HOUSEKEEPING
Calculate your life expectancy
The length of your retirement is a key component of your retirement planning, and the biggest unknown of the entire process is how long you will live.
Typically, workers expect to retire at age 65 and spend 20 years in retirement, which is in line with published reports on life expectancy, such as the 2006 Social Security trustees report noting that a 65-year-old man can expect to live to age 81 while a 65-year-old woman can plan on reaching 84.
But most consumers don’t know their life expectancy, and living beyond life expectancy can create financial problems. “The Longevity Game” from Northwestern Mutual can help; you can get a sense of your life expectancy at .
SHORT COURSE
Municipal bonds
Municipal bonds are debt obligations issued by states, cities, counties and other governmental entities to raise money for schools, highways, hospitals and any other projects (such as sewer systems and beyond) that are considered to be for the good of the people.
In buying a municipal bond, a consumer actually is lending money to an issuer, which is promising to pay a specific rate of interest, and to return the principal on a set maturity date. (Most muni bonds have semi-annual interest payments.)
Some municipal bonds offer income that is not exempt from both federal and state taxes. There is an entirely separate market of municipal issues that are taxable at the federal level but still offer a state — and often local — tax exemption on interest paid to residents of the state of issuance.
