The best retirement advice? Be flexible

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In revealing audio clips, clients share the unexpected challenges they found in later life — and the financial choices they had to make to adjust.
For Linda Gonzalez, the perfect retirement included a place to work on her ceramics, time to spend with grandchildren and freedom to travel. So she spent modestly and saved steadily from her salary as an executive assistant in Southern California. Then, with the finish line almost in sight, a layoff left her unemployed in her early 60s. "In life," she says, "you never know what's going to happen."
"The true art of preparing for retirement isn't so much about devising rigid plans as gaining the flexibility to bend without breaking," says Cynthia Hutchins, director of Financial Gerontology, Bank of America. "Often people find that they have to make trade-offs or course corrections."

Listen to our conversation

Linda Gonzalez says she has always been a saver, so when she faced a layoff as well as a divorce and the challenge of retiring alone, she relied on her dad's lessons in independence from her youth. Click to hear part of our phone interview with Linda.
Click to hear part of our phone interview with Linda Gonzalez
Linda Gonzalez
Audio Transcript
Recorded on September 12, 2017
Linda Gonzalez: I was a single mom and a working mom for half of my working life. In all that time, I never touched my 401(k).
My dad always kept saying, you know, "You're going to get married," and all of that, but he still wanted me to be independent. And he raised me to be independent. And I think that, today, women need to be strong and independent. You just can't just give up on your goals and you just have to concentrate and keep your eye on the prize.
I'm grateful that I was always able to invest for my whole working life and I highly recommend it. I think I started saving at 6% because that was what my company would match. And as I would get a raise, I would take that raise and I would put it towards my 401(k). So, I never saw the money in my paycheck, but I saw it in my savings.
I eventually hit the 10% goal and the whole rest of my working life I've saved 10% of my paycheck. If you don't have that money to start with, you never miss it. So, you know, I was never tempted to take my raise and not put it into my 401(k). I've always been a saver and I've worked hard to secure my money. And if I didn't have to use it, I wasn't going to.
So, a few years ago, I decided I was going to retire and I had enough in my nest egg that I retired with pretty much the same paycheck as I had while I was working.
I've done a lot financially just by saving. And I tell my son and his wife — I tell them, "You have to save for the future because you just never know what's going to happen."
IMPORTANT INFORMATION
Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as "MLPF&S" or "Merrill") makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation ("BofA Corp."). MLPF&S is a registered broker-dealer, registered investment adviser, Member Securities Investor Protection (SIPC) popup and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp").
Investment products:
Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value
© 2021 Bank of America Corporation. All rights reserved. 3388967
"No matter when they happen in your life, things like a layoff or an illness in the family can cause you to rethink your retirement plans. The most important thing is to look at various scenarios and have a contingency plan for each one," Hutchins says. "Starting early to create these plans can help you keep your retirement strategy on track."
Preparing for retirement isn't so much about devising rigid plans as gaining the flexibility to bend without breaking. Often people find that they have to make trade-offs.
— Cynthia Hutchins,
director of Financial Gerontology,
Bank of America

Recovering after a layoff

Instead of panicking when her pink slip arrived, Gonzalez considered her options. After two divorces, she'd long ago dropped the idea of retiring with a spouse and had been feeling emotionally and financially ready for a solo retirement.
"I was determined not to touch my retirement savings," she recalls. Unemployment insurance, severance and emergency savings met her basic expenses. She lived frugally, avoided credit card debt and continued driving her aging car. When she landed a job 18 months later, she made up for lost income by working for three years past age 65, the traditional retirement age.
While working a few extra years is a course correction that many people find necessary, Hutchins says, others don't have that choice.

A health crisis can change everything

For those approaching retirement age, sudden health changes are one of the most common disruptors — and one that most people have a difficult time anticipating. That was the case for Sue and Dennis Zuber.
As they entered their late 50s, Dennis was finishing his doctoral program and Sue was working full-time. They planned to ramp up their retirement savings after several years of getting by on Sue's income. Then Dennis, a college professor, came down with an illness that forced him to stop working. Suddenly, "We were down to one income," says Sue, a compliance specialist. "It absolutely changed our lives and retirement plans."
Working with a Merrill Financial Solutions Advisor, the Zubers consolidated retirement plans from a number of past jobs into a single account. Noting that their money was primarily in cash and that their main concern was having enough money to live comfortably in retirement, their advisor suggested the Zubers invest in a diverse mix of stocks and bonds to give their savings the potential to grow. While this recommendation might not be right for everyone, working with their advisor, they were able to create a portfolio that was appropriate for their risk tolerance, liquidity needs and timelines.
While life still feels full of uncertainties, rethinking their finances has given the Zubers a sense of clarity. Sue says, "It really helped to sit down face-to-face and talk with somebody."
As the Zubers discovered, no matter how healthy you and your loved ones feel today, things can change — and quickly. The key is to think ahead so you don't get blindsided, says Ben Storey, director of Retirement Thought Leadership at Bank of America. "A lot of people realize the importance of having their homes insured, but they don't consider long-term care insurance. They have an easier time anticipating that a tree may fall on their house than imagining that they may be stricken with a long-term illness someday."
Think about what you absolutely must cover. Only then can you think about things you would love to be able to fund but, if they didn't materialize, would not be the end of the world.
— Ben Storey,
director of Retirement Thought Leadership,
Bank of America

Listen to our conversation

When unexpected health issues forced Dennis Zuber to retire early, his wife, Sue, says the budgeting skills she learned as a stay-at-home mom helped them manage. Click to hear part of our phone interview with Dennis and Sue.
Click to hear part of our phone interview with Sue Zuber
Sue and Dennis Zuber
Audio Transcript
Recorded on August 15, 2017
Sue Zuber: We moved to California in 2007 and Dennis had a great job, but he ended up leaving on disability due to some major, totally unexpected health issues.
No one knows when that type of situation is going to arise. He was the health nut of the family; it's just — those things happen. We thought we would have dual income to save for retirement more aggressively in our 50s, but that ended up not being the case.
I pretty much was a stay-at-home mom and we've always been very budget oriented. So I think that's what helped us, and I'm thankful for that. We pretty much have always tried to stay within our one-income budget.
IMPORTANT INFORMATION
Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as "MLPF&S" or "Merrill") makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation ("BofA Corp."). MLPF&S is a registered broker-dealer, registered investment adviser, Member Securities Investor Protection (SIPC) popup and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp").
Investment products:
Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value
© 2021 Bank of America Corporation. All rights reserved. 3393279

When your family needs you

About the time Linda Gonzalez was settling into retirement, life brought yet another change. Her mother, in her 90s, came to live with her in Los Angeles. Though Linda cherished the opportunity to help her mom through her last years, until her death in early 2017, having a housemate meant putting some of her travel dreams on hold — and working with a Merrill Financial Solutions Advisor to come up with a plan to cover her mother's expenses. She invested the proceeds from the sale of her mother's Arizona home into a conservative investment portfolio that was designed to produce a stream of income for them.
The Zubers also found themselves juggling family priorities and retirement goals, choosing to put off saving seriously for their retirement while they were helping their children through college. "Another goal we had for ourselves was paying down debt. You just can't do it all," recalls Sue Zuber. But their advisor helped them figure out how to ramp up investing for retirement while still chipping away at debt. They were also able to provide some financial assistance for their children's education expenses.
Such choices are an inevitable part of navigating the zigzags of your financial life journey, notes Storey, and you may need to periodically recheck your finances. "It's important to break things down, really think about what you absolutely must cover: things like health care costs, housing and how you're going to keep the lights on," Storey says. "Only then can you think about things that you would love to be able to fund but, if they didn't fully materialize, would not be the end of the world."

More days to enjoy — and look forward to

In 2013, Joseph Coughlin, director of the AgeLab at Massachusetts Institute of Technology (MIT) and the author of The Longevity Economy, asked 200 long-ago MIT graduates (average age: 79) about their biggest retirement surprise. Instead of stock responses about life hurrying by, "the overwhelming answer was that retirement is a lot longer than you anticipate," Coughlin recalls. "These retirees emphasized that they were actually surprised how much time they had."
The biggest retirement surprise, according to an MIT survey? "Retirement is a lot longer than you anticipate. These retirees were surprised how much time they had."
— Joseph Coughlin,
director of the AgeLab at MIT
Linda Gonzalez expects that, like her mother, she too may live well into her 90s — with a retirement that stretches as long as 30 years. And she knows just how she wants to spend her time. Though the path was a little different than she anticipated, she's made her retirement dreams come true, converting part of her garage into a ceramics studio, visiting her grandchildren in Florida and thinking about places she wants to visit. She also knows that the years ahead will certainly bring new surprises. And that's just fine, she says.
For their part, after Dennis' health scare, the Zubers' biggest priority is spending as much time as possible with their family. "We are thankful that we have what we have and are in a better financial position going forward," Sue says.
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Footnote 
You have choices about what to do with your employer-sponsored retirement plan accounts. Depending on your financial circumstances, needs and goals, you may choose to roll over to an IRA or convert to a Roth IRA, roll over an employer-sponsored plan from your old job to your new employer, take a distribution, or leave the account where it is. Each choice may offer different investment options and services, fees and expenses, withdrawal options, required minimum distributions, tax treatment, and different types of protection from creditors and legal judgments. These are complex choices and should be considered with care. For more information on rolling over your IRA, 401(k), 403(b) or SEP IRA, visit our rollover page or call a Merrill rollover specialist at 888.637.3343.
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