Riding the Retirement Wave

By Michelle Singletary
Sunday, March 5, 2006

By now you've probably heard that this year the oldest of the baby boomers will turn 60. Specifically, the Census Bureau estimates that 7,918 people will be turning 60 each day in 2006. That amounts to 330 every hour.

That also means millions of people will finally be forced to figure out how to manage their finances, health and leisure in retirement. Personally, I'm dreaming of the day I can say to my employer and co-workers, "Love ya, but I've got to go."

I've been working since I was 13 years old. And when I say that, I don't mean I was working to earn movie money or buy records (I'm older than you may think). I needed to work to help my grandmother pay for my school clothes and other essentials.

I can't wait to stop working because I have to. However, when I think of all the decisions I have to make before I retire, my dream turns into a nightmare. With retirement come choices about how to take your pension, if you are still lucky to have a traditional pension. You have to decide how to take money out of an Individual Retirement Account or your 401(k) plan. Or there's the decision of when to start getting your Social Security.

Oh, and let's not forget Medicare. There is Medicare Part A, Part B, Part C and Part D. I swear, if they add another part to Medicare I will most assuredly scream. Figuring out what you have to do for each part is like sitting down to a 10,000-piece jigsaw puzzle of an ocean. It's a daunting task.

Thankfully, I've found a book for this month's Color of Money Book Club that will guide you through the many questions you have to answer before you retire. For March I'm recommending "How to Retire Happy: The 12 Most Important Decisions You Must Make Before You Retire" (McGraw Hill, $16.95) by Stan Hinden.

Hinden, who is retired, was a longtime financial reporter for The Washington Post. From 1996 to 2003 he wrote The Post's "Retirement Journal" column.

"How to Retire Happy" was first released in 2001, but Hinden has revised and updated this edition with new information on Medicare's prescription drug plan. John Bogle, the founder of the Vanguard Group, wrote the foreword.

Here's what Bogle had to say: "This is a great book because it fills a major gap in the investment literature. There are countless books about accumulating financial assets for retirement, but few about what to do when you get there."

What I love about this book is that Hinden makes it personal. He talks about how he continues to second-guess his retirement decisions. He shares what he did right and most importantly what he did wrong in making his choices. It's in reading about his mistakes that I learned the most.

For example, Hinden is having second thoughts about taking his maximum pension payment rather than choosing an option that would have continued paying his wife, Sara, upon his death.

Hinden also fesses up that he got scared when the Dow Jones Industrial Average dropped by 18 percent between Aug. 1 and Oct. 11, 1991. Hinden decided to sell his shares in the Windsor Fund, a value-oriented stock mutual fund. At the time the price of the shares in the fund fell from $12.39 to $9.72, a drop of 22 percent. When he sold his shares, he put the money in a money market fund.

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