6 Things Retirees Should be Grateful For

By Dennis Miller

Over-consumption of mass media can cause emotional whiplash. So, I unplugged from mass media and cleared some head space to consider what my fellow retirees and I have to be grateful for.

1. The annual gift tax exclusion and the combined lifetime exemption. I will die a happy man if I never have to fill out IRS Form 709. The very idea of a taxable gift is downright nuts. I am, however, grateful for the annual gift tax exclusion ($14,000 in 2013) and the combined lifetime gift and estate tax exemption ($5,250,000 in 2013).While I discourage bailing out ne’er-do-well family members, giving ought to be a non-punishable choice. To exercise this freedom, Jo and I give our grandchildren silver coins each year, which I wrote about in The Greatest Investment I Ever Made. The freedom to give tax-free shouldn’t end with your dying breath, either. Between you and your spouse, you can give and bequeath a lot of money before either the federal gift or estate tax becomes a real hurdle. And for those of you with enough dough to dread the estate tax, there are fancy tools like a Grantor Retained Annuity Trust (GRAT) to drain your taxable estate and eliminate the problem.
2. Ted Benna and Subsection 401(k) of the Internal Revenue Code. The law providing for defined contribution pension accounts was enacted 1978, when most retirements depended on private pensions and Social Security. Enter Ted Benna two years later, then co-owner of a benefits consultancy, who figured out how to use the provision to create a straightforward, tax-advantaged way to save for retirement. Benna received quite a bit of press earlier this year for criticizing the overwhelming complexity of 401(k) plans today. Still, the tax benefits and employer-matching programs make contributing to your 401(k) well worth the small chore of understanding and managing it.
3. The Employee Retirement Income Security Act of 1974 (ERISA). Since the ’75 tax year, ERISA has allowed individuals to save pre-tax assets in a traditional IRA. Since then, a handful of IRA cousins have popped up—Roth, SEP, SIMPLE, and Self-Directed. Depending on your circumstances, one or more of these accounts can help you create substantial wealth for retirement.I struggled to open and contribute to my first IRA at age 35. Now its balance is proof positive that IRAs work—a truth I’m always eager to share with my children and grandchildren.
4. Increased longevity. Thanks to dramatic advancements in medicine, you can now expect to live to a ripe of old age (78.62 on average here in the US). When Roosevelt signed the Social Security Act of 1935 into law, women in the US had an average life expectancy of 63.9 years and men, 59.9 years. Yes, it’s a challenge to save for these extra years of retirement, but the flip side is: there is more life to enjoy.I just learned that our second great-grandchild is due on July 4. Had I been born one generation earlier, it’s unlikely I could have expected to live to enjoy such a happy moment, and I definitely could not have expected to live long enough to truly get to know the little munchkin. Today I expect to see this newborn off to high school, at the very least.
5. Time. Control over your own time is the single biggest perk of retirement. You’ve worked hard to reach your retirement goals. That work is what allows you to spend your time as you choose: traveling, relaxing with your spouse, playing with your grandkids, standing on your head—whatever floats your boat.Money plus time equals options. Be thankful to have both!
6. The option to enjoy a second career post-retirement. Turning 65 does not suck out your life force. If, like me, you choose to spend retirement working in a second (or third) career, there are countless ways to make that happen.A wonderful team of truly talented people surrounds me here at Miller’s Money. More than one senior has confided to me that he wished he could have worked with his current team during his first career; life would have been a lot more fun that way. I wholeheartedly agree.

It is you, our readers and subscribers who make our jobs possible. We are all very thankful for each and every one of you, particularly those of you who’ve written to share feedback and helpful suggestions. Your input helps us serve you better, which we will continue to strive to do.

Oh! There is one last thing I am thankful for: the success of the Money Forever portfolio this year and our new Bulletproof Income strategy spearheaded by our lead analyst, Andrey Dashkov. Our mantra is: preserve capital and avoid catastrophic losses. Personally, I’m thrilled at how well we’re living up to that goal. Our total yield for 2013, including all positions bought, sold, and held for a partial year was 9.8%. And our current holdings are up 15.2%—and those are not annualized numbers. Other model portfolios may shout about even bigger gains, but I don’t know of any consistently performing that well while prioritizing safety as much as we do. For that I tip my hat to our research team.

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Image courtesy of  Taoty / FreeDigitalPhotos.net.