s a lot more than $750, of course, but it’s still far short of the $1,320 you’d get if you never claimed benefits at all until you turned 70.

Who Benefits by Resetting Your Claim

Besides helping out those in a temporary financial bind, this strategy may also improve your spouse’s benefits. Under Social Security rules, one spouse has to first file for their retirement benefit before the second spouse can file for a spousal benefit. While filing for retirement early will reduce that filer’s benefits, it could increase your family’s overall income. That’s because your husband or wife can then collect spousal benefits, while his or her individual benefit will keep rising till age 70.

If there’s a big age difference between you and your spouse, or if your spouse has a work record to consider, it can make sense for one spouse to begin benefits early, then suspend them when the second spouse reaches an optimal claiming age. The benefits of start-stop-start can become particularly valuable in maximizing family benefits for a couple, especially if they have young children.

As you can see, calculations for how to maximize benefits using start-stop-start can be very complex. You will probably do best to get help from a financial adviser, or use a benefits claiming calculator (see some recommendations here and here), or both.

Philip Moeller is an expert on retirement, aging, and health. He is an award-winning business journalist and a research fellow at the Sloan Center on Aging & Work at Boston College. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

MONEY

Here’s the Only State Where Retirees Have Enough Income

Just one state plus the District of Columbia have typical retirees with more than 70% of pre-retirement income. Traditional pensions and low cost of living make a difference.

The problems retirees encounter trying to secure lifetime income know no bounds: In 49 states those past the age of 65, on average, fall short of a widely accepted benchmark for minimum income in retirement, new research shows.

Financial advisers generally agree you need at least 70% of pre-retirement income to maintain your lifestyle after calling it quits. Many say 80% to 85% is a more appropriate target.

But even using the lower bar, Nevada is the only state where the typical retiree has sufficient income to live comfortably in retirement, according to a study from Interest.com, a division of Bankrate, a financial information provider. The District of Columbia also makes the cut. But every other jurisdiction in the nation falls short, underscoring the scope of the retirement income crisis in America.

Nationally, the median income for those who are 65 and older equals just 60% of the median income for those aged 45 to 64, the study found. In Nevada, median income for those past 65 is 71%. In Washington D.C., the figure is 74%. States that get close to the minimum retirement income level are Hawaii (69%), Arizona (68%) and Mississippi (68%). At the bottom are Massachusetts (49%) and North Dakota (49%).

The national rate represents a jump of 10 percentage points over the past decade. But that is not as encouraging as it may appear, reflecting trends where older Americans stay on the job longer and young workers fail to see significant wage gains. The share of Americans working past 65 has been increasing for 20 years and reached 18.9% this May, one of the highest levels in the last half century.

Washington D.C. tops the retirement income list in large measure because of its huge population of retired federal employees, many of who have generous traditional pension plans. Nevada (along with Arizona and Mississippi) benefits from a low cost of living; the costs of food, housing, utilities, transportation and medical care in Reno, Nev., are just 67% of such costs in Washington D.C.

Hawaii is one of the most expensive places on Earth to retire. But it measures up well in this study because the state has a strong traditional pension culture. It may also help that wealthy people choose it as their retirement destination. At the bottom, Massachusetts (like much of the Northeast) has long suffered from a high cost of living while North Dakota recently has seen its cost of living soar amid an oil boom in that state.

MONEY retirement age

How to Know When It’s Time to Retire

Birthday candles
Fuse—Getty Images

I’ve long argued that one’s quality of life should be a principal factor in deciding when to retire. At the same time, however, financial considerations can’t be ignored. With this in mind, here are three rules of thumb to help you decide whether you’ve reached the perfect age to retire.

1. Have you saved enough money?

The “multiply by-25″ rule is a popular tool that retirement experts encourage people to use to estimate whether they’ve saved enough money to stop working and, at least hopefully, begin a life of leisure.

Here’s how it works: Multiply your desired annual income in retirement, less projected annual Social Security benefits, by 25. If your savings are greater than that, then you’re in good shape. If not, then you may not be financially ready to retire.

For example, let’s say that Bob and Mary Jane estimate they’ll spend $40,000 a year in retirement. Using the rule of 25, they’ll need savings of $1 million.

A slightly different iteration of this is the “multiply by-300″ rule. This is the same thing, but it focuses on months instead of years — that is, take your average monthly expenditures, minus your monthly Social Security check, and multiply that by 300.

If your savings are greater than that, then you’re all set. If not, then you might want to continue working for a few more years.

2. Will you have enough income?

This question is related to the first one, but it attacks the issue from a slightly different angle. As such, it also has its own rule of thumb: the 4% rule.

This rule holds that you can safely withdraw 4% from your portfolio every year and still be confident it will last through retirement. Thus, to determine if you’ll have enough income in retirement, multiply your portfolio by 4% and then add in your projected annual Social Security benefits — to learn one potential problem with this rule, click here.

If the sum of these two numbers is enough to cover your expenses, then you’re ready to retire. If not, then it may behoove you to put off retirement for a while longer, as doing so should allow your portfolio to continue growing. It will also give your Social Security benefits time to accrue delayed retirement credits.

3. Is your portfolio properly allocated?

Finally, determining if you’re ready to retire isn’t just about how much you’ve saved, it’s also about how your savings are allocated into various asset classes — namely, stocks and bonds.

To be ready for retirement, you want to make sure that your assets are invested in as safe of a way as possible. To do so, it’s smart to steer your portfolio increasingly toward fixed-income investments like bonds as you approach your desired retirement age.

Experts use the following rule to determine the proper allocation: “The percentage of your portfolio invested in bonds should equal your age.” Thus, if you’re 60 years old, then 60% of your portfolio should be in bonds and 40% in stocks. If you’re 55, then the split is 55% to 45%, respectively.

While this may seem like it has less to do with the timing of retirement than the former two rules, the reality is that it’s of equal importance. As my colleague Morgan Housel has discussed in the past, one of investors’ biggest mistakes is to underestimate the volatility in the stock market. According to Morgan’s research, stocks fall by an average of 10% once every 11 months.

Suffice it to say, a drop of this magnitude would have a material impact on both of the preceding rules, as a 10% decline in your stock holdings would equate to a much smaller income under the 4% rule and, as a corollary, it would call for a delayed retirement date under the multiply by-25 rule.

And the impact of this would be even more exaggerated if the lions’ share of your assets were still in stocks as opposed to bonds. Consequently, the culmination of your strategy to bring your portfolio into accord with this final rule is a key step in determining the perfect age at which you’re ready to pull the trigger and actually retire.

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